<PAGE>
As filed with the Securities and Exchange Commission on
May 29, 1998
Registration No. 2-95973
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/ / PRE-EFFECTIVE AMENDMENT NO. _____ / / POST-EFFECTIVE AMENDMENT NO. ____
(Check appropriate box or boxes)
_____________
THE ONE GROUP-Registered Trademark-
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices)
_____________
MARK S. REDMAN
3435 Stelzer Road
Columbus, Ohio 43219
(Name and address of Agent for Service)
_____________
Copy to:
ALAN G. PRIEST, ESQUIRE MICHAEL V. WIBLE, ESQUIRE
Ropes & Gray BANC ONE CORPORATION
1301 K Street, N.W. 100 East Broad Street
Suite 800 East 18th Floor
Washington, D.C. 20005 Columbus, OH 43271-0158
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.
It is proposed that this filing will become effective on June 28, 1998
pursuant to Rule 488.
An indefinite amount of the Registrant's securities has been registered
under the Securities Act of 1933 pursuant to Rule 24f-2 under The Investment
Company Act of 1940. In reliance upon such rule, no filing fee is being paid at
this time. A Rule 24f-2 notice for the Registrant for the year ended June 30,
1997 was filed on August 29, 1997.
<PAGE>
THE ONE GROUP-Registered Trademark-
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-1A Item Caption in Combined Prospectus/Proxy Statement
- -------------- ----------------------------------------------
<S> <C>
1 Cross-Reference Sheet; Front Cover
2 Table of Contents
3 Synopsis and Risk Factors
4 Proposal (1) -- Approval of Agreement and Plan of
Reorganization; Introduction; Information about the Proposed
Transaction; Terms of the Proposed Transaction; Federal Tax
Opinions; Comparison of Shareholder Rights; Existing and Pro
Forma Capitalization
5 Front Cover -- Incorporated by reference to specified
documents; One Group-Registered Trademark- Funds; Financial
Statements; Information filed with the Securities and
Exchange Commission; Management Discussion of Fund
Performance
6 Front Cover -- Incorporated by Reference to Specified
Documents; Marquis Funds; Financial Statements; Information
filed with the Securities and Exchange Commission
7 Information About the Proposed Transaction; Voting
Information
8 Interest of Certain Persons in the Transaction
9 Not Applicable
10,11 Cover Page
12 Cover Page -- Incorporated by reference to specified
documents
13 Cover Page -- Incorporated by reference to specified
documents
14 Pro Forma Financial Statements
</TABLE>
Part C
- ------
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
MARQUIS FUNDS
2 OLIVER STREET
BOSTON, MASSACHUSETTS 02109
June __, 1998
To the Shareholders:
Enclosed you will find several documents furnished to you in connection
with a special meeting of the shareholders of Marquis Funds (the "Trust"),
Institutional Money Market Fund ("Marquis Institutional"), Treasury Securities
Money Market Fund ("Marquis Treasury Securities"), Tax-Exempt Money Market Fund
("Marquis Tax-Exempt"), Government Securities Fund ("Marquis Government"),
Strategic Income Bond Fund ("Marquis Strategic Income"), Louisiana Tax-Free
Income Fund ("Marquis Louisiana"), Balanced Fund ("Marquis Balanced"), Value
Equity Fund ("Marquis Value"), Growth Equity Fund ("Marquis Growth"), Small Cap
Equity Fund ("Marquis Small Cap"), and International Equity Fund ("Marquis
International"), (collectively, the "Marquis Funds"). The meeting will be held
at the offices of SEI Investments Company at One Freedom Valley Road, Oaks,
Pennsylvania, 19456 on Thursday, July 30, 1998 at 10:00 a.m. Eastern time. We
hope this material will receive your immediate attention and that, if you cannot
attend the meeting in person, you will vote your proxy promptly.
The Trustees of the Trust are recommending that shareholders of each
Marquis Fund approve a reorganization in which Marquis Institutional, Marquis
Treasury Securities, Marquis Tax-Exempt, Marquis Government, Marquis Strategic
Income, Marquis Louisiana, Marquis Balanced, Marquis Value, Marquis Growth,
Marquis Small Cap, and Marquis International will transfer all of their assets
to The One Group Treasury Only Money Market Fund, The One Group U.S. Treasury
Securities Money Market Fund, The One Group Municipal Money Market Fund, The One
Group Government Bond Fund, The One Group Income Bond Fund, The One Group
Louisiana Municipal Bond Fund, The One Group Asset Allocation Fund, The One
Group Disciplined Value Fund, The One Group Growth Opportunities Fund, The One
Group Small Capitalization Fund, and The One Group International Equity Index
Fund (collectively, the "One Group Funds"), respectively, in return for Class A,
Class B, and Fiduciary Class shares of the corresponding One Group Funds. At the
same time, the One Group Funds will assume all of the liabilities of the Marquis
Funds. After the transfer, shares of the One Group Funds will be distributed to
the corresponding Marquis Funds' shareholders and the Marquis Funds will be
liquidated.
As a result of these transactions, shares of your Marquis Fund would, in
effect, be exchanged at net asset value and on a tax-free basis for shares of a
corresponding One Group Fund. If you own shares of the Marquis Funds and are a
financial organization authorized to act in a fiduciary, advisory, custodial or
similar capacity, or you own Trust Class shares, you will receive One Group
Fiduciary Class Shares. If you otherwise own Marquis Class A, Retail Class or
Cash Sweep Class shares, you will receive One Group Class A Shares.
Shareholders holding Marquis Class B Shares will receive One Group Class B
shares. If you are invested in Marquis Institutional, you will receive shares
of One Group Treasury Only Money Market Fund.
We believe that the proposed transaction offers shareholders of Marquis
Funds the opportunity to pursue similar investment objectives in a more
efficient manner and with greater economies of scale.
THE TRUSTEES BELIEVE THAT THE PROPOSED COMBINATION OF MARQUIS
INSTITUTIONAL, MARQUIS TREASURY SECURITIES, MARQUIS TAX-EXEMPT, MARQUIS
GOVERNMENT, MARQUIS STRATEGIC INCOME, MARQUIS LOUISIANA, MARQUIS BALANCED,
MARQUIS VALUE, MARQUIS GROWTH, MARQUIS SMALL CAP, AND MARQUIS INTERNATIONAL WITH
THE ONE GROUP TREASURY ONLY MONEY MARKET FUND, THE ONE GROUP U.S. TREASURY
SECURITIES MONEY MARKET FUND, THE ONE GROUP MUNICIPAL MONEY MARKET FUND, THE ONE
GROUP GOVERNMENT BOND FUND, THE ONE GROUP INCOME BOND FUND, THE ONE GROUP
LOUISIANA BOND FUND, THE ONE GROUP ASSET ALLOCATION FUND, THE ONE GROUP VALUE
GROWTH FUND, ONE GROUP GROWTH OPPORTUNITIES FUND, THE ONE GROUP SMALL
CAPITALIZATION FUND, AND THE ONE
<PAGE>
GROUP INTERNATIONAL INDEX FUND, RESPECTIVELY, IS IN THE BEST INTERESTS OF THE
MARQUIS FUNDS AND THEIR SHAREHOLDERS AND RECOMMEND THAT YOU VOTE IN FAVOR OF
SUCH PROPOSAL.
The Notice of Special Meeting of Shareholders, the accompanying Combined
Prospectus/Proxy Statement, Prospectuses for the One Group Funds, Prospectuses
for the Marquis Funds, and the form of proxy are enclosed. Please read these
documents carefully. If you are unable to attend the meeting in person, we urge
you to sign, date, and return the proxy card so that your shares may be voted in
accordance with your instructions.
Sincerely
/s/ Mark E. Nagle
-------------
Mark E. Nagle
President
<PAGE>
MARQUIS FUNDS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Marquis Funds
NOTICE IS HEREBY GIVEN of a Special Meeting of Shareholders (Special
Meeting and any adjournment thereof, the "Meeting") of Marquis Funds (the
"Trust"), Institutional Money Market Fund, Treasury Securities Money Market
Fund, Tax-Exempt Money Market Fund, Government Securities Fund, Strategic Income
Bond Fund, Louisiana Tax-Free Income Fund, Balanced Fund, Value Equity Fund,
Growth Equity Fund, Small Cap Equity Fund, and International Equity Fund,
(collectively the "Marquis Funds"). The meeting will be held at the offices of
SEI Investments Company at One Freedom Valley Road, Oaks, Pennsylvania, 19456 on
Thursday, July 30, 1998 at 10:00 a.m. Eastern time, for the following purpose:
1. To approve an Agreement and Plan of Reorganization pursuant
to which Institutional Money Market Fund, Treasury
Securities Money Market Fund, Tax-Exempt Money Market Fund,
Government Securities Equity Fund, Strategic Income Fund,
Louisiana Tax-Free Income Fund, Balanced Fund, Value Equity
Fund, Growth Equity Fund, Small Cap Fund, and International
Equity Fund will transfer all of their assets to The One
Group Treasury Only Money Market Fund, The One Group U.S.
Treasury Securities Money Market Fund, The One Group
Municipal Money Market Fund, The One Group Government Bond
Fund, The One Group Income Bond Fund, The One Group
Louisiana Municipal Bond Fund, The One Group Asset
Allocation Fund, The One Group Disciplined Value Fund, The
One Group Growth Opportunities Fund, The One Group Small
Capitalization Fund, and The One Group International Equity
Index Fund (collectively the "One Group Funds"),
respectively, in return for Class A, Class B, and Fiduciary
Class shares of the corresponding One Group Funds. At the
same time, the One Group Funds will assume all of the
liabilities of the Marquis Funds. After the transfer, shares
of the One Group Funds will be distributed to the
corresponding Marquis Funds' shareholders tax-free in
liquidation of the Marquis Funds.
2. To transact any other business as properly comes before the
Meeting.
The proposed transaction is described in the attached Combined
Prospectus/Proxy Statement. A copy of the Agreement and Plan of Reorganization
is attached as Exhibit A to the Prospectus/Proxy Statement.
Pursuant to instructions of the Board of Trustees of the Trust, the
close of business on May 18, 1998, has been designated as the record date for
determination of shareholders entitled to notice of, and to vote at, the
Meeting.
Each shareholder who does not expect to attend in person is requested to
date, execute, sign, and promptly return the enclosed form of proxy.
By Order of the Trustees
/s/John H. Grady, Jr.
John H. Grady, Jr.
SECRETARY
Boston, Massachusetts
June __, 1998
Your prompt attention to the enclosed form of proxy will help avoid
the expense of additional mailings.
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
June __, 1998
The One Group-Registered Trademark- Marquis Funds
3435 Stelzer Road 2 Oliver Street
Columbus, OH 43219 Boston, MA 02019
Tel. No. 1-800-480-4111 Tel. No. 1-800-471-1144
COMBINED PROSPECTUS/PROXY STATEMENT
This Combined Prospectus/Proxy Statement is furnished in connection with
the solicitation of proxies from the shareholders of the following Marquis
Funds:
Institutional Money Market Fund ("Marquis Institutional")
Treasury Securities Money Market Fund ("Marquis Treasury Securities")
Tax-Exempt Money Market Fund ("Marquis Tax-Exempt")
Government Securities Fund ("Marquis Government")
Strategic Income Fund ("Marquis Strategic Income")
Louisiana Tax-Free Income Fund ("Marquis Louisiana")
Balanced Fund ("Marquis Balanced")
Value Equity Fund ("Marquis Value")
Growth Equity Fund ("Marquis Growth")
Small Cap Fund ("Marquis Small Cap")
International Equity Fund ("Marquis International")
The proxies will be used at a special meeting of shareholders
("Meeting") to approve an Agreement and Plan of Reorganization ("Agreement")
between Marquis Funds (the "Trust") and The One Group dated as of May 18, 1998,
a copy of which is attached as Exhibit A, and the completion of the transactions
(collectively, the "Transaction") contemplated in the Agreement. The Agreement
provides for the transfer of all the assets and liabilities of each Marquis Fund
to corresponding One Group Funds in exchange for shares of the One Group Funds
as follows:
<TABLE>
<CAPTION>
<S> <C>
Shareholders of Will Receive Shares of
- --------------- ----------------------
Marquis Institutional Money Market Fund The One Group Treasury Only Money Market Fund
Marquis Treasury Securities Money Market Fund The One Group U.S. Treasury Securities Money Market Fund
Marquis Tax-Exempt Money Market Fund The One Group Municipal Money Market Fund
Marquis Government Securities Fund The One Group Government Bond Fund
Marquis Strategic Income Fund The One Group Income Bond Fund
Marquis Louisiana Tax-Free Income Fund The One Group Louisiana Municipal Bond Fund
Marquis Balanced Fund The One Group Asset Allocation Fund
Marquis Value Equity Fund The One Group Disciplined Value Fund
Marquis Growth Equity Fund The One Group Growth Opportunities Fund
Marquis Small Cap Fund The One Group Small Capitalization Fund
Marquis International Equity Fund The One Group International Equity Index Fund
</TABLE>
Following the transfer of assets, shares of each One Group Fund will be
distributed to shareholders of each corresponding Marquis Fund. The Marquis
Funds will then be dissolved and liquidated. As a result of the transactions,
you will receive on a tax-free basis, a number of full and fractional shares of
the corresponding One Group Fund equal at the date of the exchange to the value
of your share of the net assets of each Marquis Fund in which you were invested.
If you own Class A shares of the Marquis Funds and are a financial
organization authorized to act in a fiduciary, advisory, custodial or similar
capacity, or you own Trust Class shares, you will receive One Group Fiduciary
Class
4
<PAGE>
Shares. If you own otherwise Marquis Class A, Retail Class or Cash Sweep Class
shares, you will receive One Group Class A Shares. Shareholders holding Marquis
Class B Shares will receive One Group Class B shares. If you are invested in
Marquis Institutional, you will receive shares of One Group Treasury Only Money
Market Fund.
Both the Trust and The One Group are open-end management investment
companies made up of multiple series. Each series is operated as a separate
fund. The Trust consists of eleven such funds, while The One Group contains
forty funds, thirty-three of which are currently offered to investors.
This Combined Prospectus/Proxy Statement explains concisely what you
should know before investing in The One Group Treasury Only Money Market Fund
("One Group Treasury Only"), The One Group U.S. Treasury Securities Money Market
Fund ("One Group Treasury Securities"), The One Group Municipal Money Market
Fund ("One Group Municipal"), The One Group Government Bond Fund ("One Group
Government"), The One Group Income Bond Fund ("One Group Income"), The One Group
Louisiana Municipal Bond Fund ("One Group Louisiana"), The One Group Asset
Allocation Fund ("One Group Asset Allocation"), The One Group Disciplined Value
Fund ("One Group Value"), The One Group Growth Opportunities Fund ("One Group
Growth"), The One Group Small Capitalization Fund ("One Group Small
Capitalization"), and The One Group International Equity Index Fund ("One Group
International Index"). Please read it carefully and keep it for future
reference.
This Combined Prospectus/Proxy Statement is accompanied by current
prospectuses for each of The One Group Funds, which are dated November 1, 1997,
as well as the February 1, 1998 prospectuses for the Marquis Funds. These
prospectuses are incorporated into this Combined Prospectus/Proxy Statement by
reference. The current Statement of Additional Information of The One Group,
dated November 1, 1997, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Statement of Additional
Information of The One Group may be obtained, without charge, by writing to The
One Group Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by calling
1-800-480-4111 during business hours. The current Statement of Additional
Information of Marquis Funds, dated February 1, 1998, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
Statement of Additional Information of Marquis Funds can be obtained without
charge by calling 1-800-471-1144. In addition, a Statement of Additional
Information dated June __, 1998 relating to the reorganization of the Marquis
Funds described in this Combined Prospectus/Proxy Statement, has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
Such Statement of Additional Information may be obtained, without charge, by
writing or calling The One Group Services Company at the address or telephone
number provided above.
PLEASE REMEMBER THAT SHARES OF THE ONE GROUP FUNDS:
- - ARE NOT DEPOSITS OR OBLIGATIONS, OR GUARANTEED BY BANC ONE CORPORATION
OR ITS AFFILIATES;
- - ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY;
- - INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE AMOUNT
INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
5
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS COMBINED PROSPECTUS/PROXY STATEMENT IN
CONNECTION WITH THE OFFER MADE BY THIS COMBINED PROSPECTUS/PROXY STATEMENT AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE ONE GROUP. THIS COMBINED PROSPECTUS/PROXY
STATEMENT DOES NOT CONSTITUTE AN OFFERING BY THE ONE GROUP IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Proposal (1) Approval of the Agreement and Plan of Reorganization. .
Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPARISON OF CURRENT FEES
COMPARISON OF INVESTMENT OBJECTIVES
COMPARISON OF INVESTMENT POLICIES
COMPARISON OF SHAREHOLDER POLICIES
FEDERAL INCOME TAX CONSEQUENCES
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management Discussion of Fund Performance. . . . . . . . . . . . . .
Information About the Proposed Transaction . . . . . . . . . . . . .
INTRODUCTION
TERMS OF THE PROPOSED REORGANIZATION
FEDERAL TAX OPINIONS
FEES AND EXPENSES OF THE REORGANIZATION
COMPARISON OF SHAREHOLDER RIGHTS
EXISTING AND PRO FORMA CAPITALIZATION
Voting Information . . . . . . . . . . . . . . . . . . . . . . . . .
Interests of Certain Persons in the Transaction. . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .
Information filed with the Securities and Exchange Commission. . . .
Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . Exhibit
</TABLE>
6
<PAGE>
PROPOSAL (1): APPROVAL OF THE REORGANIZATION OF THE MARQUIS FUNDS
On May 18, 1998, the Board of Trustees ("Trustees") of the Trust
approved an Agreement and Plan of Reorganization pursuant to which Marquis
Institutional, Marquis Treasury Securities, Marquis Tax-Exempt, Marquis
Government, Marquis Strategic Income, Marquis Louisiana, Marquis Balanced,
Marquis Value, Marquis Growth, Marquis Small Cap, and Marquis International will
transfer all of their assets to One Group Treasury Only, One Group U.S. Treasury
Securities, One Group Municipal, One Group Government, One Group Income, One
Group Louisiana, One Group Asset Allocation, One Group Value, One Group Growth,
One Group Small Capitalization, and One Group International Index (collectively
the "One Group Funds"), respectively, in return for Class A, Class B, and
Fiduciary Class shares of the corresponding One Group Funds. At the same time,
the One Group Funds will assume all of the liabilities of the Marquis Funds.
Following the transfer of assets, shares of each One Group Fund will be
distributed to shareholders of each corresponding Marquis Fund. The Marquis
Funds will then be dissolved and liquidated. As a result of the transactions,
you will receive on a tax-free basis, a number of full and fractional shares of
the corresponding One Group Fund equal at the date of the exchange to the value
of your share of the net assets of each Marquis Fund in which you were invested.
If you own Class A shares of the Marquis Funds and are a financial
organization authorized to act in a fiduciary, advisory, custodial or similar
capacity, or you own Trust Class shares, you will receive One Group Fiduciary
Class Shares. If you otherwise own Marquis Class A, Retail Class or Cash Sweep
Class shares, you will receive One Group Class A Shares. Shareholders holding
Marquis Class B Shares will receive One Group Class B shares. If you are
invested in Marquis Institutional on that date, you will receive shares of One
Group Treasury Only.
The Trustees have concluded that participation in the proposed
transaction is in the best interests of the Marquis Funds and their
shareholders. The Trustees have further concluded that the economic interests of
shareholders of the Marquis Funds will not be diluted as a result of the
proposed transaction. In reaching this conclusion, the Trustees considered,
among other things:
1. The similarity of the investment objectives and policies of
The One Group Funds with those of the Marquis Funds.
2. The performance of The One Group Funds as compared to the
Marquis Funds.
3. The enhanced range of investment options available to
investors in The One Group. The One Group currently offers
33 different funds.
4. The tax-free nature of the transaction.
5. The investment and market leverage that The One Group will
achieve as a result of the reorganization. Shareholders may
benefit from the resulting economies of scale.
6. The expense ratios of the Marquis Funds and The One Group
Funds.
7. The fact that the sales load currently charged Class B
shareholders will not change.
For a more complete discussion of the factors affecting the Board's
decision, please see page ___.
7
<PAGE>
SYNOPSIS
This Synopsis is designed to allow you to compare the current fees,
investment objectives, policies and restrictions, and shareholder policies of
each Marquis Fund with those of the corresponding One Group Fund. This section
is only a synopsis. For more complete information, please read the prospectus
for each fund.
COMPARISON OF CURRENT FEES
The following tables show the current fees for the Marquis Funds
followed by those currently charged by the corresponding One Group Fund. If the
reorganization is approved, you would pay the fees shown for the One Group Fund
that corresponds to your current Marquis Fund and share class. If you own Class
B shares of Marquis Funds, the Contingent Deferred Sales Charge currently
applicable to those shares (including the period of time you have held those
shares) will be applied to the One Group shares you receive in the
reorganization. This means that the sales charge applicable to your current
Class B shares will not change.
MARQUIS INSTITUTIONAL MONEY MARKET FUND
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) .04%
12b-1 Fees None
Other Expenses .21%
Total Operating Expenses (after fee waivers) (1) .25%
</TABLE>
(1) THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE ITS ADVISORY FEE OR
REIMBURSE EXPENSES TO THE EXTENT NECESSARY TO KEEP "TOTAL OPERATING
EXPENSES" FOR THE FUND FROM EXCEEDING .25%. THE ADVISOR RESERVES THE
RIGHT TO TERMINATE ITS WAIVER AT ANY TIME IN ITS SOLE DISCRETION.
ABSENT SUCH WAIVER, MANAGEMENT FEES FOR THE FUND WOULD BE .15% AND TOTAL
OPERATING EXPENSES FOR THE FUND WOULD BE .36%.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in shares of
the Fund assuming: (1) 5% annual return and (2) redemption at the end of each
time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$3 $8 $14 $32
</TABLE>
8
<PAGE>
THE ONE GROUP TREASURY ONLY MONEY MARKET FUND
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES(1)
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) None
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily net assets)
Investment Advisory Fees .08%
Other Expenses .10%
Total Fund Operating Expenses .18%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM REDEMPTION AMOUNTS PAID BY
WIRE.
(2) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) 5% annual return; and (2) redemption at the end of each time
period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$2 $6 $10 $23
</TABLE>
9
<PAGE>
MARQUIS TREASURY SECURITIES MONEY MARKET FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CASH
RETAIL CLASS SWEEP CLASS TRUST CLASS
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases None None None
Maximum Sales Load Imposed on Reinvested Dividends None None None
Maximum Contingent Deferred Sales Charge None None None
Wire Redemption Fee $25 $25 None
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees .30% .30% .30%
12b-1 Fees (after fee waivers) (1) .20% .50% None
Other Expenses (after fee waivers) .20% .20% .20%
Total Operating Expenses (after fee waivers) (2) .70% 1.00% .50%
</TABLE>
(1) THE ADVISOR AND ADMINISTRATOR HAVE VOLUNTARILY AGREED TO WAIVE THEIR
FEES AND THE DISTRIBUTOR HAS VOLUNTARILY AGREED TO WAIVE 12b-1 FEES TO
THE EXTENT NECESSARY TO KEEP "TOTAL OPERATING EXPENSES" FOR THE RETAIL
CLASS AND CASH SWEEP CLASS SHARES FROM EXCEEDING 0.70% AND 1.00%,
RESPECTIVELY. THE ADVISOR, ADMINISTRATOR AND THE DISTRIBUTOR RESERVE
THE RIGHT TO TERMINATE THEIR WAIVERS AT ANY TIME IN THEIR SOLE
DISCRETION. ABSENT SUCH WAIVERS, 12b-1 FEES FOR THE RETAIL CLASS SHARES
OF THE FUND WOULD BE 0.25% AND FOR CASH SWEEP SHARES OF THE FUND WOULD
BE .75%
(2) ABSENT THE ADVISOR'S, ADMINISTRATOR'S AND THE DISTRIBUTOR'S VOLUNTARY
FEE WAIVERS, TOTAL OPERATING EXPENSES FOR RETAIL CLASS SHARES WOULD BE
0.75% AND FOR CASH SWEEP CLASS SHARES WOULD BE 1.25%.
EXAMPLE
You would pay the following expenses on a $1,000 investment in the Fund
assuming (1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Retail Class $ 7 $22 $39 $ 87
Cash Sweep Class $10 $32 $55 $122
Trust Class $5 $16 $28 $63
</TABLE>
10
<PAGE>
THE ONE GROUP U.S. TREASURY SECURITIES MONEY MARKET FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering price) None None None None
Maximum Contingent Deferred
Sales Charge (as a
percentage of original
purchase price or redemption
proceeds, as applicable) None 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average
daily net assets)
Investment Advisory Fees
(after fee waiver)(3) .30% .30% .30% .30%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% None
Other Expenses .21% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers)(5) .76% 1.51% 1.51% .51%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM REDEMPTION AMOUNTS PAID BY
WIRE.
(2) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(3) WITHOUT A FEE WAIVER, INVESTMENT ADVISORY FEES WOULD BE .35% FOR ALL
CLASSES OF SHARES.
(4) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED UNDER THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS.
(5) TOTAL OPERATING EXPENSES HAVE BEEN REVISED TO REFLECT FEE WAIVERS.
WITHOUT A VOLUNTARY REDUCTION OF INVESTMENT ADVISORY AND 12b-1 FEES,
TOTAL OPERATING EXPENSES WOULD BE .81% FOR CLASS A SHARES, 1.56% FOR
CLASS B SHARES, 1.56% FOR CLASS C SHARES, AND .56% FOR FIDUCIARY CLASS
SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 94
Class A (without fee waiver) $ 8 $ 26 $ 45 $100
Class B $ 65 $ 78 $102 $160
Class B (without fee waiver) $ 66 $ 79 $105 $165
Class C $ 25 $ 48 $ 82 $180
Class C (without fee waiver) $ 26 $ 49 $ 85 $186
Fiduciary Class $ 5 $ 16 $ 29 $ 64
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 70
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 94
Class A (without fee waiver) $ 8 $ 26 $ 45 $100
Class B $ 15 $ 48 $ 82 $160
Class B (without fee waiver) $ 16 $ 49 $ 85 $165
Class C $ 15 $ 48 $ 82 $180
Class C (without fee waiver) $ 16 $ 49 $ 85 $186
Fiduciary Class $ 5 $ 16 $ 29 $ 64
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 70
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
11
<PAGE>
MARQUIS TAX EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES RETAIL CLASS CASH SWEEP CLASS
<S> <C> <C>
Maximum Sales Load Imposed on Purchases None None
Maximum Sales Load Imposed on Reinvested Dividends None None
Maximum Contingent Deferred Sales Charge None None
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) .44% .44%
12b-1 Fees (after fee waivers) (1) .00% .60%
Other Expenses (after fee waivers) (1) .21% .21%
Total Operating Expenses (after fee waivers) (2) .65% 1.25%
</TABLE>
(1) THE ADVISOR AND ADMINISTRATOR HAVE VOLUNTARILY AGREED TO WAIVE THEIR
FEES AND THE DISTRIBUTOR HAS VOLUNTARILY AGREED TO WAIVE 12b-1 FEES TO
THE EXTENT NECESSARY TO KEEP "TOTAL OPERATING EXPENSES" FOR THE RETAIL
CLASS SHARES FROM EXCEEDING 0.65%. THE ADVISOR, ADMINISTRATOR AND THE
DISTRIBUTOR RESERVE THE RIGHT TO TERMINATE THEIR WAIVERS AT ANY TIME IN
THEIR SOLE DISCRETION. ABSENT SUCH WAIVERS, MANAGEMENT FEES WOULD BE
0.45%, OTHER EXPENSES WOULD BE 0.25% AND THE 12b-1 FEE FOR THE RETAIL
CLASS AND CASH SWEEP CLASS SHARES OF THE FUND WOULD BE 0.25% AND .75%,
RESPECTIVELY.
(2) ABSENT THE ADVISOR'S, ADMINISTRATOR'S AND THE DISTRIBUTOR'S VOLUNTARY
FEE WAIVERS, TOTAL OPERATING EXPENSES FOR RETAIL CLASS SHARES OF THE TAX
EXEMPT FUND WOULD BE 0.95% AND FOR CASH SWEEP CLASS SHARES WOULD BE
1.45%.
EXAMPLE
You would pay the following expenses on a $1,000 investment in the Fund
assuming (1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Retail Class $ 7 $21 $36 $ 81
Cash Sweep Class $13 $40 $69 $151
</TABLE>
12
<PAGE>
THE ONE GROUP MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS C CLASS
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) None 1.00% None
Redemption Fees None None None
Exchange Fees None None None
ANNUAL OPERATING EXPENSES(2)
(as a percentage of average daily
net assets)
Investment Advisory Fees (after fee
waiver)(3) .25% .25% .25%
12b-1 Fees(4) .25% 1.00% None
Other Expenses .25% .25% .25%
Total Fund Operating Expenses (after
fee waiver)(5) .75% 1.50% .50%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM REDEMPTION AMOUNTS PAID BY
WIRE.
(2) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(3) WITHOUT A FEE WAIVER, INVESTMENT ADVISORY FEES WOULD BE .35% FOR ALL
CLASSES OF SHARES.
(4) DUE TO 12b-1 FEES, LONG-TERM CLASS A AND CLASS C SHAREHOLDERS MAY PAY
MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED UNDER THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS.
(5) TOTAL OPERATING EXPENSES HAVE BEEN REVISED TO REFLECT FEE WAIVERS.
WITHOUT A VOLUNTARY REDUCTION OF INVESTMENT ADVISORY FEES, TOTAL
OPERATING EXPENSES WOULD BE .85% FOR CLASS A SHARES, 1.60% FOR CLASS C
SHARES AND .60% FOR FIDUCIARY CLASS SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 9 $ 27 $ 47 $105
Class C $ 25 $ 47 $ 82 $179
Class C (without fee waiver) $ 26 $ 50 $ 87 $190
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 19 $ 33 $ 75
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 9 $ 27 $ 47 $105
Class C $ 15 $ 47 $ 82 $179
Class C (without fee waiver) $ 16 $ 50 $ 87 $190
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 19 $ 33 $ 75
</TABLE>
13
<PAGE>
MARQUIS GOVERNMENT SECURITIES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) .51% .51%
12b-1 Fees None .75%
Other Expenses (after expense reimbursements) (1) .19% .19%
Total Operating Expenses (after fee waivers) (2) .70% 1.45%
</TABLE>
(1) THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE ITS FEE, AND THE
ADMINISTRATOR HAS VOLUNTARILY AGREED TO REIMBURSE OTHER EXPENSES, TO THE
EXTENT NECESSARY TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING .70%
FOR CLASS A SHARES AND 1.45% FOR CLASS B SHARES. ABSENT SUCH WAIVERS,
MANAGEMENT FEES WOULD BE .55%. ABSENT EXPENSE REIMBURSEMENTS, OTHER
EXPENSES WOULD BE .21%.
(2) ABSENT THE ADVISOR'S VOLUNTARY FEE WAIVER AND THE ADMINISTRATOR'S
VOLUNTARY FEE REIMBURSEMENT, TOTAL OPERATING EXPENSES FOR CLASS A SHARES
WOULD BE .76% AND FOR CLASS B SHARES WOULD BE 1.51%.
* A REDEMPTION CHARGE OF 1.00% WILL BE ASSESSED AGAINST THE PROCEEDS OF
ANY REDEMPTION REQUEST RELATING TO CLASS A SHARES OF THE FUNDS THAT WERE
PURCHASED WITHOUT A SALES CHARGE IN RELIANCE UPON THE WAIVER ACCORDED TO
PURCHASES IN THE AMOUNT OF $1 MILLION OR MORE, BUT ONLY WHERE SUCH
REDEMPTION REQUEST IS MADE WITHIN 1 YEAR OF THE DATE THE SHARES WERE
PURCHASED.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $42 $57 $73 $119
Class B $50 $66 $84 $125
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $42 $57 $73 $119
Class B $15 $46 $79 $125
</TABLE>
14
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original
purchase price or redemption proceeds,
as applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily
net assets)
Investment Advisory Fees (after fee
waiver) .45% .45% .45% .45%
12b-1 Fees (after fee waiver)(4) .25% .90% .90% None
Other Expenses .24% .24% .24% .24%
Total Fund Operating Expenses (after
fee waivers)(5) .94% 1.59% 1.59% .69%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM REDEMPTION AMOUNTS PAID BY
WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS.
WITHOUT THE VOLUNTARY WAIVER OF FEES, 12b-1 FEES WOULD BE .35% FOR
CLASS A SHARES AND 1.00% FOR CLASS B AND CLASS C SHARES.
(5) WITHOUT THE VOLUNTARY REDUCTION OF INVESTMENT ADVISORY AND 12b-1 FEES,
TOTAL OPERATING EXPENSES WOULD BE 1.04% FOR CLASS A SHARES, AND 1.69% FOR
CLASS B AND CLASS C SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $54 $74 $ 95 $155
Class A (without fee waivers) $55 $77 $100 $166
Class B $66 $80 $107 $172
Class B (without fee waivers) $67 $83 $112 $183
Class C $26 $50 $ 87 $189
Class C (without fee waivers) $27 $53 $ 92 $200
Fiduciary Class $ 7 $22 $ 38 $ 86
Fiduciary Class (without fee waiver) $ 7 $22 $ 38 $ 86
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $54 $74 $ 95 $155
Class A (without fee waivers) $55 $77 $100 $168
Class B $16 $50 $ 87 $172
Class B (without fee waivers) $17 $53 $ 92 $183
Class C $16 $50 $ 87 $189
Class C (without fee waivers) $17 $53 $ 92 $200
Fiduciary Class $ 7 $22 $ 38 $ 86
Fiduciary Class (without fee waiver) $ 7 $22 $ 38 $ 86
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
15
<PAGE>
MARQUIS STRATEGIC INCOME BOND FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) .31% .31%
12b-1 Fees None .75%
Other Expenses (after expense
reimbursements) (1) .59% .59%
Total Operating Expenses (after
fee waivers) (2) .90% 1.65%
</TABLE>
(1) THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE ITS FEE, AND THE
ADMINISTRATOR HAS VOLUNTARILY AGREED TO REIMBURSE OTHER EXPENSES, TO THE
EXTENT NECESSARY TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING .90%
FOR CLASS A SHARES AND 1.65% FOR CLASS B SHARES. ABSENT SUCH WAIVERS,
MANAGEMENT FEES WOULD BE .74%. ABSENT EXPENSE REIMBURSEMENTS, OTHER
EXPENSES WOULD BE .69%.
(2) ABSENT THE ADVISOR'S VOLUNTARY FEE WAIVER AND THE ADMINISTRATOR'S
VOLUNTARY FEE REIMBURSEMENT, TOTAL OPERATING EXPENSES FOR CLASS A SHARES
WOULD BE 1.43% AND FOR CLASS B SHARES WOULD BE 2.13%..
* A redemption charge of 1.00% will be assessed against the proceeds of
any redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $44 $63 N/A N/A
Class B $52 $72 N/A N/A
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $44 $63 N/A N/A
Class B $17 $52 N/A N/A
</TABLE>
16
<PAGE>
THE ONE GROUP INCOME BOND FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily net
assets)
Investment Advisory Fees (after fee
waiver)(4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver)(5) .25% .90% .90% None
Other Expenses .22% .22% .22% .22%
Total Fund Operating Expenses
(after fee waiver)(6) .87% 1.52% 1.52% .62%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM REDEMPTION AMOUNTS PAID BY
WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) WITHOUT THE FEE WAIVER, INVESTMENT ADVISORY FEES WOULD BE .60% FOR ALL
CLASSES OF SHARES.
(5) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS. WITHOUT THE VOLUNTARY WAIVER OF FEES, 12b-1 FEES WOULD BE .35%
FOR CLASS A SHARES AND 1.00% FOR CLASS B AND CLASS C SHARES.
(6) WITHOUT THE VOLUNTARY REDUCTION OF INVESTMENT ADVISORY AND 12b-1 FEES,
TOTAL OPERATING EXPENSES WOULD BE 1.17% FOR CLASS A SHARES, 1.82% FOR
CLASS B SHARES, 1.82% FOR CLASS C SHARES AND .82% FOR FIDUCIARY CLASS
SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $53 $72 $ 91 $147
Class A (without fee waivers) $56 $80 $106 $181
Class B $65 $78 $103 $164
Class B (without fee waivers) $68 $87 $119 $197
Class C $25 $48 $ 83 $181
Class C (without fee waivers) $28 $57 $ 99 $214
Fiduciary Class $ 6 $20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $26 $ 46 $101
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $53 $72 $ 91 $147
Class A (without fee waivers) $56 $80 $106 $181
Class B $15 $48 $ 83 $164
Class B (without fee waivers) $18 $57 $ 99 $197
Class C $15 $48 $ 83 $181
Class C (without fee waivers) $18 $57 $ 99 $214
Fiduciary Class $ 6 $20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $26 $ 46 $101
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
17
<PAGE>
MARQUIS LOUISIANA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees .35% .35%
12b-1 Fees None .75%
Other Expenses .30% .30%
Total Operating Expenses .65% 1.40%
</TABLE>
* A redemption charge of 1.00% will be assessed against the proceeds of
any redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $41 $55 $70 $113
Class B $49 $64 $82 $119
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $41 $55 $70 $113
Class B $14 $44 $77 $119
</TABLE>
18
<PAGE>
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original
purchase price or redemption
proceeds, as applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average
daily net assets)
Investment Advisory Fees (after fee waiver)(4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver)(5) .25% .90% .90% None
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses
(after fee waivers)(6) .97% 1.62% 1.62% .72%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM REDEMPTION AMOUNTS PAID BY
WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) WITHOUT THE FEE WAIVER, INVESTMENT ADVISORY FEES WOULD BE .60% FOR ALL
CLASSES OF SHARES.
(5) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS. WITHOUT THE VOLUNTARY WAIVER OF FEES, 12b-1 FEES WOULD BE .35%
FOR CLASS A SHARES AND 1.00% FOR CLASS B AND CLASS C SHARES.
(6) WITHOUT THE VOLUNTARY REDUCTION OF INVESTMENT ADVISORY AND 12b-1 FEES,
TOTAL OPERATING EXPENSES WOULD BE 1.27% FOR CLASS A SHARES, 1.92% FOR
CLASS B SHARES, 1.92% FOR CLASS C SHARES AND .92% FOR FIDUCIARY CLASS
SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $54 $75 $ 96 $159
Class A (without fee waivers) $57 $83 $112 $191
Class B $66 $81 $108 $175
Class B (without fee waivers) $69 $90 $124 $207
Class C $26 $51 $ 88 $192
Class C (without fee waivers) $29 $60 $104 $224
Fiduciary Class $ 7 $23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 9 $29 $ 51 $113
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $54 $75 $ 96 $159
Class A (without fee waivers) $57 $83 $112 $191
Class B $16 $51 $ 88 $175
Class B (without fee waivers) $19 $60 $104 $207
Class C $16 $51 $ 88 $192
Class C (without fee waivers) $19 $60 $104 $224
Fiduciary Class $ 7 $23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 9 $29 $ 51 $113
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
19
<PAGE>
MARQUIS BALANCED FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) .71% .71%
12b-1 Fees None .75%
Other Expenses (after expense reimbursements) (1) .19% .19%
Total Operating Expenses (after fee waivers) (2) .90% 1.65%
</TABLE>
(1) THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE ITS FEE, AND THE
ADMINISTRATOR HAS VOLUNTARILY AGREED TO REIMBURSE OTHER EXPENSES, TO THE
EXTENT NECESSARY TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING .90%
FOR CLASS A SHARES AND 1.65% FOR CLASS B SHARES. ABSENT SUCH WAIVERS,
MANAGEMENT FEES WOULD BE .74%. ABSENT EXPENSE REIMBURSEMENTS, OTHER
EXPENSES WOULD BE .22%.THE BALANCED FUND.
(2) ABSENT THE ADVISOR'S VOLUNTARY FEE WAIVER AND THE ADMINISTRATOR'S
VOLUNTARY FEE REIMBURSEMENT, TOTAL OPERATING EXPENSES FOR CLASS A SHARES
WOULD BE .96% AND FOR CLASS B SHARES WOULD BE 1.71%..
* A redemption charge of 1.00% will be assessed against the proceeds of
any redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $44 $63 $83 $142
Class B $52 $72 $95 $147
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $44 $63 $83 $142
Class B $17 $52 $90 $147
</TABLE>
(1) The Advisor has voluntarily agreed to waive its fee, and the
Administrator has voluntarily agreed to reimburse Other Expenses, to the
extent necessary to keep Total Operating Expenses from exceeding 1.65%
for the Balanced Fund.
(2) Absent the Advisor's voluntary fee waiver and the Administrator's
voluntary fee reimbursement, Total Operating Expenses for Class B shares
would be as follows: Balanced Fund - 1.71 %.
20
<PAGE>
THE ONE GROUP ASSET ALLOCATION
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original
purchase price or redemption proceeds,
as applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily
net assets)
Investment Advisory Fees (after fee
waiver)(4) .55% .55% .55% .55%
12b-1 Fees (after fee waiver)(5) .25% 1.00% 1.00% None
Other Expenses .40% .40% .40% .40%
Total Fund Operating Expenses
(after fee waivers)(6) 1.20% 1.95% 1.95% .95%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM THE REDEMPTION AMOUNTS PAID
BY WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) WITHOUT THE FEE WAIVER, INVESTMENT ADVISORY FEES WOULD BE .65% FOR ALL
CLASSES OF SHARES.
(5) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS. WITHOUT THE VOLUNTARY WAIVER, 12b-1 FEES WOULD BE .35% FOR
CLASS A SHARES.
(6) TOTAL OPERATING EXPENSES HAVE BEEN REVISED TO REFLECT FEE WAIVERS.
WITHOUT THE VOLUNTARY REDUCTION OF INVESTMENT ADVISORY AND 12b-1 FEES,
TOTAL OPERATING EXPENSES WOULD BE 1.40% FOR CLASS A SHARES, 2.05% FOR
CLASS B SHARES, 2.05% FOR CLASS C SHARES AND 1.05% FOR FIDUCIARY CLASS
SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 81 $108 $184
Class A (without fee waivers) $ 59 $ 87 $118 $205
Class B $ 70 $ 91 $125 $208
Class B (without fee waiver) $ 71 $ 94 $130 $221
Class C $ 30 $ 61 $105 $227
Class C (without fee waiver) $ 31 $ 64 $110 $238
Fiduciary Class $ 10 $ 30 $ 53 $117
Fiduciary Class (without fee waiver) $ 11 $ 33 $ 58 $128
</TABLE>
Assuming no redemption the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 81 $108 $184
Class A (without fee waivers) $ 59 $ 87 $118 $205
Class B $ 20 $ 61 $105 $208
Class B (without fee waiver) $ 21 $ 64 $110 $221
Class C $ 20 $ 61 $105 $227
Class C (without fee waiver) $ 21 $ 64 $110 $238
Fiduciary Class $ 10 $ 30 $ 53 $117
Fiduciary Class (without fee waiver) $ 11 $ 33 $ 58 $128
</TABLE>
/Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
21
<PAGE>
MARQUIS VALUE EQUITY FUND
<TABLE>
<CAPTION>
Shareholder Transaction Expenses CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) .74% .74%
12b-1 Fees None .75%
Other Expenses (after expense reimbursements) (1) .26% .26%
Total Operating Expenses (after fee waivers) (2) 1.00% 1.75%
</TABLE>
(1) THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE ITS FEE, AND THE
ADMINISTRATOR HAS VOLUNTARILY AGREED TO REIMBURSE OTHER EXPENSES, TO THE
EXTENT NECESSARY TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.00%
FOR CLASS A SHARES AND 1.75% FOR CLASS B SHARES. ABSENT EXPENSE
REIMBURSEMENTS, OTHER EXPENSES WOULD BE .26%.
(2) ABSENT THE ADVISOR'S VOLUNTARY FEE WAIVER AND THE ADMINISTRATOR'S
VOLUNTARY FEE REIMBURSEMENT, TOTAL OPERATING EXPENSES FOR CLASS A SHARES
WOULD BE 1.00% AND FOR CLASS B SHARES WOULD BE 1.75%.
* A redemption charge of 1.00% will be assessed against the proceeds of
any redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $45 $66 $ 88 $153
Class B $53 $75 $100 $159
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $45 $66 $ 88 $153
Class B $18 $55 $ 95 $159
</TABLE>
22
<PAGE>
THE ONE GROUP DISCIPLINED VALUE FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% None
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses
(after fee waiver)(5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM THE REDEMPTION AMOUNTS PAID
BY WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS. WITHOUT THE VOLUNTARY WAIVER, 12b-1 FEES WOULD BE .35% FOR
CLASS A SHARES.
(5) WITHOUT THE VOLUNTARY REDUCTION OF 12b-1 FEES, TOTAL OPERATING EXPENSES
WOULD BE 1.35% FOR CLASS A SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $111 $189
Class A (without fee waiver) $ 58 $ 86 $116 $200
Class B $ 70 $ 93 $128 $213
Class C $ 30 $ 63 $108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of the period, the dollar amounts in the above
example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $111 $189
Class A (without fee waiver) $ 58 $ 86 $116 $200
Class B $ 20 $ 63 $108 $213
Class C $ 20 $ 63 $108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
23
<PAGE>
MARQUIS GROWTH EQUITY FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) .72% .72%
12b-1 Fees None .75%
Other Expenses (after expense reimbursements) (1) .28% .28%
Total Operating Expenses (after fee waivers) (2) 1.00% 1.75%
</TABLE>
(1) THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE ITS FEE, AND THE
ADMINISTRATOR HAS VOLUNTARILY AGREED TO REIMBURSE OTHER EXPENSES, TO THE
EXTENT NECESSARY TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.00%
FOR CLASS A SHARES AND 1.75% FOR CLASS B SHARES. ABSENT SUCH WAIVERS,
MANAGEMENT FEES WOULD BE .74%. ABSENT EXPENSE REIMBURSEMENTS, OTHER
EXPENSES WOULD BE .30%.
(2) ABSENT THE ADVISOR'S VOLUNTARY FEE WAIVER AND THE ADMINISTRATOR'S
VOLUNTARY FEE REIMBURSEMENT, TOTAL OPERATING EXPENSES FOR CLASS A SHARES
WOULD BE 1.04% AND FOR CLASS B SHARES WOULD BE 1.79%.
* A redemption charge of 1.00% will be assessed against the proceeds of
any redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $45 $66 $ 88 $153
Class B $53 $75 $100 $159
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $45 $66 $ 88 $153
Class B $18 $55 $ 95 $159
</TABLE>
24
<PAGE>
THE ONE GROUP GROWTH OPPORTUNITIES FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% None
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses
(after fee waiver)(5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM THE REDEMPTION AMOUNTS PAID
BY WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS. WITHOUT THE VOLUNTARY WAIVER, 12b-1 FEES WOULD BE .35% FOR
CLASS A SHARES.
(5) WITHOUT THE VOLUNTARY REDUCTION OF 12b-1 FEES, TOTAL OPERATING EXPENSES
WOULD BE 1.35% FOR CLASS A SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $111 $189
Class A (without fee waiver) $ 58 $ 86 $116 $200
Class B $ 70 $ 93 $128 $213
Class C $ 30 $ 63 $108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of the period, the dollar amounts in the above
example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $111 $189
Class A (without fee waiver) $ 58 $ 86 $116 $200
Class B $ 20 $ 63 $108 $213
Class C $ 20 $ 63 $108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
25
<PAGE>
MARQUIS SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after fee waivers) (1) 1.19% 1.19%
12b-1 Fees None .75%
Other Expenses (after fee reimbursements) (1)(2) .11% .11%
Total Operating Expenses after fee waivers) (1)(3) 1.30% 2.05%
</TABLE>
(1) MANAGEMENT FEES INCLUDE FEES AT THE "MASTER" LEVEL OF 1.00% AND FEES AT
THE "FEEDER" LEVEL OF .19%. THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE
ITS FEE, AND THE ADMINISTRATOR HAS VOLUNTARILY AGREED TO REIMBURSE OTHER
EXPENSES, TO THE EXTENT NECESSARY TO KEEP THE TOTAL OPERATING EXPENSES
AT THE FEEDER LEVEL FROM EXCEEDING .20%. ABSENT SUCH WAIVER, MANAGEMENT
FEES AT THE FEEDER LEVEL WOULD BE .40%. ABSENT SUCH REIMBURSEMENTS,
OTHER EXPENSES AT THE FEEDER LEVEL WOULD BE 2.46%.
(2) OTHER EXPENSES INCLUDE EXPENSES AT THE "MASTER" LEVEL OF .10%, AND
EXPENSES AT THE "FEEDER" LEVEL OF .01%. THE DISTRIBUTOR HAS WAIVED, ON
A VOLUNTARY BASIS, ALL OR A PORTION OF ITS SHAREHOLDER SERVICING FEE AT
THE MASTER LEVEL WITH RESPECT TO THE PORTFOLIOS, AND THE OTHER EXPENSES
SHOWN REFLECT THIS WAIVER. ABSENT SUCH WAIVERS, OTHER EXPENSES AT THE
MASTER LEVEL WOULD BE .32%.
(3) ABSENT THE MASTER FUND ADVISOR'S VOLUNTARY FEE WAIVERS, THE ADVISOR'S
VOLUNTARY FEE WAIVERS AND THE ADMINISTRATOR'S VOLUNTARY REIMBURSEMENTS,
TOTAL OPERATING EXPENSES WOULD BE 4.18% FOR CLASS A SHARES AND 4.93% FOR
CLASS B SHARES.
The Trustees believe that, because of the resultant economies of scale and
associated decreased expenses, the aggregate per share expenses of both the
Small Cap Equity Fund and International Equity Fund together with those of the
corresponding Portfolio will be approximately equal to the expenses the
respective Fund would incur if it invested directly in securities in which the
corresponding Portfolio invests.
* A redemption charge of 1.00% will be assessed against the proceeds of
any redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $48 $75 N/A N/A
Class B $56 $84 N/A N/A
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $48 $75 N/A N/A
Class B $21 $64 N/A N/A
</TABLE>
26
<PAGE>
THE ONE GROUP SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% None
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses
(after fee waiver)(5) 1.31% 2.06% 2.06% 1.06%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM REDEMPTION AMOUNTS PAID BY
WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS. WITHOUT THE VOLUNTARY WAIVER, 12b-1 FEES WOULD BE .35% FOR
CLASS A SHARES.
(5) WITHOUT THE VOLUNTARY REDUCTION OF 12b-1 FEES, TOTAL OPERATING EXPENSES
WOULD BE 1.41% FOR CLASS A SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 58 $ 85 $114 $196
Class A (without fee waiver) $ 59 $ 88 $119 $206
Class B $ 71 $ 95 $131 $220
Class C $ 31 $ 65 $111 $239
Fiduciary Class $ 11 $ 34 $ 58 $129
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 58 $ 85 $114 $196
Class A (without fee waiver) $ 59 $ 88 $119 $206
Class B $ 21 $ 65 $111 $220
Class C $ 21 $ 65 $111 $239
Fiduciary Class $ 11 $ 34 $ 58 $129
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
27
<PAGE>
MARQUIS INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3.50% None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
*Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None 3.50%
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fees (after fee waivers) (1) 1.05% 1.05%
12b-1 Fees None .75%
Other Expenses (after fee reimbursements) (1)(2) .50% .50%
Total Operating Expenses after fee waivers) (1)(3) 1.55% 2.30%
</TABLE>
(1) MANAGEMENT FEES INCLUDE FEES AT THE "MASTER" LEVEL OF .86%, AND FEES AT
THE "FEEDER" LEVEL OF .19%. THE ADVISOR HAS VOLUNTARILY AGREED TO WAIVE
ITS FEE, AND THE ADMINISTRATOR HAS VOLUNTARILY AGREED TO REIMBURSE OTHER
EXPENSES, TO THE EXTENT NECESSARY TO KEEP THE TOTAL OPERATING EXPENSES
AT THE FEEDER LEVEL FROM EXCEEDING .27%. ABSENT SUCH WAIVER, MANAGEMENT
FEES AT THE FEEDER LEVEL WOULD BE .40%. ABSENT SUCH REIMBURSEMENTS,
OTHER EXPENSES AT THE FEEDER LEVEL WOULD BE 1.81 %. ABSENT THE MASTER
FUND ADVISOR'S VOLUNTARY FEE WAIVERS, MANAGEMENT FEES AT THE MASTER
LEVEL WOULD BE .96%.
(2) OTHER EXPENSES INCLUDE EXPENSES AT THE "MASTER" LEVEL OF .42% AND
EXPENSES AT THE "FEEDER" LEVEL OF .08%. THE DISTRIBUTOR HAS WAIVED, ON
A VOLUNTARY BASIS, ALL OR A PORTION OF ITS SHAREHOLDER SERVICING FEE AT
THE MASTER LEVEL WITH RESPECT TO THE PORTFOLIOS, AND THE OTHER EXPENSES
SHOWN REFLECT THIS WAIVER. THE DISTRIBUTOR RESERVES THE RIGHT TO
TERMINATE ITS WAIVER AT ANY TIME IN ITS SOLE DISCRETION. ABSENT SUCH
WAIVERS, OTHER EXPENSES AT THE MASTER LEVEL WOULD BE .42%.
(3) ABSENT THE MASTER FUND ADVISOR'S VOLUNTARY FEE WAIVERS, THE ADVISOR'S
VOLUNTARY FEE WAIVERS AND THE ADMINISTRATOR'S VOLUNTARY REIMBURSEMENTS,
TOTAL OPERATING EXPENSES WOULD BE 3.59% FOR CLASS A SHARES AND 4.34% FOR
CLASS B SHARES.
The Trustees believe that, because of the resultant economies of scale and
associated decreased expenses, the aggregate per share expenses of both the
Small Cap Equity Fund and International Equity Fund together with those of the
corresponding Portfolio will be approximately equal to the expenses the
respective Fund would incur if it invested directly in securities in which the
corresponding Portfolio invests.
* A redemption charge of 1.00% will be assessed against the proceeds of
any redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $50 $82 N/A N/A
Class B $58 $92 N/A N/A
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $50 $82 N/A N/A
Class B $23 $72 N/A N/A
</TABLE>
28
<PAGE>
THE ONE GROUP INTERNATIONAL EQUITY INDEX FUND
<TABLE>
<CAPTION>
FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS B CLASS C CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) None(2) 5.00% 1.00% None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES(3)
(as a percentage of average daily net assets)
Investment Advisory Fees .55% .55% .55% .55%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% None
Other Expenses .41% .41% .41% .41%
Total Fund Operating Expenses
(after fee waiver)(5) 1.21% 1.96% 1.96% .96%
</TABLE>
(1) IF YOU BUY OR SELL SHARES THROUGH A SHAREHOLDER SERVICING AGENT, YOU MAY
BE CHARGED SEPARATE TRANSACTION FEES BY THE SHAREHOLDER SERVICING AGENT.
IN ADDITION, A $7.00 CHARGE IS DEDUCTED FROM THE REDEMPTION AMOUNTS PAID
BY WIRE.
(2) EXCEPT FOR PURCHASES OF $1 MILLION OR MORE. PLEASE SEE "SALES CHARGES."
(3) EXPENSE INFORMATION HAS BEEN RESTATED TO REFLECT CURRENT FEES.
(4) DUE TO 12b-1 FEES, LONG-TERM CLASS A, CLASS B AND CLASS C SHAREHOLDERS
MAY PAY MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS. WITHOUT THE VOLUNTARY WAIVER, 12b-1 FEES WOULD BE .35% FOR
CLASS A SHARES.
(5) WITHOUT THE VOLUNTARY REDUCTION OF 12b-1 FEES, TOTAL OPERATING EXPENSES
WOULD BE 1.31% FOR CLASS A SHARES.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and
(3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 82 $109 $185
Class A (without fee waiver) $ 58 $ 85 $114 $196
Class B $ 70 $ 92 $126 $209
Class C $ 30 $ 62 $106 $229
Fiduciary Class $ 10 $ 31 $ 53 $118
</TABLE>
Assuming no redemption at the end of the period, the dollar amounts in the above
example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 82 $109 $185
Class A (without fee waiver) $ 58 $ 85 $114 $196
Class B $ 20 $ 62 $106 $209
Class C $ 20 $ 62 $106 $229
Fiduciary Class $ 10 $ 31 $ 53 $118
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
THE EXAMPLES SHOWN ON PAGES _____ ARE DESIGNED TO ASSIST YOU IN UNDERSTANDING
THE VARIOUS COSTS AND EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY PAID BY
INVESTORS IN A FUND. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
29
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES
This section will help you compare the investment objective and policies of
each Marquis Fund with that of the corresponding One Group Fund. Please be
aware that this is only a brief discussion. More complete information can be
found in The One Group and Marquis Funds prospectuses which you received along
with this Combined Prospectus/Proxy Statement.
Each Marquis Fund and its corresponding One Group Fund pursue similar
investment objectives and hold substantially similar securities, either directly
or through a "master/feeder" arrangement. As a result, the proposed
reorganization of Marquis Funds will not result in significant portfolio
turnover or transaction expenses due to The One Group's disposal of incompatible
securities. Banc One Investment Advisors Corporation ("Banc One Investment
Advisors") serves as investment advisor to both Marquis Funds and The One Group.
MARQUIS INSTITUTIONAL AND ONE GROUP TREASURY ONLY
Marquis Institutional seeks to preserve principal value and maintain a high
degree of liquidity while providing current income by investing exclusively in
obligations issued by the U.S. Treasury and in repurchase agreements involving
such obligations.
Similarly, One Group Treasury Only seeks high current income with liquidity
and stability of principal. However, One Group Treasury Only does not purchase
securities that are subject to repurchase agreements.
Each Fund seeks to maintain a stable net asset value of $1.00 per share,
although there is no assurance that the Funds will be able to achieve this
objective. In addition, each Fund's portfolio securities are valued under the
amortized cost method in compliance with regulations of the SEC. Consequently,
both Marquis Institutional and One Group Treasury Only invest only in U.S.
dollar-denominated securities, maintain an average maturity on a dollar-weighted
basis of 90 days or less, and acquire only "eligible securities" that present
minimal credit risk and have a maturity of 397 days or less. Each Fund is
offered exclusively to institutional investors.
MARQUIS TREASURY SECURITIES AND ONE GROUP TREASURY SECURITIES
Marquis Treasury Securities seeks to preserve principal value and maintain
a high degree of liquidity while providing current income by investing
exclusively in obligations issued by the U.S. Treasury and in repurchase
agreements involving such obligations.
The investment objective of One Group Treasury Securities is to seek
current income with liquidity and stability of principal. The Fund will invest
exclusively in short-term U.S. Treasury obligations, including repurchase
agreements collateralized by such obligations.
Each Fund seeks to maintain a stable net asset value of $1.00 per share,
although there is no assurance that the Funds will be able to achieve this
objective. In addition, each Fund's portfolio securities are valued under the
amortized cost method in compliance with regulations of the SEC. Consequently,
both Marquis Institutional and One Group Treasury Only invest only in U.S.
dollar-denominated securities, maintain an average maturity on a dollar-weighted
basis of 90 days or less, and acquire only "eligible securities" that present
minimal credit risk and have a maturity of 397 days or less.
MARQUIS TAX-EXEMPT AND ONE GROUP MUNICIPAL
Marquis Tax-Exempt seeks to preserve principal value and maintain a high
degree of liquidity while providing current income exempt from Federal income
taxes by investing, under normal market conditions, at least 80% of its net
assets in eligible securities issued by or on behalf of the states, territories,
and possessions of the United States and the District of Columbia and their
political subdivisions, agencies, and instrumentalities, the interest on which
is exempt from Federal income tax. At least 80% of the Fund's assets will be
invested in municipal securities the interest on which is
30
<PAGE>
not treated as a preference item for purposes of the federal alternative minimum
tax. Marquis Tax-Exempt may invest up to 20% of its net assets in the aggregate
in taxable money market instruments.
Likewise, One Group Municipal seeks as high a level of current interest
income exempt from Federal income tax as is consistent with capital preservation
and stability of principal. As a matter of fundamental policy, One Group
Municipal invests at least 80% of its total assets in municipal securities.
These are securities issued by or on behalf of the states, territories, and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies, and instrumentalities, the interest on which
is exempt from Federal income tax. These municipal securities produce interest
that, in the opinion of bond counsel for the issuer, is exempt from Federal
income tax. However, the Fund may invest as much as 100% of its assets in
municipal securities that produce income that is subject to the Federal
alternative minimum tax. If you are subject to the Federal alternative minimum
tax, please read the section of The One Group Municipal Money Market Fund
prospectus entitled "Tax Treatment of Shareholders". The Fund also may invest
up to 20% of its total assets in other types of securities, such as taxable
money market instruments, including repurchase agreements.
MARQUIS GOVERNMENT AND ONE GROUP GOVERNMENT
Marquis Government seeks current income consistent with relative stability
of capital by investing primarily in U.S. Government securities. Under normal
conditions, at least 65% of the Fund's total assets will be invested in
obligations issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities. The Fund normally will
maintain a dollar-weighted average portfolio maturity of three to ten years,
however, under certain circumstances this average weighted maturity may fall
below three years.
One Group Government seeks a high level of current income with liquidity
and safety of principal. The Fund limits its investments to securities issued
by the U.S. Government and its agencies and instrumentalities or related to
securities issued by the U.S. Government and its agencies and instrumentalities.
At least 65% of the Fund's total assets will be invested in debt instruments
with principal and interest guaranteed by the U.S. Government or its agencies
and instrumentalities, some of which may be subject to repurchase agreements,
and other securities representing an interest in or secured by mortgages that
are issued or guaranteed by certain U.S. government agencies or
instrumentalities. The Fund's average weighted remaining maturity will
ordinarily range between three and fifteen years, taking into account expected
prepayment of principal on certain investments. However, the Fund's average
weighted remaining maturity may be outside this range if warranted by market
conditions.
MARQUIS STRATEGIC AND ONE GROUP INCOME
Marquis Strategic seeks to provide current income by investing primarily in
investment grade fixed income securities. Under normal conditions, the Fund
will invest at least 65% of its net assets in investment grade fixed income
securities. The Fund generally emphasizes U.S. Government securities and
investment grade debt securities of U.S. issuers. Marquis Strategic also may
purchase obligations issued by the Canadian government. Normally, the Fund
will maintain a dollar-weighted average portfolio maturity of greater than ten
years; however, under certain circumstances, this average maturity may fall
below ten years.
One Group Income seeks a high level of current income by investing
primarily in a diversified portfolio of high, medium and low grade debt
securities. The Fund invests at least 70% of its total assets in debt
securities of all types rated as investment grade at the time of investment or,
if unrated, determined to be of comparable quality by Banc One Investment
Advisors. In addition, up to 30% of the Fund's total assets may be invested in
convertible securities, preferred stock, loan participations and debt securities
rated below investment grade or, if unrated, determined by Banc One Investment
Advisors to be of comparable quality. Securities rated below investment grade
are called "high yield bonds," "non-investment grade bonds" and "junk bonds".
Securities rated below investment grade are considered to be speculative and
high risk. Even though it may invest in debt securities in all rating
categories, the Fund will not invest more than 20% of its total assets in
securities rated below the fifth rating category. Marquis Strategic Income only
invests in investment grade securities, which are securities rated in the top
four ratng categories. The Fund's average
31
<PAGE>
weighted maturity will normally range between five and twenty years, although
the Fund may shorten its weighted average maturity to as little as two years if
deemed appropriate for temporary defensive purposes. As a matter of fundamental
policy, at least 65% of the Fund's total assets will consist of bonds.
MARQUIS LOUISIANA AND ONE GROUP LOUISIANA
The investment objective of Marquis Louisiana is to provide a level of
current income consistent with relative stability of capital. The Fund invests
at least 80% of its net assets in investment grade fixed income securities, the
interest on which is exempt from federal income tax and is not a preference item
for purposes of the alternative minimum tax. Under normal conditions, at least
65% of the Fund's total assets will be invested in municipal securities the
interest on which is exempt from Louisiana personal income tax. The Fund may
invest up to 20% of its total assets in municipal securities that are subject to
the alternative minimum tax and other taxable investments, including money
market securities. Normally, the Fund will maintain a dollar-weighted average
portfolio maturity of seven to fifteen years; however, under certain
circumstances this average weighted maturity may fall below seven years. The
Fund is non-diversified.
Similarly, One Group Louisiana is a non-diversified fund that seeks current
income both consistent with preservation of capital and exempt from both Federal
income tax and Louisiana personal income tax. As a matter of fundamental policy
at least 80% of the Fund's net assets will consist of investment grade municipal
securities issued by or on behalf of the State of Louisiana and its political
subdivisions, agencies and instrumentalities, the interests on which is exempt
from both Federal income tax and Louisiana personal income tax. Unlike Marquis
Louisiana, One Group Louisiana may hold up to 100% of its assets in municipal
securities the interest on which is subject to Federal alternative minimum tax.
The Fund may hold up to 20% of its total assets in cash or cash equivalents,
municipal securities of other states, U.S. Government securities and short-term
taxable investments. The Fund's average weighted maturity normally will be
between five and twenty years, although the Fund may invest in securities of any
maturity.
Shareholders of One Group Louisiana who are subject to the Federal
alternative minimum tax may have all or a portion of their income from the Fund
subject to Federal income tax. If you are subject to the Federal alternative
minimum tax, please read the section in the One Group Louisiana Municipal Bond
Fund prospectus entitled "Tax Treatment of Shareholders." In addition,
corporate shareholders of both Marquis Louisiana and One Group Louisiana will be
required to take the interest on municipal securities into account in
determining their alternative minimum taxable income.
MARQUIS BALANCED AND ONE GROUP ASSET ALLOCATION
Marquis Balanced seeks to provide capital appreciation and current income
through the regular payment of dividends and interest by investing in a
combination of equity, fixed income and money market instruments. Under normal
conditions, the Fund will invest between 30% and 75% of its total assets in
equity securities, including common and preferred stock and between 25% and 75%
of its total assets in fixed income securities. At least 25% of the Fund's
assets will be in fixed income senior securities. The Fund may invest in
equity securities of foreign issuers traded in the United States, including
American Depositary Receipts. The Fund also may invest in money market
securities.
Likewise, One Group Asset Allocation seeks to provide total return while
preserving capital by investing in a combination of stocks, fixed income
securities and money market instruments. The Fund normally will invest between
40% and 75% of its total assets in all types of equity securities, including the
stock of both large and small capitalization companies, as well as growth and
value securities. Up to 20% of the equities held by the Fund may be foreign
securities, including American Depositary Receipts. Between 25% and 60% of the
Fund's total assets will be invested in fixed income securities, including
bonds, notes, and other debt securities. The balance of the Fund's total assets
will be invested in money market instruments.
Banc One Investment Advisors will regularly review a Fund's asset
allocations and vary them over time to favor investments which they believe will
provide the most favorable total return. In making asset allocation decisions,
Banc
32
<PAGE>
One Investment Advisors will evaluate projections of risk, market and economic
conditions, volatility, yields and expected return. Because One Group Asset
Allocation seeks total return over the long term, Banc One Investment Advisors
will not attempt to time the market. Rather, asset allocation shifts will be
made gradually over time.
MARQUIS VALUE AND ONE GROUP VALUE
Marquis Value seeks to provide long-term capital appreciation by investing
primarily in equity securities which have a low current valuation relative to
various measures of intrinsic value. The Fund invests primarily in equity
securities of established companies with equity market capitalizations in excess
of $300 million which Banc One Investment Advisors believes to have potential
for capital appreciation. Banc One Investment Advisors selects companies based
on the soundness of the issuer and an analysis of various fundamental financial
characteristics, including earnings yield, book value, cash flow, anticipated
future growth of dividends and earnings estimates.
Although capital appreciation is the primary purpose for investing in a
security, Marquis Value will focus on companies that pay current dividends.
The Fund invests at least 65% of its total assets in common stocks, debt
securities convertible to common stock, warrants and preferred stocks. A
portion of the Fund's assets will be held in cash equivalents.
One Group Value seeks capital appreciation with the secondary goal of
achieving current income by investing primarily in equity securities. The Fund
invests primarily in the equity securities of companies with below-market
average price-to-earnings and price-to-book value ratios. The Fund considers the
issuer's soundness and earnings prospects. If Banc One Investment Advisors
determines that a company's fundamentals are declining or that the company's
ability to pay dividends has been impaired, it likely will eliminate the Fund's
holding of the company's stock. The Fund normally invests at least 80% of its
total assets in equity securities, including common stocks, debt securities, and
preferred stocks that are convertible into common stocks. A portion of the
Fund's assets will be held in cash equivalents.
MARQUIS GROWTH AND ONE GROUP GROWTH
Marquis Growth seeks to provide long-term capital appreciation by investing
primarily in companies whose sales and earnings are expected to grow at an above
average rate. The Fund invests primarily in equity securities of established
companies with equity market capitalizations in excess of $300 million which
Banc One Investment Advisors believes to have potential for long-term capital
appreciation and growth. Banc One Investment Advisors initiates purchase and
sale decisions based on such growth and profitability measures as return on
equity, earnings growth, sales growth, and expected return.
Capital appreciation is the primary purpose of Marquis Growth. Current
dividend income is a secondary consideration. The Fund invests at least 65% of
its total assets in common stocks, warrants, rights to purchase common stocks,
debt securities convertible to common stock, and preferred stocks. A portion of
the Fund's assets will be held in cash equivalents.
One Group Growth seeks growth of capital and secondarily, current income,
by investing primarily in equity securities. The Fund invests in securities
that have the potential to produce above-average growth per share over a
one-to-three year period. Typically, the Fund acquires shares of established
companies with a history of above-average growth, as well as those companies
expected to enter periods of above average growth. Not all the securities
purchased by the Fund will pay dividends. The Fund also invests in smaller
companies in emerging growth industries.
One Group Growth normally invests at least 80% of its total assets in
equity securities, including common stocks and debt securities and preferred
stocks that are convertible to common stock. A portion of the Fund's assets
will be held in cash equivalents.
MARQUIS SMALL CAP AND ONE GROUP SMALL CAP
33
<PAGE>
Marquis Small Cap seeks to provide long-term capital appreciation by
investing up to 100% of its assets in the Small Cap Growth Portfolio of SEI
Institutional Managed Trust ("Portfolio"), which in turn invests at least 65% of
its total assets in equity securities of smaller growth companies (i.e.,
companies with equity market capitalization of less than $1 billion at the time
of purchase) which, in the opinion of the Portfolio's sub-advisors, are in an
early stage or transitional point in their development and have demonstrated or
have the potential for above average growth. Any remaining assets may be
invested in the equity securities of more established companies that the
sub-advisors believe may offer strong capital appreciation due to their relative
market position, anticipated growth, changes in management or other similar
opportunities. Equity securities include common stocks, preferred stocks,
convertible securities, warrants and rights to subscribe to common stocks.
One Group Small Cap seeks long-term capital growth primarily by investing
directly in a portfolio of equity securities of small capitalization and
emerging growth companies. The Fund invests primarily in common stocks, debt
securities, preferred stocks, convertible securities, warrants, and other equity
securities of small capitalization companies. Generally, Banc One Investment
Advisors selects a portfolio of companies with a market capitalization
equivalent to the median market capitalization of the S&P Small-Cap 600 Index,
although the Fund may occasionally hold securities of companies with larger
capitalizations if doing so contributes to the Fund's investment objective. The
Fund invests at least 65% of its total assets in the securities described above.
Up to 35% of its total assets may be invested in U.S. Government Securities,
other investment grade fixed income securities, cash, and cash equivalents.
MARQUIS INTERNATIONAL AND ONE GROUP INTERNATIONAL INDEX
Marquis International seeks to provide long-term capital appreciation by
investing up to 100% of its assets in the International Equity Portfolio of SEI
Investment Trust ("Portfolio"), which in turn invests at least 65% of its assets
in equity securities of at least three countries other than the United States.
Securities of non-U.S. issuers purchased by the Portfolio will typically be
listed on recognized foreign exchanges but also may be purchased
over-the-counter, or in the form of sponsored or unsponsored depositary
receipts. The Portfolio expects its investments to emphasize large,
intermediate and small capitalization companies. The Portfolio expects to be
fully invested in its primary investments, but may invest up to 35% of its total
assets in U.S. or non-U.S. cash reserves, money market instruments, swaps,
options, and futures contracts.
Unlike Marquis International, One Group International Index is an index
fund. This means that it is not actively managed. Rather, One Group
International Index seeks to provide investment results that correspond to the
aggregate price and dividend performance of the securities on the MSCI EAFE GDP
Index. The Fund attempts to track the capital performance and dividend income
of the Index by investing in a representative portion of the stocks which match
as closely as possible the characteristics of the stocks which comprise the
Index. The Fund also will invest in stock index futures. The Fund will attempt
to achieve a correlation between the performance of its portfolio and that of
the MSCI EAFE GDP Index of at least 0.90, without taking into account expenses.
Perfect correlation would be 1.00.
One Group International Index normally invests at least 65% of its total
assets directly in foreign equity securities, consisting of common stocks
(including American Depositary Receipts) and preferred stocks, securities
convertible to common stock (provided they are traded on an exchange or
over-the-counter), warrants and receipts. No more than 10% of the Fund's assets
will be held in cash or cash equivalents. The Fund may invest up to 10% of its
net assets in securities of emerging international markets such as Mexico, Chile
and Brazil, either directly through local exchanges, through publicly traded
closed-end country funds, or through "passive foreign investment companies." A
substantial portion of the Fund's assets will be denominated in foreign
currencies.
COMPARISON OF INVESTMENT POLICIES
Both the Marquis Funds and The One Group Funds have adopted certain
FUNDAMENTAL investment policies. This means that they cannot be changed without
the consent of a majority of the outstanding shares of each Marquis Fund and
34
<PAGE>
each One Group Fund. Substantially all of the fundamental investment policies
of each Marquis Fund and each One Group Fund are identical, with the exception
of Marquis International and One Group International Index. The following
percentages apply at the time of purchase of a security.
EQUITY FUNDS AND TAXABLE BOND FUNDS
As a matter of fundamental policy, Marquis Government, Marquis Strategic
Income, Marquis Balanced, Marquis Value, Marquis Growth, Marquis Small Cap,
Marquis International, One Group Government, One Group Income, One Group Asset
Allocation, One Group Disciplined, One Group Small Cap, One Group Growth and One
Group International Index may not:
1. Purchase an issuer's securities if as a result more than 5% of its total
assets would be invested in the securities of that issuer or the Fund would
own more than 10% of the outstanding voting securities of that issuer.
This does not include securities issued or guaranteed by the United States,
its agencies or instrumentalities, and repurchase agreements involving
these securities. This restriction applies with respect to 75% of a Fund's
total assets. For purposes of these limitations, a security is considered
to be issued by the government entity whose assets and revenues guarantee
or back the security. With respect to private activity bonds or industrial
development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total assets
of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in the
obligations issued or guaranteed by the U.S. government or its agencies and
instrumentalities and repurchase agreements involving such securities. For
the Marquis Funds, this limitation does not apply to tax exempt securities
issued by governments or political subdivisions of governments. For
purposes of this limitation (i) utilities will be divided according to
their services (for example, gas, gas transmission, electric and telephone
will each be considered a separate industry); and (ii) wholly-owned finance
companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents. For the Marquis Funds, (i) supranational entities will be
considered to be a separate industry and (ii) asset-backed securities
secured by distinct types of assets, such as truck and auto loan leases,
credit card receivables and home equity loans, will each be considered a
separate industry.
3. Make loans, except that a Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending.
TAX-EXEMPT AND MUNICIPAL BOND FUNDS
Marquis Louisiana and One Group Louisiana will not:
1. Purchase securities of any issuer (except securities issued or guaranteed
by the United States, its agencies or instrumentalities, and, if consistent
with a Fund's investment objective and policies, repurchase agreements
involving such securities) if as a result more than 25% of the total assets
of a Fund would be invested in the securities of such issuer. This
restriction applies to 50% of a Fund's assets. With respect to the
remaining 50% of its total assets, a Fund may not purchase the securities
of any issuer if as a result more than 5% of the total assets of the Fund
would be invested in the securities of such Issuer. For purposes of these
limitations, a security is considered to be issued by the government entity
whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the
assets and revenues of a non-governmental user, such user would be
considered the issuer.
2. Purchase any securities that would cause more than 25% of the total assets
of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply (I) to investments in the
obligations issued or guaranteed by the
35
<PAGE>
U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities, and (ii) to tax exempt securities
issued by governments or political subdivisions of governments. For
purposes of this limitation (I) utilities will be divided according to
their services (for example, gas, gas transmission, electric and telephone
will each be considered a separate industry); and (ii) wholly-owned finance
companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents. For the Marquis Funds, (I) supranational entities will be
considered to be a separate industry and (ii) asset-backed securities
secured by distinct types of assets, such as truck and auto loan leases,
credit card receivables and home equity loans, will each be considered a
separate industry.
3. Make loans, except that a Fund may (I) purchase or hold debt instruments
in accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending.
MONEY MARKET FUNDS
Marquis Treasury Securities, Marquis Tax-Exempt, One Group Treasury
Securities, and One Group Municipal will use their best efforts to maintain a
constant net asset value of $1.00 per share, although there is no guarantee that
the Funds will be able to do so. In addition, none of the Funds will:
1. Purchase securities of any issuer (except securities issued or guaranteed
by the United States, its agencies or instrumentalities, and, if consistent
with the Fund's investment objective and policies, repurchase agreements
involving such securities) if as a result more than 5% of the total assets
of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such
issuer, provided, however, that a Fund may invest up to 25% of its total
assets without regard to this restriction as permitted by applicable law.
For purposes of these limitations, a security is considered to be issued by
the government entity whose assets and revenues guarantee or back the
security. With respect to private activity bonds or industrial development
bonds backed only by the assets and revenues of a nongovernmental user,
such user would be considered the issuer. This restriction applies with
respect to 75% of the total assets of Marquis Tax-Exempt, One Group
Treasury Securities, and One Group Municipal.
2. Purchase any securities that would cause more than 25% of the total assets
of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply (I) to investments in the
obligations issued or guaranteed by the U.S. government or its agencies and
instrumentalities and repurchase agreements involving such securities, and
(ii) to tax exempt securities issued by governments or political
subdivisions of governments. For purposes of this limitation (I) utilities
will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be
in the industries of their parents if their activities are primarily
related to financing the activities of their parents.
3. Make loans, except that a Fund may (I) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending. Marquis
Treasury Securities may not engage in securities lending.
One Group Treasury Securities will invest only in U.S. Treasury obligations
and repurchase agreements collateralized by such obligations.
INSTITUTIONAL MONEY MARKET FUNDS
Marquis Institutional and One Group Treasury Only will use their best
efforts to maintain a constant net asset value of $1.00 per share, although
there is no guarantee that the Funds will be able to do so. In addition,
neither of the Funds will:
36
<PAGE>
1. Purchase securities of any issuer (except securities issued or guaranteed
by the United States, its agencies or instrumentalities and, if consistent
with such Fund's investment objective and policies, repurchase agreements
involving such securities) if as a result more than 5% of the total assets
of the Fund would be invested in the securities of such issuer or the Fund
would own more than 10% of the outstanding voting securities of such
issuer; provided, however, that a Fund may invest up to 25% of its total
assets without regard to this restriction as permitted by applicable law.
For purposes of these limitations, a security is considered to be issued by
the government entity whose assets and revenues guarantee or back the
security. With respect to private activity bonds or industrial development
bonds backed only by the assets and revenues of a non-governmental user,
such user would be considered the issuer.
2. Make loans, except that a Fund may (I) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements (except for One Group Treasury Only); and (iii)
engage in securities lending.
Marquis Institutional will not:
1. Purchase any securities that would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in the
obligations issued or guaranteed by the U.S. government or its agencies and
instrumentalities and repurchase agreements involving such securities,
In addition, One Group Treasury Only:
1. Will not purchase securities while borrowings (including reverse repurchase
agreements) exceed 5% of the respective Fund's assets.
2. Will not borrow money or issue senior securities, except that the Funds may
borrow from banks for temporary purposes in amounts not exceeding 10% of
their total assets at the time of the borrowing.
3. Will not mortgage, pledge or hypothecate any assets, except in connection
with borrowing specified in 2 above and in amounts not in excess of the
lesser of the dollar amount borrowed or 10% of the value of the respective
Fund's total assets at the time of its borrowing.
4. Will not purchase securities other than U.S. Treasury bills, notes and
other U.S. obligations issued or guaranteed by the U.S. Treasury.
5. Will not invest in any securities subject to repurchase agreements.
INVESTMENT POLICIES FOR ALL FUNDS
None of the Marquis Funds or the One Group Funds may:
1. Purchase securities on margin, sell securities short, or participate in a
joint or joint and several basis in any securities trading account, except,
the Marquis Funds and One Group Louisiana, may obtain short-term credits as
necessary for clearance of purchases of portfolio securities.
2. Underwrite the securities of other issuers except to the extent that a Fund
may be deemed to be an underwriter under certain securities laws in the
disposition of "restricted securities."
3. Purchase or sell commodities or commodity contracts (including futures
contracts), except that for bona fide hedging and other permissible
purposes: (I) Marquis Funds and One Group Funds (except Marquis
Institutional, Marquis Treasury Securities, Marquis Tax-Exempt, One Group
Treasury Only, One Group
37
<PAGE>
Treasury Securities and One Group Municipal) may purchase or sell financial
futures contracts and may purchase call or put options on financial futures
contracts, and (ii) One Group International Index may purchase or sell
foreign currency futures contracts and foreign currency forward contacts,
and may purchase put or call options on foreign currency futures contracts
and on foreign currencies on appropriate U.S. exchanges, and may purchase
or sell foreign currency on a spot basis.
4. Invest in any issuer for purposes of exercising control or management.
5. Purchase securities of other investment companies except as permitted by
the 1940 Act and rules, regulations and applicable exemptive relief
thereunder.
6. Purchase or sell real estate. Each One Group Fund, other than One Group
Treasury Only, One Group Treasury Securities and One Group Municipal,
however, may purchase securities secured by real estate or interests
therein. Marquis Government, Marquis Strategic Income and Marquis
Louisiana may invest in mortgage-backed securities. In addition, each
Marquis Fund and each One Group Fund, other than One Group Treasury Only,
One Group Treasury Securities and One Group Municipal, may invest in
securities issued by companies investing in real estate or interests
therein.
7. Borrow money or issue senior securities, except that each Fund may borrow
from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time
of such borrowing; or mortgage, pledge, or hypothecate any assets, except
in connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's
total assets at the time of its borrowing. The One Group Funds will not
purchase securities while its borrowings (including reverse repurchase
agreements) in excess of 5% of its total assets are outstanding.
In addition, the One Group Funds may not purchase participation or other
direct interests in oil, gas or mineral exploration or development programs
(although investments by all of the One Group Funds other than One Group
Treasury Securities and One Group Treasury Only Money Market in marketable
securities of companies engaged in such activities are not hereby precluded).
This is a non-fundamental policy for Marquis Funds.
The following investment restrictions are NON-FUNDAMENTAL. This means that
they can be changed without the consent of a majority of the outstanding shares
of each Marquis Fund or each One Group Fund.
Neither the Marquis Funds nor the One Group Funds may:
1. Invest in illiquid securities in an amount exceeding, in the aggregate 15%
of the Fund's net assets (10% of net assets for a Fund that is a Money
Market Fund). An illiquid security is a security which cannot be disposed
of promptly (within seven days) and in the usual course of business without
a loss, and includes repurchase agreements maturing in excess of seven
days, time deposits with a withdrawal penalty, non-negotiable instruments
and instruments for which no market exists.
The One Group Funds may not acquire the securities of registered open-end
investment companies or registered unit investment trusts in reliance on Section
12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.
SHAREHOLDER POLICIES AND PROCEDURES
The following is a summary comparison of the major shareholder policies and
procedures of Marquis Funds and The One Group. As you will see, the Funds have
adopted substantially similar policies and procedures.
HOW DO THE FUNDS' PURCHASE PROCEDURES DIFFER?
38
<PAGE>
Shares of both the Marquis Funds and the One Group Funds are sold on a
continuous basis. Shares of the Marquis Funds currently may be purchased
directly from the shareholder servicing and transfer agent, DST Systems, Inc.,
or from an authorized sub-transfer agent by mail, by wire or through an
automatic investment plan. Shares also may be purchased through certain
authorized broker/dealers.
Likewise, shares of the One Group Funds may be purchased directly from
their distributor, the One Group Services Company by mail, telephone or wire.
In addition, One Group shares also may be purchased through investment advisors,
brokers, financial planners, banks, insurance companies, retirement or 401(k)
plan sponsors, or other intermediaries.
ARE THE FUNDS OPEN ON THE SAME DAYS?
Purchases and redemptions of shares of Marquis Funds and the One Group
Funds may be made on any day that the New York Stock Exchange is open for
trading ("Business Days"). However, Marquis Institutional, One Group Treasury
Only, Maquis Treasury Securities, One Group Treasury Securities, Marquis
Tax-Exempt and One Group Municipal are not open for business on Columbus Day and
Veterans Day.
HOW DO THE FUNDS' MINIMUM INVESTMENT AMOUNTS COMPARE?
The minimum initial investment in either class of any Marquis Fund is
$2,500 ($500 minimum for Individual Retirement Accounts and employees of Banc
One Investment Advisors and its affiliates; however, the distributor may waive
the minimum investment at its discretion.) Subsequent purchases of shares must
be at least $100 except for purchases through the automatic investment plan and
payroll deductions, which must be at least $50.
The minimum initial and subsequent investments in the One Group Funds are
$1,000 and $100, respectively ($100 and $25, respectively, for employees of BANC
ONE CORPORATION and its affiliates). Initial and subsequent investment minimums
may be waived at the distributor's discretion. Investors may purchase up to a
maximum of $250,000 of Class B shares per individual purchase order.
DO THE FUNDS OFFER THE SAME CLASSES OF SHARES?
The One Group Funds currently offer four classes of shares: Class A, Class B,
Class C, and Fiduciary Class.
- - Class A, Class B and Class C shares are offered to the general public.
- - Fiduciary Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository institution,
insurance company, pension plan or other organization authorized to act in
fiduciary, advisory, agency, custodial or similar capacities.
- - The section entitled "How To Do Business With The One Group" in the One
Group Prospectuses accompanying this Combined Prospectus/ Proxy Statement
will provide more information.
The Marquis Funds offers five classes of shares: Class A, Class B, Retail
Class, Cash Sweep and Trust Class.
- - Class A shares are offered to the general public and to investors for whom
affiliates of BANC ONE CORPORATION serve in a fiduciary, agency or
custodial capacity. Class B shares are offered to the general public.
- - Retail Class is offered to the general public, but is available only in
Marquis Treasury Securities and Marquis Tax-Exempt.
- - Trust Class shares are have a minimum intitial investment amount of $1
million, but are offered only in Marquis Treasury Securities and Marquis
Tax-Exempt.
- - Cash Sweep Class is offered only in Marquis Treasury Securities.
HOW DO SALES CHARGES COMPARE?
Marquis Funds and The One Group Funds have similar sales charge structures.
39
<PAGE>
- - One Group Class A shares assess a 4.5% up-front sales charge. Marquis
Class A shares charge an up-front fee of 3.5% of the offering price.
- - Class A shares of One Group Treasury Securities and Class A shares of One
Group Municipal shares are sold without any sales charge, as are Trust,
Retail and Cash Sweep shares of Marquis Treasury Securities and Marquis
Tax-Exempt.
- - Both One Group Class B shares and Marquis Class B shares are offered
without any up-front sales charge, but both do assess a Contingent Deferred
Sales Charge ("CDSC") if you redeem shares according to the following
schedules:
<TABLE>
<CAPTION>
THE ONE GROUP
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
<CAPTION>
MARQUIS FUNDS
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 3.50%
1-2 2.75%
2-3 2.00%
3-4 1.25%
4-5 0.50%
more than 5 0.00%
</TABLE>
- - One Group Class C shares are offered without any up-front sales charge, but
do assess a Contingent Deferred Sales Charge ("CDSC") if you redeem shares
according to the following schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
-------------------- ------------------------
<S> <C>
0-1 1.00%
After first year none
</TABLE>
WILL I PAY A SALES CHARGE IN THE REORGANIZATION?
- - One Group Fiduciary Class shares do not assess any sales charges.
- - Marquis Institutional and One Group Treasury Only do not assess a sales
charge.
- - No sales charge will be imposed on any Class A shares of the One Group
Funds distributed in the reorganization.
40
<PAGE>
- - If you own Class B shares of Marquis Funds, the CDSC currently applicable
to those shares (including the period of time you have held those shares)
will be applied to your One Group shares. This means that your CDSC will
not change.
- - For additional information regarding sales charges for the One Group Funds
and the Marquis Funds see the section entitled "COMPARISON OF CURRENT
EXPENSES" in this Combined Prospectus/Proxy Statement.
HOW DO EXCHANGE PRIVILEGES COMPARE?
Marquis Funds and The One Group have adopted similar, but slightly different,
exchange policies.
Marquis Fund shareholders enjoy the following exchange privileges:
- - Class A shares may be exchanged for Class A shares of any other Marquis
Fund or for Retail Class shares of Marquis Treasury Securities and Marquis
Tax-Exempt.
- - Class B shares may be exchanged for Class B shares of any other Marquis
Fund.
- - Retail Class shares of Marquis Treasury Securities and Marquis Tax-Exempt
may be exchanged for Class A or Class B shares of any other Marquis Funds.
- - Trust Class shares of Marquis Treasury Securities may be exchanged for
Class A shares of any other Marquis Fund.
- - Cash Sweep shares of Marquis Treasury Securities and Marquis Tax-Exempt may
be exchanged for Class A or Class B shares of other Marquis Funds.
- - Exchanges are processed the same business day they are received, provided
they are received by 4:00 p.m., Eastern time/3:00 p.m., Central time.
One Group shareholders may make the following exchanges:
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of
that Fund or for Class A or Fiduciary Class shares of another Fund of The
One Group, BUT ONLY IF you are eligible to purchase those shares.
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of
that Fund or for Class A or Fiduciary Class shares of another Fund of The
One Group.
- - Class B shares of a Fund may be exchanged for Class B shares of another
Fund of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another
Fund of The One Group.
- - Exchanges are processed the same business day they are received, provided
they are received by 4:00 p.m., Eastern time/3:00 p.m., Central time.
- - The One Group does not charge a fee for this privilege.
DO THE FUNDS ASSESS A SALES CHARGE ON AN EXCHANGE?
Marquis Funds generally do not assess a sales charge on exchanges. However:
- - You will pay a sales charge on exchanges from Retail Class shares of
Marquis Treasury Securities and Marquis Tax-Exempt to Class A or Class B
shares of any other Marquis Fund unless you qualify for a sales load
waiver.
- - You will pay a sales charge if you exchange Trust Class shares of Marquis
Treasury Securities acquired with cash for Class A shares of any other
Marquis Fund unless you qualify for a sales load waiver.
- - You will pay a sales charge on exchanges from Cash Sweep shares of Marquis
Treasury Securities and Marquis Tax-Exempt to Class A or Class B shares of
any other Marquis Fund, unless you qualify for a sales charge waiver.
- - For information on sales charge waivers, please see the section in the
prospectus for Marquis Funds entitled "WAIVER OF SALES CHARGES".
Generally, you will not pay a sales charge on an exchange between One Group
Funds. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify
for a sales charge waiver.
- - You will pay a sales charge if you bought Class A shares of a Fund:
41
<PAGE>
1. That does not charge a sales charge and you want to exchange those
shares for shares of a Fund that does, in which case you would pay the
sales charge applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that
Fund's sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a
sales charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC
of either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C
shares is carried over to your new shares.
- - For information on sales charge waivers, please see the section in the
prospectus for The One Group entitled "SALES CHARGE REDUCTIONS AND
WAIVERS."
HOW DO THE FUNDS AUTOMATIC CONVERSION FEATURES COMPARE?
Both Marquis Funds Class B shares and One Group Class B shares automatically
convert to Class A shares after a period of time.
Marquis Class B shares convert to Class A shares after five years (measured from
the end of the month in which the shares were purchased). One Group Class B
shares convert to Class A shares after eight years, also measured from the end
of the month in which the shares were purchased. Any One Group Class B shares
you receive in the reorganization will still convert to Class A shares after
five years (rather than the eight years normally applicable to One Group
shares). In both the Marquis Funds and the One Group Funds:
- - Your shares after the conversion will be subject to the lower distribution
and shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of
shares, nor will you be subject to any tax.
- - Conversions are on the basis of the relative net asset values of the two
classes.
- - For more information, see the section entitled "Conversion Feature" in
both the Marquis Funds and The One Group Prospectuses accompanying this
Combined Prospectus/Proxy Statement.
HOW DO REDEMPTION PROCEDURES COMPARE?
Both the Marquis Funds and the One Group Funds permit shareholders to redeem
their shares without charge (except for the CDSC assessed Class B shares) on any
Business Day;
- - Shares may ordinarily be redeemed by mail, telephone or wire. Marquis
Funds assess a $25 charge for wiring redemption fees. One Group
shareholders pay a $7.00 wire redemption fee.
- - All redemption orders are effected at the net asset value per share next
determined for Marquis and One Group Class A shares, One Group Fiduciary
Class shares, Marquis Retail, Trust and Cash Sweep shares.
- - Redemption orders for Marquis and One Group Class B share are effected at
net asset value per share next determined reduced by any applicable CDSC,
after receipt of a valid request for redemption.
- - Both the Marquis Funds and the One Group Funds pay shareholders for shares
redeemed within seven days after receipt of the request for redemption.
However, One Group Treasury Securities and One Group Municipal will attempt
to honor requests for next day payment, if the request is received before:
(I) 12:00 noon Eastern time for One Group Municipal, and
(ii) 2:00 p.m. Eastern time for One Group Treasury Securities.
- - For additional information on redemption procedures, see the section
entitled "REDEMPTION OF SHARES" in the Marquis Funds Prospectus and
"REDEEMING FUND SHARES" in the One Group Prospectuses, both accompanying
this Combined Prospectus/Proxy Statement.
42
<PAGE>
DO BOTH FUNDS PROVIDE FOR SYSTEMATIC WITHDRAWALS?
Yes, both the Marquis Funds and the One Group Funds allow you to redeem shares
on a systematic basis, and both Marquis Funds and the One Group Funds allow you
to receive monthly, quarterly, or annual payments of $100 or more. However,
there are some differences:
- - Marquis Funds also allow for semi-annual payments.
- - In order to redeem on a systematic basis, The One Group requires a minimum
account balance of $10,000. The minimum account balance required by
Marquis Funds is $5,000.
- - If you own Class B shares of a One Group Fund, you or your designee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually. This is because The One Group
permits a shareholder to withdraw up to 10% of their account value each
year without paying the normal CDSC. If you were permitted to
systematically withdraw in excess of 10% of your account value annually,
you would be subject to a CDSC.
- - Marquis Funds does not impose a limit on Class B systematic withdrawals.
However, the entire amount of the systematic withdrawal is subject to the
applicable CDSC.
- - One Group Treasury Securities and One Group Municipal permit systematic
withdrawals for all share classes. Systematic withdrawals are not
permitted for Trust Class shareholder of Marquis Treasury Securities.
Neither Marquis Institutional nor One Group Treasury Only permit systematic
withdrawals.
DO THE FUNDS DECLARE AND DISTRIBUTE DIVIDENDS THE SAME WAY?
No. For the equity funds:
- - Marquis Balanced, Marquis Value, Marquis Growth, Marquis Small Cap and
Marquis International declare and pay dividends quarterly.
- - One Group Asset Allocation. One Group Value, One Group Growth, One Group
Small Cap and One Group International Index generally declare dividends on
the last business day of each month. Dividends are distributed on the
first business day of the next month.
- - Capital gains, if any, for each Marquis Fund and each One Group Fund are
distributed at least annually.
For the bond funds:
- - One Group Government, One Group Income, and One Group Louisiana generally
declare dividends on each business day. Dividends are distributed on the
first business day of each month.
- - Marquis Government, Marquis Strategic Income, and Marquis Louisiana declare
and pay dividends monthly.
- - Capital gains, if any, for each Marquis Fund and each One Group Fund are
distributed at least annually.
For the money market funds:
- - One Group Treasury Only, One Group Treasury Securities, One Group
Municipal, Marquis Institutional, Marquis Treasury Only, and Marquis
Tax-Exempt declare dividends on each business day. Dividends are
distributed on the first business day of each month.
- - Capital gains, if any, for each Marquis Fund and each One Group Fund are
distributed at least annually.
Both the Marquis Funds and the One Group Funds pay dividends and distributions
on a per-share basis. This means that the value of your shares will be reduced
by the amount of the payment. In addition, shareholders in both the Marquis
Funds and the One Group Funds automatically receive all income dividends and
capital gain distributions in additional shares of the same Fund and class,
unless they have elected to take such payment in cash.
ARE FUND SHARES PRICED THE SAME WAY?
Yes. Both the Marquis Funds and the One Group Funds determine net asset value
per share by dividing the total market value of a Fund's investments and other
assets allocable to a class (minus class expenses) by the number of outstanding
43
<PAGE>
shares in that class. A Fund's net asset value changes every day. The Marquis
Funds and the One Group Funds calculate net asset value at different times
during the day.
- - Net asset value is calculated each business day at 4:00 p.m. Eastern
time/3:00 Central time for the following funds:
Marquis Government One Group Government
Marquis Strategic Income One Group Income
Marquis Louisiana One Group Louisiana
Marquis Balanced One Group Asset Allocation
Marquis Value One Group Value
Marquis Growth One Group Growth
Marquis Small Cap One Group Small Cap
Marquis International One Group International Index
- - Net asset value is calculated each business day at 12:00 noon Eastern
time/11:00 a.m. Central time and 4:00 p.m. Eastern time/3:00 p.m. Central
time, for the following funds:
Marquis Tax-Exempt One Group Municipal
Marquis Treasury Securities
Marquis Institutional
- - Net asset value is calculated each business day at 2:00 p.m. Eastern
time/1:00 p.m. Central time and 4:00 p.m. Eastern time/3:00 p.m. Central
time, for the following funds:
One Group Treasury Securities
One Group Treasury Only
Both Marquis Money Market and One Group Money Market value securities based on
the amortized cost method of valuation pursuant to Rule 2a-7 under the
Investment Company Act of 1940.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of this transaction is subject to the condition that the One Group
Funds and the Marquis Funds receive an opinion of Ropes & Gray, counsel to The
One Group, to the effect that the transaction will not result in the recognition
of gain or loss for Federal income tax purposes by the Funds under Sections 361
and 1032 of the Internal Revenue Code of 1986, as amended, (the "Code") or the
Marquis Fund shareholders under Section 354 of the Code.
RISK FACTORS
This section will help you understand the main risks of investing in the
One Group Funds. Because of the similarities in investment objectives and
policies, the Marquis Funds and the One Group Funds (for purposes of this
discussion only, collectively, the "Funds") are subject to substantially similar
investment risks. The following discussion identifies the broad risks inherent
in investing in the Funds. For more specific risks relating to specific
securities purchased by the Funds, please read the sections entitled "INVESTMENT
PRACTICES" and "INVESTMENT RISKS" in The One Group prospectuses, and
"DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS" in the Marquis Funds
prospectuses.
EQUITY SECURITIES: Marquis Balanced, Marquis Value, Marquis Growth, Marquis
Small Cap, Marquis International, One Group Asset Allocation, One Group
Disciplined, One Group Growth, One Group Small Cap and One Group International
Index invest in equity securities, which may increase or decrease in value. As
a result, the value of your investment in a Fund may increase or decrease in
value.
44
<PAGE>
SMALL CAPITALIZATION COMPANIES: Marquis Small Cap and One Group Small Cap invest
in small capitalization companies. Investments in smaller, younger companies
may be riskier than investments in larger, more established companies. These
companies may be more vulnerable to changes in economic conditions, specific
industry conditions, market fluctuations, and other factors effecting the
profitability of other companies. Because economic events may have a greater
impact on smaller companies, there may be a greater and more frequent
fluctuation in their stock price. This may cause frequent and unexpected
increases or decreases in the value of your investment.
FIXED INCOME SECURITIES: Marquis Institutional, Marquis Treasury Securities,
Marquis Tax-Exempt, Marquis Strategic Income, Marquis Government, Marquis
Louisiana, Marquis Balanced, One Group Treasury Only, One Group Treasury
Securities, One Group Municipal, One Group Income, One Group Government, One
Group Louisiana, and One Group Asset Allocation invest in fixed income
securities. Investments in fixed income securities (for example, bonds) will
increase or decrease in value based on changes in interest rates. If rates
increase, the value of a Fund's investments generally declines. On the other
hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
NON-DIVERSIFIED FUNDS: Both Marquis Louisiana and One Group Louisiana are
"non-diversified" funds. This means that the Funds may invest a more
significant portion of their assets in the securities of a single issuer than
can a "diversified" fund. In addition, the Funds' investments are concentrated
geographically. These concentrations increase the risk of loss to the Funds if
an issuer fails to make interest or principal payments or if the market value of
a security declines.
STATE SPECIFIC MUNICIPAL SECURITIES: Because Marquis Louisiana and One Group
Louisiana concentrate their investments in Louisiana, certain factors may have
a disproportionate negative effect on the Funds' investments. These factors may
include certain economic conditions, constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives.
The Louisiana economy is heavily dependent on a single industry, in this case
energy (oil and gas). Louisiana continues to recover from the oil price
declines of the mid-1980's, although its debt burden is well above that of other
states, while wealth and income indicators are below the national average.
Louisiana posts unemployment rates above the national average.
INDEX FUNDS: Unlike Marquis International, One Group International Index is an
index fund. An index fund's investment objective is to track the performance of
a specified index. Therefore, securities may be purchased, retained and sold by
an index fund at times when an actively managed fund would not do so. As a
result, you can expect greater risk of loss (and a correspondingly greater
prospect of gain) from changes in the value of securities that are heavily
weighted in the index than would be the case if the funds were not fully
invested in such securities. Because of this, an index fund's share price can
be volatile and you should be prepared to handle sudden, and sometimes
substantial, fluctuations in the value of your investment.
INTERNATIONAL FUNDS: Investments in foreign securities involve risks different
from investments in U.S. securities. These include the risk of losses
attributable to unfavorable governmental or political actions, seizure of
foreign deposits, changes in tax or trade statutes, and governmental collapse
and war. Investments in foreign securities also involve the risk associated
with higher transaction costs, delayed settlements, currency controls and
adverse economic developments. This also includes the risk that fluctuations in
the exchange rates between the U.S. dollar and foreign currencies may negatively
affect an investment. Adverse changes in exchange rates may erode or reverse
any gains produced by foreign currency denominated investments and may widen any
losses. Exchange rate volatility also may affect the ability of an issuer to
repay U.S. dollar denominated debt, thereby increasing credit risk. Because of
these risk factors, the share price of both Marquis International and One Group
International Equity Index Fund is expected to be volatile, and you should be
prepared to sustain sudden, and sometimes substantial, fluctuations in the value
of your investment.
45
<PAGE>
LOWER RATED SECURITIES: One Group Income may invest in debt securities rated in
the lowest investment grade category. Securities in this rating category are
considered to have speculative characteristics. Changes in economic conditions
or other circumstances may have a greater effect on the ability of issuers of
these securities to make principal and interest payments than they do on issuers
of higher grade securities.
HIGH YIELD/JUNK BONDS: One Group Income also may invest up to 30% of its total
assets in debt securities rated below investment grade. Marquis Strategic
Income does not invest in securities rated below investment grade. These
securities are regarded as predominately speculative. Lower rated securities
generally provide a higher yield than higher rated debt securities of similar
maturity, but are subject to a greater degree of risk that the issuer may not be
able to make principal and interest payments. Issuers of these securities may
not be as strong financially as those issuing higher rated securities. Such
high yield issuers may include smaller, less creditworthy companies or highly
indebted firms.
The market value of high yield securities may fluctuate more than the market
value of higher rated securities, since high yield securities tend to reflect
short-term corporate and market developments to a greater extent than higher
rated securities. Thus, periods of economic uncertainty and change can result
in the increased volatility of market prices of high yield bonds and of the
investment company's net asset value. Additional risks of high yield securities
include limited liquidity and secondary market support. As a result, the prices
of high yield securities may decline rapidly in the event that a significant
number of holders decide to sell. Issuers of high yield securities also are
more vulnerable to real or perceived economic changes, political changes or
adverse developments specific to the issuer. A projection of an economic
downturn, for example, could cause the price of these securities to decline
because a recession could lessen the ability of a highly leveraged company to
make principal and interest payments on its debt securities. In the event of a
default, One Group Income would experience a decrease in income and a decline in
the market value of its investments. In addition, a long-term track record on
bond default rates, such as that for investment grade corporate bonds, does not
exist for the high yield market. It may be that future default rates on
high-yield bonds will be more widespread and higher than in the past, especially
during periods of deteriorating economic conditions.
Finally, the market prices of debt securities generally fluctuate with changes
in interest rates so that One Group Income's net asset value can be expected to
decrease as long-term interest rates rise and to increase as long-term rates
fall. The market prices of high yield securities structured as zero coupon or
pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically.
Credit quality in the high yield bond market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, One
Group Income will not rely solely on ratings issued by established credit rating
agencies, but will use such ratings in conjunction with Banc One Investment
Advisors' independent and ongoing review of credit quality.
Because investments in lower rated securities involve greater investment risk,
achievement of One Group Income's investment objectives may be more dependent on
Banc One Investment Advisor's credit analysis than would be the case if One
Group Income were investing in higher rated securities. One Group Income may
seek to hedge investments through transactions in options, futures contracts and
related options. One Group Income also may use swap agreements to further
manage exposure to lower rated securities.
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other investments.
These include:
- - Each Marquis Fund and each One Group Fund may purchase options, futures
contracts, and options on futures contracts.
- - Marquis Balaced, One Group Assets Allocation, Marquis Value, Marquis
Growth, Marquis Stategic Income, One Group Income, Marquis International
may hold warrants.
- - Marquis Government, One Group Government, Marquis Balanced, One Group Asset
Allocation, Marquis Startegic Income, One Group Income, One Group Louisiana
and One Group Municipal may invest in
46
<PAGE>
mortgage-backed securities, including collateralized mortgage obligations
and Real Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs).
- - Marquis Government, Marquis Balanced, One Group Asset Allocation, Marquis
Startegic Income, One Group Income, One Group Louisiana and One Group
Municipal may purchase asset-backed securities.
- - Marquis International and One Group International Index may invest in swap,
cap and floor transactions.
In addition to the derivatives listed above, One Group Income, One Group Asset
Allocation, One Group Disciplined, One Group Growth, One Group Small Cap and One
Group Asset Allocation invest in the following derivatives.
- - new financial products
- - structured instruments
Only One Group International Index invests in currency forwards.
Derivatives may be riskier than traditional investments.
The above discussion is qualified in its entirety by the disclosure in the One
Group Funds and Marquis Funds Prospectuses accompanying this Combined
Prospectus/Proxy Statement.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
This section includes a discussion by the management of The One Group and
Marquis Funds about each fund's performance.
TREASURY SECURITIES
MONEY MARKET FUNd
For the twelve months ended September 30, 1997, the Treasury Securities Money
Market Fund generated a total return of 5.04% for Trust shares and 4.83% for
Retail shares from which a 12b-1 charge has been deducted. From inception on
February 26, 1997, the Cash Sweep Class of the Treasury Securities Money Market
Fund generated a total return on an annualized basis of 4.46%. This compares to
a 4.84% return for the IBC/Donoghue U.S. Treasury and Repo Index. The Fund's net
assets increased from $1.049 billion to $1.364 billion over the fiscal year.
For much of the year, the Fund's largest sector weighting consisted of
overnight repurchase agreements collateralized by U.S. Treasury securities. This
strategy was designed to take advantage of a pattern in the yield curve that
offered little reward for venturing out into longer maturities. In addition, it
provides shareholders with an adequate degree of liquidity.
Looking ahead, we do not foresee a near-term slowdown in economic growth that
would cause the Federal Reserve Board to lower interest rates. On the contrary,
we feel there remains a possibility that money market rates could stay stable or
rise. Should this occur, we believe we are well positioned to take advantage of
higher rates by converting our cash assets into longer-term instruments.
TAX EXEMPT
MONEY MARKET FUND
47
<PAGE>
For the twelve months ended September 30, 1997, the Tax Exempt Money Market Fund
generated a total return of 3.12%. This compares to a 3.08% return for the
IBC/Donoghue Tax-Free Index. The Fund's net assets increased from $66.2 million
to $76.7 million over the fiscal year.
Short-term interest rates were stable during most of the fiscal year, except for
a quarter-percent hike by the Federal Reserve Board ("the Fed") in March 1997.
Other fundamental factors in the short-term municipal securities market remained
favorable as well, including steady demand coupled with a declining supply.
In this environment, the Fund was able to follow up on its strong performance of
1996 with another excellent year.
Looking ahead, we see a continuation of current conditions, as moderate economic
growth and low inflation add up to an ideal environment for stability in the
short-term municipal markets. However, any imbalance in such factors as
employment, consumer and producer prices, or consumer sentiment could spur the
Fed to push short-term rates higher.
GOVERNMENT SECURITIES FUND
For the twelve months ended September 30, 1997, the Government Securities Fund
generated a total return of 8.22% for Class A shares without a sales load, 4.46%
for Class A shares from which a sales charge has been deducted, and 3.90% for
Class B shares from which a sales charge has been deducted. This compares to a
7.83% return for the Lehman Intermediate Government Bond Index.
The Fund's holdings, which consist primarily of obligations issued or guaranteed
as to principal and interest by the U.S. Government and its agencies or
instrumentalities, ended the fiscal year with an average weighted maturity of
6.0 years, and a weighted average duration of 3.7 years.
The Fund's strong performance for the fiscal year was attributable to a
favorable economic environment, along with portfolio strategies that enhanced
yields.
The domestic economy continued to benefit from low inflation, despite moderate
economic growth and the lowest unemployment levels in decades. As a result, the
Federal Reserve Board found little cause to increase interest rates. Outside of
a modest hike in short-term rates in March 1997, bonds enjoyed a relatively
stable environment for most of the fiscal year.
Throughout the year, the Fund maintained its strategy of overweighing the
non-callable sector of the government market, with Treasury and agency
securities representing over half of the portfolio. The balance of the portfolio
was composed primarily of mortgage-backed instruments and collateralized
mortgage obligations, which provided incremental yield without compromising
quality. The short-term portion of the portfolio was held to only about 4%
during most of the period.
Looking ahead, we see a continuation of the favorable economic trends that have
prevailed over the past year. Long-term interest rates are declining worldwide,
while the domestic economy continues to experience moderate growth with low
inflation. We believe that good values are plentiful in the government bond
markets and that real rates are attractive relative to historical norms.
In light of these conditions, we plan to continue our strategy of pursuing high
quality and above-average yields. We will view any cyclical upswings in yields
as buying opportunities.
<TABLE>
<CAPTION>
Average Average Average
One Annual Annual Annual
Year 3 Year 5 Year 10 Year
Return Return Return Return
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A
- -------
WITHOUT LOAD 8.22% 7.69% 5.50% 7.93%
WITH LOAD 4.46 6.42 4.75 7.54
48
<PAGE>
Class B
- -------
WITHOUT LOAD 7.40 6.87 4.89 7.61
WITH LOAD 3.90 6.28 4.81 7.61
</TABLE>
For the period ended September 30, 1997.
Past performance of the Fund is not predictive of future performance. Class A
shares were offered beginning October 1, 1993. Class B shares were offered
beginning October 22, 1993. Performance of the Class A shares reflects the
maximum front end sales charge of 3.50%. Performance of the Class B shares
reflects the maximum contingent deferred sales charge of 1.25% for the four-year
holding period. The performance quoted includes past performance of the common
trust fund managed by First National Bank of Commerce, adjusted for fees and
expenses, for the periods prior to the inception of the Government Securities
Fund. The common trust fund was not registered under the 1940 Act and therefore
was not subject to certain investment restrictions which may have adversely
affected performance. The performance of the Lehman Intermediate Government Bond
Index and the Lipper Intermediate U.S. Government Average does not include
annual operating expenses which are experienced by the Fund.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE GOVERNMENT SECURITIES FUND
VERSUS THE LEHMAN INTERMEDIATE GOVERNMENT BOND
INDEX AND THE LIPPER INTERMEDIATE U.S. GOVERNMENT AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Government Government Lehman Intermediate Lipper Intermediate
Securities Securities Fund, Government Bond U.S. Government
Fund w/load Index Average
9/87 10000 9650 10000 10000
9/88 11095 10707 11062 11140
9/89 11990 11571 12127 12185
9/90 12852 12403 13168 13076
9/91 14660 14146 14956 14925
9/92 16401 15827 16818 16699
9/93 17897 17270 18105 18068
9/94 17602 16986 17833 17400
9/95 19510 18827 19727 19345
9/96 20309 19599 20733 20088
9/97 21439 20689 22356 21729
[LINE GRAPH OMITTED]
CLASS B
Government Government Lehman Intermediate Lipper Intermediate
Securities Securities Fund, Government Bond U.S. Government
Fund w/load Index Average
9/87 10000 10000 10000 10000
9/88 11095 11095 11062 11140
9/89 11990 11990 12127 12185
9/90 12852 12852 13168 13076
9/91 14660 14660 14956 14925
9/92 16401 16401 16818 16699
9/93 17457 17457 18105 18068
9/94 17059 17059 17833 17400
9/95 18782 18782 19727 19345
9/96 19389 19389 20733 20088
9/97 20824 20824 22356 21729
STRATEGIC INCOME BOND FUND
From its inception on January 31, 1997, the Strategic Income Bond Fund generated
a total return on an annualized basis of 8.26% for Class A shares without a
sales load, 2.77% for Class A shares from which a sales charge has been
deducted, and 2.33% for Class B shares from which a sales charge has been
deducted. This compares to a 9.74% return for the Lehman Aggregate Bond Index
and 9.70% for the Salomon Broad Bond Index. The Fund's net assets reached $16.0
million by the end of the fiscal year.
During fiscal 1997, the Fund increased its weighting in high-quality corporate
bonds, which at year-end represented nearly two-thirds of the total portfolio.
The balance of the portfolio was composed primarily of Federal agency
mortgage-backed instruments. This approach allowed us to capture the higher
yields currently available in corporate issues.
Looking ahead, we believe that the current interest rate environment offers good
opportunities for fixed income investors, with our forecasts showing stable
interest rates for the near-term future.
However, we remain concerned that an unforeseen event, such as the economy
running at full capacity -- and any inflationary side effects of this scenario
- -- or an upward spike in oil prices, could have an adverse impact on the fixed
income markets.
49
<PAGE>
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE STRATEGIC
INCOME BOND FUND VERSUS THE SALOMON BROAD BOND INDEX, AND THE LIPPER CORPORATE
DEBT BBB RATED AVERAGE, AND THE LEHMAN AGGREGATE BOND INDEX
[LINE GRAPH OMITTED]
CLASS A
Strategic Strategic Salomon Lipper Lehman
Income Income Broad Corporate Aggregate
Bond Bond Fund Bond Debt BBB Bond
Fund w/load Index Rated Average Index
1/97 10000 9650 10000 10000 10000
2/97 9935 9587 10011 10046 10025
3/97 9765 9423 9910 9900 9914
4/97 9927 9580 10052 10041 10062
5/97 10009 9658 10146 10149 10158
6/97 10146 9791 10267 10294 10279
7/97 10506 10138 10545 10638 10556
8/97 10363 10000 10454 10505 10467
9/97 10550 10180 10608 10682 10622
[LINE GRAPH OMITTED]
CLASS B
Strategic Strategic Salomon Lipper Lehman
Income Income Broad Corporate Aggregate
Bond Bond Fund Bond Debt BBB Bond
Fund w/load Index Rated Average Index
1/97 10000 10000 10000 10000 10000
2/97 9939 9939 10011 10046 10025
3/97 9766 9766 9910 9900 9914
4/97 9913 9913 10052 10041 10062
5/97 10000 10000 10146 10149 10158
6/97 10120 10120 10267 10294 10279
7/97 10473 10473 10545 10638 10556
8/97 10335 10335 10454 10505 10467
9/97 10504 10154 10608 10682 10622
<TABLE>
<CAPTION>
Annualized Inception Cumulative Inception
to Date to Date
<S> <C> <C>
Class A
- -------
WITHOUT LOAD 8.26% 5.50%
WITH LOAD 2.77 1.83
Class B
- -------
WITHOUT LOAD 7.57 5.04
WITH LOAD 2.33 1.54
</TABLE>
For the period ended September 30, 1997.
Past performance of the Fund is not predictive of future performance. Class A
and B shares were offered beginning January 31, 1997. Performance of the Class A
shares reflects the maximum front end sales charge of 3.50%. Performance of the
Class B shares reflects the maximum contingent deferred sales charge of 3.50%
for the one-year holding period. The performance of the Salomon Broad Bond
Index, the Lipper Corporate Debt BBB Rated Average, and the Lehman Aggregate
Bond Index does not include annual operating expenses which are experienced by
the Fund.
LOUISIANA TAX-FREE INCOME FUND
For the twelve months ended September 30, 1997, the Louisiana Tax-Free Income
Fund generated a total return of 7.77% for Class A shares without a sales load,
3.95% for Class A shares from which a sales charge has been deducted, and 3.49%
for Class B shares from which a sales charge has been deducted. This compares to
a 7.22% return for the Lipper Intermediate Municipal Fund Index and a 9.03%
return for the Lehman Municipal Bond Index. The Fund's net assets increased from
$21.6 million to $39.6 million over the fiscal year.
The Fund's holdings, consisting primarily of securities which are exempt from
federal and state income tax to Louisiana residents, ended the fiscal year with
an average weighted maturity of 8.5 years, an average duration of 6.4 years, and
a weighted average quality rating of AAA.
50
<PAGE>
Throughout the fiscal year, the Fund benefited from a stable interest rate
environment, as economic growth and inflation remained low. These conditions set
the stage for a period in which the fund was able to deliver its full coupon
yields, as well as some modest capital gains.
For most of the year, the Fund was overweighted in the highest quality sectors
of the Louisiana bond market. This somewhat defensive posture was designed to
shield against any fallout from the recent closing of a major casino in New
Orleans. Ultimately, however, increased tax revenues from the ongoing boom in
the energy industry have far outweighed the casino-related losses.
Looking ahead, we remain positive about the future of Louisiana-based municipal
issues, as the state's economy continues to grow and supply/demand factors point
to relatively stable prices. However, we plan to maintain our bias toward the
highest quality issues. We will stay alert to signs of inflationary pressures
that could impact total returns.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
LOUISIANA TAX-FREE INCOME FUND VERSUS THE LIPPER INTERMEDIATE MUNICIPAL
FUND INDEX, THE LEHMAN MUNICIPAL BOND INDEX,
AND THE LEHMAN 10-YEAR MUNICIPAL BOND INDEX
[LINE GRAPH OMITTED]
CLASS A
Louisiana Louisiana Lipper Lehman Lehman
Tax-Free Tax-Free Income Intermediate Municipal 10-Year
Income Fund Municipal Bond Municipal
Fund w/load Fund Index Index Bond Index
10/93 10000 9650 10000 10000 10000
3/94 9564 9229 9707 9566 9592
9/94 9719 9379 9861 9738 9801
3/95 10138 9784 10251 10276 10314
9/95 10597 10226 10723 10827 10958
3/96 10823 10445 10954 11138 11228
9/96 11071 10684 11192 11482 11488
3/97 11317 10921 11420 11747 11812
9/97 11932 11514 11998 12519 12580
[LINE GRAPH OMITTED]
CLASS B
Louisiana Louisiana Lipper Lehman Lehman
Tax-Free Tax-Free Income Intermediate Municipal 10-Year
Income Fund Municipal Bond Municipal
Fund w/load Fund Index Index Bond Index
10/93 10000 10000 10000 10000 10000
3/94 9642 9642 9769 9650 9671
9/94 9753 9753 9925 9824 9882
3/95 10136 10136 10317 10367 10399
9/95 10554 10554 10792 10923 11049
3/96 10741 10741 11024 11237 11321
9/96 10934 10934 11264 11584 11583
3/97 11147 11147 11493 11851 11910
9/97 11698 11573 12075 12630 12684
<TABLE>
<CAPTION>
Average Annual Average Annual
One Year 3 Year Return Inception
Return Return o Date
<S> <C> <C> <C>
Class A
- -------
WITHOUT LOAD 7.77% 7.07% 4.55%
WITH LOAD 3.95 5.81 3.63
<CAPTION>
Class B
- -------
WITHOUT LOAD 6.99 6.25 4.23
WITH LOAD 3.49 5.65 3.94
</TABLE>
For the period ended September 30, 1997.
51
<PAGE>
Past performance of the Fund is not predictive of future performance. Class A
shares were offered beginning October 1, 1993. Class B shares were offered
beginning October 22, 1993. Performance of the Class A shares reflects the
maximum front end sales charge of 3.50%. Performance of the Class B shares
reflects the maximum contingent deferred sales charge of 1.25% for the four-year
holding period. The performance of the Lipper Intermediate Municipal Fund Index,
the Lehman Municipal Bond Index, and the Lehman 10-Year Municipal Bond Index
does not include annual operating expenses which are experienced by the Fund.
BALANCED FUND
For the twelve months ended September 30, 1997, the Balanced Fund generated a
total return of 26.10% for Class A shares without a sales load, 21.69% for Class
A shares from which a sales charge has been deducted, and 21.69% for Class B
shares from which a sales charge has been deducted. This compares to a 24.03%
return for the Lipper Balanced Funds Average, a 40.43% return for the S&P 500
Composite Index, and a 7.83% return for the Lehman Intermediate Government Bond
Index. The Fund's net assets increased from $116.4 million to $138.9 million
over the fiscal year.
During the year, the Fund shifted to a somewhat more aggressive position,
increasing its proportion of stocks to about 55% of the portfolio, while bond
holdings represented about 40% and cash about 5%. This ratio reflected our
increasing confidence in the economy, which continued to demonstrate a
surprising combination of moderate growth and low inflation. The Fund's
proportions proved to be justified, as stocks outperformed bonds by a
significant margin.
The bond portion of the Fund produced solid gains through a combination of
coupon yields and capital appreciation. Bonds benefited from a relatively stable
environment in which rates actually declined somewhat over the course of the
fiscal year.
The Fund continued to emphasize intermediate-term government bonds for their
relative safety and stability. In addition, we increased the proportion of
mortgage-backed securities in order to take advantage of incremental yield
opportunities. Mortgage-backed instruments were favored over corporate bonds,
due to the fact that they offered a superior risk/return profile in the market
at that time.
The stock portion of the Balanced Fund, which pursues a strategy that combines
value and growth issues, with a value emphasis, also produced positive results
as the value and growth sectors exchanged leadership positions during the course
of the year.
The stock portfolio maintained a relatively defensive posture, with a bias
toward issues in the banking, consumer nondurables, and energy industries, where
price-earnings ratios tend to be below average. Among the better performers in
the portfolio were Parker-Hannifin, Tech Data Corp, SLM Holding Corp, and
Compaq.
Looking ahead, we believe the Balanced Fund remains well positioned for the
current environment, which offers the potential for strong returns from both
bonds and stocks. We anticipate a continuation of the favorable economic
climate, as global competition serves to prevent sharp price increases, while
productivity improvements help to boost corporate profits.
Still, we remain alert to the possibility of inflationary pressures which could
lead the Federal Reserve Board to hike interest rates. Therefore, we do not
currently anticipate any major changes in the Fund's proportions or in its
underlying investment strategies.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
BALANCED FUND VERSUS THE WILSHIRE MID-CAP VALUE INDEX, THE S&P 500 COMPOSITE
INDEX, THE LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX AND THE LIPPER BALANCED
FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Wilshire Lehman Lipper
Balanced Mid-Cap S&P 500 Intermediate Balanced
Balanced Fund Value Composite Government Funds
Fund w/load Index Index Bond Index Average
10/93 10000 9650 10000 10000 10000 10000
3/94 9752 9411 9605 9646 9807 9712
9/94 9859 9514 9870 10159 9827 9882
3/95 10365 10002 10342 11145 10227 10396
9/95 11593 11188 12469 13176 10871 11767
3/96 12272 11843 13611 14718 11158 12579
9/96 12649 12207 13823 15853 11426 13224
3/97 13303 12838 15146 17635 11686 13946
9/97 15950 15393 18888 22264 12321 16396
[LINE GRAPH OMITTED]
CLASS B
Wilshire Lehman Lipper
Balanced Mid-Cap S&P 500 Intermediate Balanced
Balanced Fund Value Composite Government Funds
Fund w/load Index Index Bond Index Average
10/93 10000 10000 10000 10000 10000 10000
3/94 9726 9726 9605 9646 9807 9712
9/94 9788 9788 9870 10159 9827 9882
3/95 10250 10250 10342 11145 10227 10396
9/95 11428 11428 12469 13176 10871 11767
3/96 12052 12052 13611 14718 11158 12579
9/96 12376 12376 13823 15853 11426 13224
3/97 12969 12969 15146 17635 11686 13946
9/97 15494 15369 18888 22264 12321 16396
52
<PAGE>
<TABLE>
<CAPTION>
Average Annual Average Annual
One Year 3 Year Return Inception
Return Return to Date
<S> <C> <C> <C>
Class A
- -------
WITHOUT LOAD 26.10% 17.40% 12.50%
WITH LOAD 21.69 16.00 11.51
Class B
- -------
WITHOUT LOAD 25.19 16.54 11.76
WITH LOAD 21.69 16.05 11.53
</TABLE>
For the period ended September 30, 1997.
Past performance of the Fund is not predictive of future performance. Class A
shares were offered beginning October 1, 1993. Class B shares were offered
beginning October 22, 1993. Performance of the Class A shares reflects the
maximum front end sales charge of 3.50%. Performance of the Class B shares
reflects the maximum contingent deferred sales charge of 1.25% for the four-year
holding period. The performance of the Wilshire Mid-Cap Value Index, the S&P 500
Composite Index, the Lehman Intermediate Government Bond Index, and the Lipper
Balanced Funds Average does not include annual operating expenses which are
experienced by the Fund.
VALUE EQUITY FUND
For the twelve months ended September 30, 1997, the Value Equity Fund generated
a total return of 45.27% for Class A shares without a sales load, 40.17% for
Class A shares from which a sales charge has been deducted, and 40.81% for Class
B shares from which a sales charge has been deducted. This compares to a 36.64%
return for the Wilshire Mid-Cap Value Index and a 40.43% return for the S&P 500
Composite Index. The Fund's net assets increased from $97.5 million to $144.1
million over the fiscal year.
The Fund's strong performance is attributable to a resurgence in the "value"
sector of the market and to portfolio decisions made throughout the year.
For the first half of fiscal 1997, the markets were dominated by a small group
of large multinational companies represented in the upper echelon of the S&P 500
Composite Index. However, as the increasingly high
53
<PAGE>
valuations of these issues began to raise eyebrows among even the most
optimistic investors, market sentiment shifted somewhat toward stocks with more
reasonable multiples, particularly in the long-dormant small and mid-cap
sectors.
Throughout the year, the Fund maintained its relatively defensive posture,
emphasizing large- and mid-cap issues whose price-earnings ratios were well
below the market average. One goal of this strategy is to protect the portfolio
against the full impact of any downturns in the market. And when put to the test
in March 1997 by a ten percent drop in the overall market, our strategy did in
fact result in a lesser decline.
The portfolio continued to be heavily weighted in a variety of industries where
multiples tend to remain lower, such as banking, consumer nondurables, selective
technology companies, and energy/minerals. However, we have deliberately avoided
any attempt to focus on broad sectors of the market, preferring to select issues
based on their individual merits.
Among the strongest performers in our portfolio during the past twelve months
were SCI Systems, Transocean Offshore, BankAmerica, and Cummins Engine.
Looking ahead, we plan to continue our emphasis on undervalued stocks that offer
above-average growth prospects and the chance for positive earnings surprises.
We believe that these issues will continue to offer a favorable combination of
capital appreciation potential and below-average risk.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE VALUE EQUITY FUND VERSUS THE WILSHIRE MID-CAP VALUE INDEX,
THE S&P 500 COMPOSITE INDEX, AND THE LIPPER EQUITY INCOME AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Value Wilshire S&P Lipper
Value Equity Mid-Cap 500 Equity
Equity Fund, Value Composite Income
Fund w/load Index Index Average
9/87 10000 9650 10000 10000 10000
9/88 8865 8555 10068 8760 9624
9/89 10844 10464 12730 11646 12026
9/90 9862 9517 9476 10571 10470
9/91 12669 12226 14086 13858 13427
9/92 13068 12611 16888 15395 14930
9/93 15650 15103 21625 17387 17612
9/94 15395 14857 21126 18029 17959
9/95 19264 18590 26688 23383 21588
9/96 21842 21077 29589 28135 25289
9/97 31730 30619 40431 39510 33925
[LINE GRAPH OMITTED]
CLASS B
Value Wilshire S&P Lipper
Value Equity Mid-Cap 500 Equity
Equity Fund, Value Composite Income
Fund w/load Index Index Average
9/87 10000 10000 10000 10000 10000
9/88 8865 8865 10068 8760 9624
9/89 10844 10844 12730 11646 12026
9/90 9862 9862 9476 10571 10470
9/91 12669 12669 14086 13858 13427
9/92 13068 13068 16888 15395 14930
9/93 15650 15650 21625 17387 17612
9/94 15305 15305 21126 18029 17959
9/95 19004 19004 26688 23383 21588
9/96 21377 21377 29589 28135 25289
9/97 30850 30850 40431 39510 33925
<TABLE>
<CAPTION>
Average Average Average
One Year Annual 3 Annual 5 Annual 10
Return Year Return Year Return Year Return
<S> <C> <C> <C> <C>
54
<PAGE>
Class A
- -------
WITHOUT LOAD 45.27% 27.26% 19.41% 12.24%
WITH LOAD 40.17 25.76 18.59 11.83
Class B
- -------
WITHOUT LOAD 44.31 26.32 18.74 11.92
WITH LOAD 40.81 25.90 18.69 11.92
</TABLE>
For the period ended September 30, 1997.
Past performance of the Fund is not predictive of future performance. Class A
shares were offered beginning October 1, 1993. Class B shares were offered
beginning October 22, 1993. Performance of the Class A shares reflects the
maximum front end sales charge of 3.50%. Performance of the Class B shares
reflects the maximum contingent deferred sales charge of 1.25% for the four-year
holding period. The performance quoted includes past performance of the common
trust fund managed by FNBC adjusted for fees and expenses. The common trust fund
was not registered under the 1940 Act and therefore was not subject to certain
investment restrictions which may have adversely affected performance. The
performance of the Wilshire Mid-Cap Value Index, the S&P 500 Composite Index,
and the Lipper Equity Income Average does not include annual operating expenses
which are experienced by the Fund.
GROWTH EQUITY FUND
For the twelve months ended September 30, 1997, the Growth Equity Fund generated
a total return of 31.25% for Class A shares without a sales load, 26.64% for
Class A shares from which a sales charge has been deducted, and 26.91% for Class
B shares from which a sales charge has been deducted. This compares to a 41.48%
return for the S&P 500/BARRA Growth Index and a 25.95% return for the Wilshire
Mid-Cap Growth Index. While the Fund has characteristics in common with both
indices, it more closely reflects the capitalization levels of the Wilshire
Mid-Cap Growth Index. The Fund's net assets increased from $18.5 million to
$33.4 million over the fiscal year.
Coming off a very strong fiscal 1996, the Fund continued to benefit from a surge
in enthusiasm for growth-oriented companies. Along with the overall stock
market, this sector has benefited from the favorable combination of moderate
economic growth, low inflation, and strong inflows of investor funds. Moreover,
growth companies have enjoyed special attention as the source of products and
services that boost productivity, making today's economic environment possible.
With significant holdings in the technology sector, as well as in healthcare,
manufacturing, and consumer nondurables, the Fund participated fully in this
ongoing rally.
Among the best performers in the portfolio for the fiscal year were computer
issues such as Compaq Corporation, Dell Computer, and Gateway 2000, as well as
healthcare leaders such as Eli Lilly, Merck, and Schering-Plough. Looking ahead,
we are concerned that the level of optimism about the economy in general and
growth stocks in particular may be reaching the level of excess.
Therefore, we continue to manage the Growth Equity Fund in a conservative
manner. We have trimmed our technology holdings in recent months and continue to
avoid those issues whose prices reflect overconfidence in the future. And while
we believe there are still many opportunities available to growth-oriented
investors, we are keenly aware of the risks that are inherent in today's
superheated market.
55
<PAGE>
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE GROWTH EQUITY
FUND VERSUS THE WILSHIRE MID-CAP GROWTH INDEX, THE S&P 500/BARRA GROWTH INDEX,
AND THE LIPPER GROWTH FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Growth Wilshire S&P 500/ Lipper
Growth Equity Mid-Cap BARRA Growth
Equity Fund Growth Growth Funds
Fund w/load Index Index Average
3/96 10000 9650 10000 10000 10000
6/96 10496 10129 10315 10701 10456
9/96 10966 10583 10599 11078 10765
12/96 11368 10970 10736 11883 11340
3/97 11165 10755 10176 12308 11207
6/97 13034 12578 11790 14804 12985
9/97 14393 13889 13351 15674 14363
[LINE GRAPH OMITTED]
CLASS B
Growth Wilshire S&P 500/ Lipper
Growth Equity Mid-Cap BARRA Growth
Equity Fund Growth Growth Funds
Fund w/load Index Index Average
4/96 10000 10000 10000 10000 10000
6/96 10232 10232 9738 10498 10128
9/96 10658 10658 10005 10867 10427
12/96 11037 11037 10135 11657 10984
3/97 10825 10825 9607 12073 10856
6/97 12609 12609 11130 14522 12577
9/97 13898 13898 12604 15376 13912
<TABLE>
<CAPTION>
One Year Average Annual Return
Return Inception to Date
<S> <C> <C>
Class A
- -------
WITHOUT LOAD 31.25% 26.43%
WITH LOAD 26.64 23.61
Class B
- -------
WITHOUT LOAD 30.41 27.04
WITH LOAD 26.91 25.34
</TABLE>
For the period ended September 30, 1997.
Past performance of the Fund is not predictive of future performance. Class A
shares were offered beginning March 1, 1996. Class B shares were offered
beginning April 19, 1996. Performance of the Class A shares reflects the maximum
front end sales charge of 3.50%. Performance of the Class B shares reflects the
maximum contingent deferred sales charge of 2.00% for the three-year holding
period. The performance of the Wilshire Mid-Cap Growth Index, the S&P 500/BARRA
Growth Index and the Lipper Growth Funds Average does not include annual
operating expenses which are experienced by the Fund.
SMALL CAP EQUITY FUND
For the twelve months ended September 30, 1997, the Small Cap Equity Fund
generated a return of 20.60% for Class A shares without a sales load, 16.35% for
Class A shares from which a sales charge has been deducted, and
56
<PAGE>
16.45% for Class B shares from which a sales charge has been deducted. This
compares to a 23.36% return for the Russell 2000 Growth Index for the same
period. The Fund's net assets reached $4.3 million by the end of the fiscal
year.
Small cap growth stocks generally underperformed for much of the fiscal year, as
large-cap issues continued to dominate the equity markets. However, as the final
quarter approached, the small cap sector began to gain momentum and appeared to
be poised for a sustainable revival.
The Marquis Small Cap Equity Fund currently invests substantially all of its
assets in the SEI Institutional Managed Trust Small Cap Growth Portfolio.
Against this backdrop, the Portfolio was hampered somewhat by weakness in
individual technology and pharmaceutical issues. However, favorable stock
selection in the producer goods and energy sectors helped to compensate for
these weaknesses.
Among the portfolio's best performers for the year were Cliffs Drilling and
Patterson Energy in the oil services sector, Imperial Credit Industries and
Astoria Financial Corp. in the financial services sector, and Medaphys in the
healthcare sector.
Looking ahead, we see strong signs of continued strength in small-cap issues,
and are pleased to note that growth stocks have begun to close the gap on the
value stocks, which had been in the lead during much of fiscal 1997. In light of
these positive trends, we plan to maintain sector weightings and market
capitalization levels that are fundamentally the same as those of the Russell
2000 Growth Index. We believe that this strategy will allow investors to add a
representative sampling of the small-cap growth sector to their overall
portfolios.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE SMALL CAP EQUITY FUND VERSUS THE
RUSSELL 2000 GROWTH INDEX AND THE LIPPER SMALL CAP FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Small Small Cap Russell Lipper
Cap Equity 2000 Small Cap
Equity Fund, Growth Funds
Fund w/load Index Average
4/92 10000 9650 10000 10000
9/92 10664 10291 9522 9895
3/93 12496 12059 10937 11734
9/93 14663 14150 12301 13161
3/94 14574 14064 12110 13121
9/94 14663 14150 12408 13441
3/95 15921 15364 12992 14193
9/95 20731 20005 15904 17328
3/96 22273 21493 17067 18764
9/96 26180 25263 17910 20586
3/97 22135 21360 16074 19656
9/97 31573 30468 22092 26828
[LINE GRAPH OMITTED]
CLASS B
Small Small Cap Russell Lipper
Cap Equity 2000 Small Cap
Equity Fund, Growth Funds
Fund w/load Index Average
4/92 10000 10000 10000 10000
9/92 10610 10610 9522 9895
3/93 12389 12389 10937 11734
9/93 14490 14490 12301 13161
3/94 14357 14357 12110 13121
9/94 14377 14377 12408 13441
3/95 15540 15540 12992 14193
9/95 20171 20171 15904 17328
3/96 21604 21604 17067 18764
9/96 25263 25263 17910 20586
3/97 21309 21309 16074 19656
9/97 30272 30272 22092 26828
<TABLE>
<CAPTION>
Average
Average Average Annual Return
One Year Annual 3 Annual 5 Inception
Return Year Return Year Return to Date
<S> <C> <C> <C> <C>
Class A
- -------
57
<PAGE>
WITHOUT LOAD 20.60% 29.13% 24.24% 23.50%
WITH LOAD 16.35 27.63 23.39 22.71
Class B
- -------
WITHOUT LOAD 19.82 28.17 23.33 22.59
WITH LOAD 16.32 27.76 23.29 22.59
</TABLE>
For the period ended September 30, 1997.
Past performance of the Fund is not predictive of future performance. Class A
and B shares were offered beginning February 3, 1997. Performance of the Class A
shares reflects the maximum front end sales charge of 3.50%. Class B shares
reflect the maximum contingent deferred sales charge of 3.50% for the one-year
holding period. The performance quoted for the Marquis Small Cap Equity Fund
represents information relating to the SEI Institutional Managed Trust Small Cap
Growth Portfolio. The Marquis Small Cap Equity Fund invests substantially all of
its assets in the SEI Institutional Managed Trust Small Cap Growth Portfolio.
The performance information contained herein has been adjusted to reflect the
actual fees and expenses of the Marquis Small Cap Equity Fund, whose fees and
expenses are higher than those of the SEI Institutional Managed Trust Small Cap
Growth Portfolio. The SEI Institutional Managed Trust Small Cap Growth Portfolio
shares were offered beginning April 20, 1992. The performance of the Russell
2000 Growth Index and the Lipper Small Cap Funds Average does not include annual
operating expenses which are experienced by the Fund.
INTERNATIONAL EQUITY FUND
For the twelve months ended September 30, 1997, the International Equity Fund
generated a return of 9.71% for Class A shares without a sales load, 5.84% for
Class A shares from which a sales charge has been deducted, and 5.52% for Class
B shares from which a sales charge has been deducted. This compares to a 12.19%
return for the MSCI EAFE Index for the same period. The Fund's net assets
reached $3.8 million by the end of the fiscal year.
The Marquis International Equity Fund invests substantially all of its assets in
the SEI International Trust International Equity Portfolio. A robust economy in
the United Kingdom, along with modest gains in France and Germany, led to strong
performance for the Portfolio's European holdings. This stood in sharp contrast
to the Asian markets, which continued to suffer from ongoing economic malaise in
Japan and currency crises in the emerging markets of Malaysia and Thailand.
The Portfolio's performance was also dampened somewhat by its small-cap
holdings, which comprise roughly 20% of the portfolio, at a time when the
small-cap sector has been out of favor in both Europe and Asia.
Looking ahead, we believe that the recent setbacks in Asia and the global
small-cap sector will be temporary in nature, and represent normal cycles in a
global investment strategy. Further, we remain optimistic that the worldwide
economic expansion will continue to provide significant opportunities for
investors who seek diversification beyond U.S. borders.
<TABLE>
<CAPTION>
Average Average Average
Annual Annual Annual Return
One Year 3 Year 5 Year Inception
Return Return Return to Date
<S> <C> <C> <C> <C>
Class A
- -------
WITHOUT LOAD 9.71% 7.68% 9.76% 5.06%
WITH LOAD 5.84 6.40 8.99 4.58
Class B
- -------
WITHOUT LOAD 9.02 6.87 8.93 4.25
WITH LOAD 5.52 6.32 8.86 4.25
</TABLE>
For the period ended September 30, 1997.
Past performance of the Fund is not predictive of future performance. Class A
and B shares were offered beginning February 3, 1997. Performance of the Class A
shares reflects the maximum front end sales charge of 3.50%. Class B shares
reflect the maximum contingent
58
<PAGE>
deferred sales charge of 3.50% for the one-year holding period. The performance
quoted for the Marquis International Equity Fund represents information relating
to the SEI International Trust International Equity Portfolio. The Marquis
International Equity Fund invests substantially all its assets in the SEI
International Trust International Equity Portfolio. The performance information
contained herein has been adjusted to reflect the actual fees and expenses of
the Marquis International Equity Fund, whose fees and expenses are higher than
those of the SEI INTERNATIONAL Trust International Equity Portfolio. The SEI
International Trust International Equity Portfolio shares were offered beginning
December 20, 1989. The performance of the MSCI EAFE Index and Lipper
International Funds Average does not include annual operating expenses which are
experienced by the Fund.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE INTERNATIONAL EQUITY FUND VERSUS THE
MSCI EAFE INDEX AND THE LIPPER INTERNATIONAL FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
International Lipper
International Equity MSCI International
Equity Fund EAFE Funds
Fund w/load Index Average
12/89 10000 9650 10000 10000
9/90 8336 8045 6927 8455
9/91 9376 9048 8443 9872
9/92 9165 8844 7842 9726
9/93 11028 10642 9908 11931
9/94 11693 11284 10883 13522
9/95 12156 11731 11514 13965
9/96 13309 12843 12507 15320
9/97 14601 14090 14032 18168
[LINE GRAPH OMITTED]
CLASS B
International Lipper
International Equity MSCI International
Equity Fund EAFE Funds
Fund w/load Index Average
12/89 10000 10000 10000 10000
9/90 8286 8286 6927 8455
9/91 9248 9248 8443 9872
9/92 8969 8969 7842 9726
9/93 10715 10715 9908 11931
9/94 11269 11269 10883 13522
9/95 11617 11617 11514 13965
9/96 12619 12619 12507 15320
9/97 13756 13756 14032 18168
59
<PAGE>
The One Group Asset Allocation Fund
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE AND STRATEGY
For the year ended June 30, 1997, The One Group Asset Allocation Fund Fiduciary
share class posted a total return of 20.16%. (For information on other share
classes and performance comparisons to indexes, please see page 6.)
Our research at the beginning of the fiscal year showed that stock valuations,
relative to bond valuations, were fairly high, but corporate earnings momentum,
or profitability, remained strong. As a result, we shifted the Fund's asset mix
slightly, to 54% stocks and 46% bonds, compared to 60% stocks and 40% bonds
during the previous fiscal year.
Relatively stable interest rates and solid earnings growth were the primary
forces at work in the bond and stock markets during the year. Without much
change in interest rates, there was little room for price appreciation in the
bond market, so returns consisted primarily of interest income. In the stock
market, strong corporate earnings helped push stocks to new heights.
EQUITY
The strong performance in the Fund's stock portfolio was due to our bottom-up
stock selection philosophy. Rather than emphasizing certain market sectors or
trying to time the market's moves, we research, evaluate and select stocks on an
individual basis to build a highly diversified portfolio. Because of this
approach, our stock portfolio represents a mix of four key equity
styles--large-capitalization growth, large-capitalization value,
medium-capitalization growth and medium-capitalization value.
We remained fully invested, focusing on stocks with an appealing combination of
good valuations and improving fundamentals.
FIXED INCOME
In the Fund's bond portfolio, our primary strategy was to maintain a neutral
duration posture of 4.1 years. (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.) We felt that the market was
fairly valued, and we didn't want to alter the portfolio's interest rate risk.
In addition, we maintained diversity among government, agency mortgage-backed
and corporate securities. Exposure to corporate and mortgage-backed securities
helped the Fund's performance, as these sectors outperformed government
securities on a relative basis. At the end of the fiscal year, 37% of the Fund's
bond portfolio was invested in government securities, 31% in mortgage-backed
securities and 32% in corporate and asset-backed securities.
Credit quality within the Fund's bond portfolio remained high, with 76% of the
portfolio's securities AAA-rated, 5% AA-rated, 14% A-rated and 6% BBB-rated. The
overall credit-quality rating of the bond portfolio was AAA-.
NOTABLE STOCK HOLDINGS
The equity portfolio benefited from particularly good stock selection in the
following sectors: technology (Intel, up 94%), health technology (Bristol
Meyers, up 85%), and energy, (Tosco, up 81%).
Three of the Fund's top 10 stock holdings changed during the year--AT&T, Royal
Dutch and Coca-Cola were replaced by Bristol Meyers, at 0.9% of assets on June
30, 1997; IBM, 0.9%; and Federal National Mortgage Association, 0.8%. The
remaining top 10 as of the end of the year included General Electric, 1.5% of
assets; Microsoft, 1.4%; Merck, 1.2%, Intel, 1.1%; Philip Morris, 1.1%; Exxon,
1.0%; and Wal-Mart, 1.0%.
OUTLOOK
We believe that equity and fixed-income securities will continue to benefit from
a strong economy, low inflation and low interest rates. In the stock market, we
expect returns to remain attractive, but we also think they will become more
subdued as we expect corporate earnings momentum to slow down. In addition, the
favoritism the market has shown toward large-capitalization growth stocks may be
fading, which would bode well for other areas of the stock market. In the bond
market, we expect yield fluctuations to be moderate and corporate credit
fundamentals to remain healthy. As such, we expect to maintain the Fund's
positions in the corporate and mortgage sectors.
Because stocks still appear fully valued compared to bonds, we expect to
maintain the Fund's current asset
60
<PAGE>
The One Group Asset Allocation Fund
PORTFOLIO PERFORMANCE REVIEW, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
allocation mix (54% stocks and 46% bonds) and investment strategies in the
coming months. Of course, we will continue to monitor the valuation levels in
the financial markets and to watch for signs of inflationary pressures, as any
changes may warrant a shift in our strategy.
/s/ MICHAEL D. WEINER
Michael D. Weiner
Fund Manager
/s/ RICHARD R. JANDRAIN III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
/s/ SCOTT GRIMSHAW
Scott Grimshaw
Fund Manager
/s/ GARY J. MADICH
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
61
<PAGE>
The One Group Asset Allocation Fund
PORTFOLIO PERFORMANCE REVIEW, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
Since
Inception
1 Year (4/5/93)
------ --------
<S> <C> <C>
Fiduciary 20.16% 11.81%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
MEASUREMENT PERIOD ---------------------------
(FISCAL YEAR COVERED) S&P 500 S&P/LIPPER MIX FIDUCIARY
--------------------- ------- -------------- ---------
<S> <C> <C> <C>
4/93 $10,000 $10,000 $10,000
6/93 10,298 10,241 10,129
6/94 10,442 10,260 10,027
6/95 13,165 12,218 11,636
6/96 16,588 14,245 13,356
6/97 22,343 17,395 16,048
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
Since
Inception
1 Year (4/2/93)
------ ---------
<S> <C> <C>
Class A 19.85% 11.52%
Class A* 14.46% 10.31%
</TABLE>
* Reflects 4.50% Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
MEASUREMENT PERIOD ---------------------------
(FISCAL YEAR COVERED) S&P 500 S&P/LIPPER MIX CLASS A* CLASS A
--------------------- ------- -------------- -------- -------
<S> <C> <C> <C> <C>
4/93 $10,000 $10,000 $ 9,550 $10,000
6/93 10,298 10,241 9,668 10,124
6/94 10,442 10,260 9,553 10,003
6/95 13,165 12,218 11,057 11,580
6/96 16,588 14,245 12,657 13,257
6/97 22,343 17,395 15,166 15,888
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
Since
Inception
1 Year (1/14/94)
------ ---------
<S> <C> <C>
Class B 18.90% 11.59%
Class B** 14.90% 10.93%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge
<TABLE>
<CAPTION> VALUE OF $10,000 INVESTMENT
MEASUREMENT PERIOD ---------------------------
(FISCAL YEAR COVERED) S&P 500 S&P/LIPPER MIX CLASS B** CLASS B
--------------------- ------- -------------- ---------- -------
<S> <C> <C> <C> <C>
1/94 $10,000 $10,000 $ 1,000 $10,000
6/94 9,344 9,410 9,402 9,402
6/95 11,779 11,206 10,803 10,803
6/96 14,842 13,065 12,292 12,292
6/97 19,992 15,995 14,316 14,616
</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 Asset Allocation Fund is measured against the S&P 500
Index, an unmanaged index generally representative of the performance of large
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 Shares.
The S&P/Lipper Mix for all the classes is a blended index consisting of 60% of
the average monthly returns of the S&P 1500 Index from January 1, 1995 (index
inception date) until present and of the S&P 500 Index from April 1993 through
December 1995. The final 40% consists of the Lipper Intermediate US Government
Bond Funds Index.
62
<PAGE>
The One Group Disciplined Value Fund
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE AND STRATEGY
The One Group Disciplined Value Fund Fiduciary share class had a total return of
20.56% for the year ended June 30, 1997. (For information on other share classes
and performance comparisons to indexes, please see page 16.)
Our goal for the Fund over the last year was to maintain a diversified portfolio
with exposure to a variety of economic sectors. Throughout the period, the stock
market was very concerned about the direction of interest rates. So, in order to
avoid some of the price volatility associated with potential changes in interest
rates, we broadly diversified the Fund's portfolio. Within this framework, we
emphasized individual stock selection and continued to rebalance the portfolio
in order to improve its structure and upgrade its holdings as market conditions
changed.
The Fund's largest sector weightings included electric utilities, banks and
industrial commodities. Securities from these sectors represented more than
one-third of the Fund's holdings. Within the electric utilities sector, many
problems surfaced due to regulatory issues and increased competition. As a
result, the Fund's investments in electric utilities stocks held back the Fund's
performance earlier in the year. After we reduced the Fund's investment in this
sector, however, overall portfolio performance improved.
The greatest positive influence on portfolio performance came from the energy
sector, where we took advantage of favorable price movements. We were able to
purchase energy stocks at attractive prices and then sell them when their prices
had appreciated to our targeted levels. The largest negative influence came from
the capital equipment sector, where some individual stock holdings showed poor
performance.
NOTABLE STOCK HOLDINGS
Outstanding performance from several individual stocks boosted the Fund's
return. These exemplary stocks included Teradyne, which increased 119% in value
due to an upturn from a cyclical low in the semiconductor capital equipment
industry; Smith Foods, which increased 85% on a takeover by Fred Meyer
Corporation; Lattice Semiconductor, which was up more than 55% due to continued
strong growth in programmable logic devices; and Edison International, which
increased 40% due to decreasing regulatory concerns.
The Fund's return suffered somewhat from the poor performance of certain stocks:
Nellcor declined more than 30% due to management's difficulties in implementing
a new MIS (management information system); Illinova declined more than 30% due
to heightened regulatory concerns in the electric utilities industry; and Octel
Communications lost 20% due to pricing pressures.
Profit-taking was the underlying motivation for changes in the Fund's top 10
holdings. For example, Seagate Technologies, Washington Post and Bear Stearns
were all trimmed or eliminated as the stocks reached their price targets. We
then established new holdings in similar industries at more attractive valuation
levels. The Fund's top 10 holdings on June 30, 1997, included Regions Financial
Corp., at 1.8% of Fund assets; SouthTrust Corp., 1.8%; CMS Energy Corp., 1.5%;
Provident Companies Inc., 1.5%; McKesson Corp., 1.5%; Nextel Communications,
1.3%; Molex, Inc., 1.3%; Summit Bancorp, 1.2%; Teradyne, Inc., 1.3%; and PMI
Group Inc., 1.2%.
OUTLOOK
Looking ahead, strong economic growth may force the Federal Reserve to tighten
monetary policy. As we've seen in the past, higher interest rates can create
severe volatility in the stock market. We will maintain our current strategy of
broad sector diversification and individual stock selection to help protect the
Fund from a possible interest rate hike. Within each sector, we will continue to
look for the best values--those with low price/earnings and price/book
ratios--among medium-capitalization stocks.
/s/ RICHARD R. JANDRAIN III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
63
<PAGE>
The One Group Disciplined Value Fund
PORTFOLIO PERFORMANCE REVIEW, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (3/2/89)
------ ------ ---------
<S> <C> <C> <C>
Fiduciary 20.56% 14.70 12.51%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
S&P/BARRA
MEASUREMENT PERIOD MIDCAP
(FISCAL YEAR COVERED) 400 VALUE FIDUCIARY
--------------------- --------- ---------
<S> <C> <C>
3/89 $10,000 $10,000
6/89 10,883 10,989
6/90 12,677 11,372
6/91 13,666 11,572
6/92 16,450 13,451
6/93 20,284 15,278
6/94 20,388 15,895
6/95 24,523 18,443
6/96 30,137 22,150
6/97 37,343 26,704
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
------ ------ ---------
<S> <C> <C> <C>
Class A 20.21% 14.45% 13.65%
Class A* 14.82% 13.40% 12.68%
</TABLE>
* Reflects 4.50% Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
S&P/BARRA
MEASUREMENT PERIOD MIDCAP
(FISCAL YEAR COVERED) 400 VALUE CLASS A* CLASS A
--------------------- --------- -------- -------
<S> <C> <C> <C>
2/92 $10,000 $ 9,550 $10,000
6/92 9,732 9,666 10,121
6/93 11,999 10,948 11,464
6/94 12,061 11,418 11,956
6/95 14,507 13,179 13,801
6/96 17,828 15,788 16,534
6/97 22,091 18,977 19,875
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (1/14/94)
------ ------ ---------
<S> <C> <C> <C>
Class B 19.19% NA 13.45%
Class B** 15.19% NA 12.81%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
S&P/BARRA
MEASUREMENT PERIOD MIDCAP
(FISCAL YEAR COVERED) 400 VALUE CLASS B** CLASS B
--------------------- --------- --------- -------
<S> <C> <C> <C>
1/94 $10,000 $10,000 $10,000
6/94 9,467 9,500 9,500
6/95 11,387 10,918 10,918
6/96 13,994 12,985 12,985
6/97 17,340 15,176 15,476
</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 Disciplined Value Fund is measured against the S&P/BARRA
Midcap 400 Value Index, an unmanaged index representing the performance of the
lowest price to book securities in the S&P Midcap 400 Index. 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 Shares.
The S&P/BARRA Midcap 400 Value Index consists of the average monthly returns of
the S&P 500 Index for periods prior to June 1991. Thereafter, the data are from
the S&P/BARRA Midcap 400 Value Index which corresponds with the initiation of
the S&P/BARRA Midcap 400 Value Index on June 30, 1991.
64
<PAGE>
The One Group Growth Opportunities Fund
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE AND STRATEGY
The One Group Growth Opportunities Fund Fiduciary share class posted a total
return of 22.75% for the year ended June 30, 1997. (For information on other
share classes and performance comparisons to the indexes, please see page 20.)
Medium-capitalization growth stocks continued to benefit from a strong economy,
low inflation, solid corporate earnings, relatively low interest rates and
worldwide political stability.
The Fund's strong performance primarily can be attributed to rising markets and
good stock selection. We evaluate stocks on an individual basis, searching for
those with appealing fundamentals. We do not select stocks based on general
economic or market trends. As a result, we were able to uncover companies in
high-growth industries that offer good business models and strategies and
competitive advantages.
The Fund continued to favor stocks in the technology sector, which offered
strong performance due to a growth rate that surpassed that of the overall
economy. We also emphasized stocks from the communications technology and
financial industries, which have offered solid earnings growth at compelling
valuations.
NOTABLE STOCK HOLDINGS
The stocks of three companies showed particularly strong performance: Dell
Computer Corporation, up 360%; Advanced Fiber, up 112%; and Charles Schwab &
Co., up 64%. Each of these companies is in a high-growth area of its respective
sector, and management has successfully executed each company's strategy. Each
has exceeded earnings projections, and earnings continue to be revised upward.
On the other hand, poor performance from Medaphis, a health services company
that was down significantly for the 12-month period, hurt the Fund's return. The
company suffered from major earnings disappointments and downward revisions
after purchasing too many firms and losing control of its acquisition
strategies.
Once a stock reaches what we believe to be its full value, we usually sell it.
Also, we may increase our position in certain issues during market sell-offs. As
a result, price changes on the Fund's stocks cause the portfolio's top 10
holdings to change from time to time. On June 30, 1997, the top 10 holdings
included Progressive Corp., at 2.4% of Fund assets; Coca Cola Enterprises, 2.3%;
Franklin Resources, 2.1%; AES Corp., 2.0%; Advanced Fiber Corp, 1.8%, Just for
Feet, 1.7%; 3 Com Corp., 1.7%; AFLAC Inc., 1.6%; BMC Software Inc., 1.5%; and
Oxford Health, 1.5%.
OUTLOOK
In the months ahead, the technology sector should remain the "backbone" of the
Fund. Furthermore, we expect to see a shift in market sentiment, as small- and
mid-capitalization stocks gain greater favor with investors. We believe that the
smaller market indexes may in the coming months start outperforming the larger
indexes--a situation that hasn't occurred in more than three years. Given this
scenario, the Fund has the potential to continue providing an attractive total
return.
/s/ ASHI S. PARIKH
Ashi S. Parikh
Fund Manager
/s/ RICHARD R. JANDRAIN III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
65
<PAGE>
The One Group Growth Opportunities Fund
PORTFOLIO PERFORMANCE REVIEW, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (3/2/89)
------ ------ ---------
<S> <C> <C> <C>
Fiduciary 22.75% 17.29% 16.89%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
S&P/BARRA
MEASUREMENT PERIOD MIDCAP
(FISCAL YEAR COVERED) 400 VALUE FIDUCIARY
--------------------- --------- ---------
<S> <C> <C>
3/89 $10,000 $10,000
6/89 10,604 10,822
6/90 10,720 13,077
6/91 10,635 14,364
6/92 12,290 16,543
6/93 14,903 20,076
6/94 14,620 20,044
6/95 18,183 24,002
6/96 21,703 29,915
6/97 26,785 36,721
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
------ ------ ---------
<S> <C> <C> <C>
Class A 22.52% 17.12% 13.24%
Class A* 17.03% 16.05% 12.28%
</TABLE>
* Reflects 4.50% Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
S&P/BARRA
MEASUREMENT PERIOD MIDCAP
(FISCAL YEAR COVERED) 400 VALUE CLASS A* CLASS A
--------------------- --------- -------- -------
<S> <C> <C> <C>
2/92 $10,000 $ 9,550 $10,000
6/92 8,904 8,448 8,847
6/93 10,798 10,282 10,766
6/94 10,592 10,229 10,710
6/95 13,173 12,224 12,799
6/96 15,724 15,196 15,912
6/97 19,406 18,618 19,495
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (1/14/94)
------ ------ ---------
<S> <C> <C> <C>
Class B 21.73% NA 14.96%
Class B** 17.73% NA 14.34%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
S&P/BARRA
MEASUREMENT PERIOD MIDCAP
(FISCAL YEAR COVERED) 400 VALUE CLASS B** CLASS B
--------------------- --------- --------- -------
<S> <C> <C> <C>
1/94 $10,000 $10,000 $10,000
6/94 8,611 9,093 9,093
6/95 10,709 10,772 10,772
6/96 12,783 13,307 13,307
6/97 15,776 15,898 16,198
</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 Growth Opportunities Fund is measured against the
S&P/BARRA Midcap 400 Growth Index, an unmanaged index representing the
performance of the highest price to book securities in the S&P Midcap 400 Index.
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 Shares.
The S&P/BARRA Midcap 400 Growth Index for the Fiduciary Class Shares consists of
the average monthly returns of the Russell 2000 Index for periods prior to June,
1991. Thereafter, the data are from the S&P/BARRA Midcap 400 Growth Index which
corresponds with the initiation of the S&P/BARRA Midcap 400 Growth Index on June
30, 1991.
66
<PAGE>
The One Group Gulf South Growth Fund
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE AND STRATEGY
For the year ended June 30, 1997, The One Group Gulf South Growth Fund Fiduciary
share class posted a total return of 13.44%. (For information on other share
classes and performance comparisons to indexes, please see page 22.)
Compared to large-capitalization growth stocks, smaller-capitalization growth
stocks remained out of favor with investors over the last year.
Large-capitalization stocks, due to their liquidity and earnings predictability,
have outperformed their smaller-capitalization brethren for the third year in a
row.
Our primary strategies during the year were to maintain an average market
capitalization of $500 million or less and enhance the portfolio's
diversification. The Fund's assets were divided among 17 sectors that span a
broad range of industries. The only sector that we significantly emphasized was
energy. In particular, our own fundamental research and increased drilling
activity in the Gulf of Mexico led us to many attractively priced oil stocks.
Although the Fund's sector weights changed little during the year, the
individual industries and stocks comprising those industries did change. We
reduced many of the Fund's positions through the normal selling of companies
that failed to perform to expectations. We also reduced some holdings due to
profit-taking. Furthermore, we scaled back each of the top 10 holdings so that
no holding represented more than 2% of total Fund assets.
NOTABLE STOCK HOLDINGS
Of the top 10 holdings on June 30, 1997, four were financial stocks--Triad
Guaranty at 1.7% of assets; CCB Financial, 1.5%; First Financial Holdings, 1.3%;
and Protective Life, 1.3%. The remaining stocks in the top 10 included DeKalb
Genetics at 1.6% of assets; Stewart Enterprises, 1.5%; Tech Data, 1.5%;
Omnicare, 1.3%; Maverick Tube Corp., 1.2%; and Newpark Resources, Inc., 1.2%.
The acceleration of activity in the Gulf of Mexico's oil patch led to strong
performance for several of the Fund's oil service companies. For example,
Maverick Tube was up more than 200%; Trico Marine and Patterson Energy were up
more than 100%; Pride Petroleum was up 50%; and Stone Energy was up 40%.
The Fund suffered a significant loss from Medaphis, a health services company
that experienced severe losses and declined 71% during the year. In the retail
sector, Garden Ridge, down 68%, was a major disappointment as earnings did not
meet expectations.
OUTLOOK
Looking ahead, it appears as though small-capitalization stocks may be on the
verge of regaining investor favor. Although the market continues to demand
liquidity, which is provided by large-capitalization stocks, the valuations in
small-company stocks are becoming more compelling on a price/earnings to growth
relationship.
/s/ DONALD E. ALLRED
Donald E. Allred
Fund Manager
/s/ RICHARD R. JANDRAIN III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
67
<PAGE>
The One Group Gulf South Growth Fund
PORTFOLIO PERFORMANCE REVIEW, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (7/1/91)
------ ------ ---------
<S> <C> <C> <C>
Fiduciary 13.44% 15.06% 16.06%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) S&P 600 FIDUCIARY
--------------------- ------- ---------
<S> <C> <C>
6/91 $10,000 $10,000
6/92 11,710 12,122
6/93 15,046 15,309
6/94 15,326 15,874
6/95 18,447 17,772
6/96 23,246 21,551
6/97 28,287 24,448
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (7/1/91)
------ ------ ---------
<S> <C> <C> <C>
Class A 13.52% 14.99% 16.00%
Class A* 8.38% 13.93% 15.11%
</TABLE>
* Reflects 4.50% Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) S&P 600 CLASS A* CLASS A
--------------------- ------- -------- -------
<S> <C> <C> <C>
6/91 $10,000 $ 9,550 $10,000
6/92 11,710 11,577 12,122
6/93 15,046 14,620 15,309
6/94 15,326 15,159 15,877
6/95 18,447 16,972 17,772
6/96 23,246 20,502 21,468
6/97 28,287 23,275 24,371
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (9/12/94)
------ ------ ---------
<S> <C> <C> <C>
Class B 12.74% NA 13.68%
Class B** 8.74% NA 12.83%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) S&P 600 CLASS B** CLASS B
--------------------- ------- --------- -------
<S> <C> <C> <C>
12/94 $10,000 $10,000 $10,000
6/95 11,470 10,594 10,594
6/96 14,454 12,702 12,702
6/97 17,589 14,020 14,320
</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 above-quoted performance data includes the performance of the Paragon Gulf
South Growth Fund for the period prior to the commencement of operations of The
One Group Gulf South Growth Fund on March 26, 1996. Performance for the
Fiduciary Shares is based on Class A Share performance adjusted to reflect the
absence of sales charges.
The performance of the Gulf South Growth Fund is measured against the S&P 600
Index, an unmanaged index generally representative of the performance of 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 Shares.
68
<PAGE>
The One Group International Equity Index Fund
PORTFOLIO PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE AND STRATEGY
For the year ended June 30, 1997, The One Group International Equity Index Fund
Fiduciary share class provided a total return of 14.64%. (For information on
other share classes and a performance comparison to the index, please see page
24.)
As it is designed to do, the Fund's performance closely matched that of the
Morgan Stanley Capital International Europe, Australia, Far East/Gross Domestic
Product (EAFE/GDP) Index. For the one-year period, the EAFE/GDP Index provided a
return of 14.57%.
We were able to slightly outperform the EAFE/GDP Index despite the fact that the
Fund has fees and expenses and the index does not. What particularly helped the
Fund overcome these factors was the Fund's investment in the emerging markets,
including Mexico, Brazil, Turkey and Thailand.
The Fund invests in a portfolio that consists of 90% EAFE/GDP and 10% emerging
markets. (The Fund owned 600 stocks in the developed international markets and
270 stocks in the emerging markets.) We invest the Fund's assets according to
how the 20 developed countries that comprise the EAFE/GDP are weighted in the
Index, and we equally weight the 13 emerging market countries. During the last
year, the emerging market component outperformed the EAFE/GDP Index, returning
17.27%.
While the Fund's one-year return was attractive, it would have been greater but
for the strength of the U.S. dollar during the period. In other words,
purchasing a U.S. dollar in most foreign countries required a greater amount of
local currency at the end of the fiscal year than it did at the beginning. As a
result, the Fund's foreign-denominated investments were worth less when
translated to U.S. dollars.
NOTABLE COUNTRY RETURNS
The Japanese stock market, where we invested the largest percentage of Fund
assets--between 23% and 29%--was down 9% for the year. In spite of this poor
performance, the Fund still provided a good return, as strong results from many
other countries helped offset the decline in the Japanese market.
The stock markets in several developed countries offered excellent returns
during the period. For example, in Finland, the market was up 54%; Spain, up
49%; The Netherlands, up 38%; Sweden, up 38%; and the United Kingdom, up 35%.
Emerging market countries offering outstanding performance included Brazil,
whose stock market was up 72%; Turkey, up 60%; Portugal, up 48%; Greece, up 47%;
and Mexico, up 31%.
OUTLOOK
Looking ahead, we believe that international economic activity will likely
remain strong. Stock market performance in Japan should improve, European
markets generally appear attractive, and many elements of the emerging markets
appear favorable.
/s/ NORMAN MELTZ
Norman Meltz
Independence International Associates Inc.
Fund Sub-Advisor
/s/ RICHARD R. JANDRAIN III
Richard R. Jandrain III
Senior Managing Director of Equity Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
69
<PAGE>
The One Group International Equity Index Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year (10/28/92)
------ ----------
<S> <C> <C>
Fiduciary 14.64% 13.57%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
MEASUREMENT PERIOD MORGAN STANLEY
(FISCAL YEAR COVERED) EAFE/GDP FIDUCIARY
--------------------- -------------- ---------
<S> <C> <C>
10/92 $10,000 $10,000
6/93 12,292 11,812
6/94 14,582 13,636
6/95 15,141 14,209
6/96 17,054 15,803
6/97 19,539 18,116
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year (4/23/93)
------ ---------
<S> <C> <C>
Class A 14.31% 10.43%
Class A* 9.18% 9.18%
</TABLE>
* Reflects 4.50% Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
MEASUREMENT PERIOD MORGAN STANLEY
(FISCAL YEAR COVERED) EAFE/GDP CLASS A* CLASS A
--------------------- -------------- -------- -------
<S> <C> <C> <C>
4/93 $10,000 $ 9,550 $10,000
6/93 9,989 9,510 9,958
6/94 11,850 10,953 11,469
6/95 12,304 11,374 11,913
6/96 13,859 12,641 13,248
6/97 15,878 14,448 15,144
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
------ ---------
<S> <C> <C>
Class B 13.37% 8.54%
Class B** 9.37% 7.84%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
MEASUREMENT PERIOD MORGAN STANLEY
(FISCAL YEAR COVERED) EAFE/GDP CLASS B** CLASS B
--------------------- -------------- --------- -------
<S> <C> <C> <C>
1/94 $10,000 $10,000 $10,000
6/94 10,046 10,323 10,323
6/95 10,431 10,650 10,650
6/96 11,750 11,712 11,712
6/97 13,461 12,978 13,278
</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.
International investing involves increased risk and volatility.
The performance of the International Equity Index Fund is measured against the
Morgan Stanley EAFE/GDP Index, an unmanaged index generally representative of
the performance of international stock markets. 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 Shares.
70
<PAGE>
The One Group Government Bond Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE
For the year ended June 30, 1997, The One Group Government Bond Fund Fiduciary
share class posted a total return of 8.10%. (For information on other share
classes and performance comparisons to indexes, please see page 11.)
While interest rates showed a slight overall decline from the beginning of the
fiscal year to the end, in between there were periods of modest volatility. The
five-year Treasury Note, for example, started the fiscal year yielding 6.55% and
ended it yielding 6.50%. However, between these two points, the yield went as
high as 6.80% and as low as 5.80%. The Fund's 30-day SEC yield (Fiduciary share
class) remained attractive at 6.24% on June 30, 1997, compared to 6.46% on June
30, 1996.
The Fund's total return is a reflection of our increased emphasis on yield
rather than price appreciation. Yields from mortgage-backed securities continued
to be the major source of total return during the fiscal year. 1996 was a good
year for the production of new mortgage securities across most classes, but as
rates rose in 1997, mortgage activity from new home purchases and refinances
slowed down. Overall, though, the mortgage-backed securities market outperformed
Treasuries and maintained a high degree of liquidity, proving to be the driving
force behind the Fund's strong performance.
STRATEGIES AND TACTICS
In addition to generating a high yield from mortgage-backed securities, another
component of the Fund's investment strategy was maintaining a neutral duration.
(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.) For most of the year the Fund's duration remained in the 5.0-year to
5.25-year range, slightly higher than it was in the previous year but still
within our neutral target.
Maintaining the Fund's duration within a neutral range helped limit the effects
of interest rate movements during the year. Specifically, when interest rates
rise, bond prices fall, and funds with shorter durations tend to outperfom those
with longer durations.
OUTLOOK
During the next 12 months, economic activity and Federal Reserve policy will
have the greatest impact on the Fund's performance. If strong economic growth
continues, the Federal Reserve is likely to initiate further rate hikes, which
would have an adverse effect on total returns. We expect rates to increase
modestly during the remainder of 1997 and then decline somewhat in 1998.
We will continue to emphasize yield, rather than price appreciation, as the
primary component of total return. As such, we expect to maintain a neutral
duration, and we plan to continue emphasizing mortgage-backed securities over
Treasuries. However, we will monitor the interest rate forecasts and restructure
the portfolio if significant interest rate volatility appears likely. In this
type of environment, mortgage-backed securities would be expected to
underperform Treasuries, so we would adjust the Fund's sector weightings
accordingly.
/s/ THOMAS E. DONNE, CFA
- -------------------------
Thomas E. Donne, CFA
Fund Manager
/s/ MICHAEL J. SAIS, CFA
- -------------------------
Michael J. Sais, CFA
Fund Co-Manager
/s/ GARY J. MADICH, CFA
- -------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
71
<PAGE>
The One Group Government Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year (2/8/93)
------ --------
<S> <C> <C>
Fiduciary 8.10% 5.52%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
SALOMON BROTHERS LIPPER US
MEASUREMENT PERIOD 3-7 YEAR GOVERNMENT BOND
(FISCAL YEAR COVERED) TREASURY INDEX FUNDS INDEX FIDUCIARY
--------------------- -------------- ----------- ---------
<S> <C> <C> <C>
2/93 $10,000 $10,000 $10,000
6/93 10,275 10,289 10,351
6/94 10,174 9,973 10,068
6/95 11,275 11,028 11,281
6/96 11,790 11,440 11,710
6/97 12,623 12,256 12,800
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year (3/5/93)
------ --------
<S> <C> <C>
Class A 7.83% 4.91%
Class A* 2.98% 3.80%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
SALOMON BROTHERS LIPPER US
MEASUREMENT PERIOD 3-7 YEAR GOVERNMENT BOND
(FISCAL YEAR COVERED) TREASURY INDEX FUNDS INDEX CLASS A* CLASS A
--------------------- -------------- ----------- -------- -------
<S> <C> <C> <C> <C>
3/93 $10,000 $10,000 $ 9,550 $10,000
6/93 10,237 10,252 9,713 10,171
6/94 10,136 9,937 9,406 9,849
6/95 11,233 10,989 10,519 11,015
6/96 11,746 11,399 10,896 11,410
6/97 12,576 12,212 11,749 12,350
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year (1/14/94)
------ ---------
<S> <C> <C>
Class B 7.14% 4.52%
Class B** 3.14% 3.77%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
SALOMON BROTHERS LIPPER US
MEASUREMENT PERIOD 3-7 YEAR GOVERNMENT BOND
(FISCAL YEAR COVERED) TREASURY INDEX FUNDS INDEX CLASS B** CLASS B
--------------------- -------------- ----------- --------- -------
<S> <C> <C> <C> <C>
1/94 $10,000 $10,000 $10,000 $10,000
6/94 9,560 9,377 9,501 9,501
6/95 10,595 10,369 10,566 10,566
6/96 11,079 10,757 10,877 10,877
6/97 11,862 11,524 11,364 11,654
</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 Government Bond Fund is measured against the Salomon
Brothers 3 to 7 Year Treasury Index, an unmanaged index comprised of US
Government agency and Treasury securities and agency mortgaged-backed
securities. 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 Shares.
The Lipper US Government Bond Funds Index consists of the equally weighted
average monthly return of the largest funds within the universe of all funds in
the category.
72
<PAGE>
The One Group Income Bond Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE
For the year ended June 30, 1997, The One Group Income Bond Fund Fiduciary share
class posted a total return of 8.10%. (For information on other share classes
and performance comparisons to indexes, please see page 13.)
As interest rates in general declined slightly during the year, the Fund's
30-day SEC yield was down from 6.91% on June 30, 1996, to 6.70% on June 30, 1997
(Fiduciary share class). Nevertheless, the Fund's yield remained attractive
primarily due to a slightly larger commitment to Yankee bonds, which are
dollar-denominated securities from foreign issuers. These bonds typically offer
higher yields than comparably-rated U.S.-issued securities.
In addition to Yankee bonds, the Fund focused on corporate bonds and mortgage
pass-through securities, which also offered good yields. Also, yield spreads
(the yield difference between corporate bonds and Treasury bonds) decreased
during the year, causing prices on corporate bonds to rise. The resulting price
appreciation combined with the attractive yields provided by all three sectors
contributed to the Fund's strong total return.
STRATEGIES AND TACTICS
A primary strategy for the year was to maintain an average duration exposure of
about 4.7 years, while improving yield. (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.) We purposely avoid making
significant changes to the Fund's duration, as we believe it is risky to "make
bets" on interest rate movements. Instead, we try to maintain a neutral duration
and position the Fund to earn a relatively good rate of interest income.
This strategy worked well during the fiscal year, as the Fund was able to
generate incremental return without taking on additional interest rate risk. In
addition, the Fund enjoyed better price appreciation than generally was
experienced in the bond market because of the Fund's greater exposure to the
corporate bond sector. As interest rates declined, prices among corporate bonds
appreciated more than others.
The Fund maintained a good quality profile during the fiscal year, with 44% of
the Fund's assets invested in securities rated AAA, 5% in those rated AA, 23% in
A-rated, and 28% in BBB- or non-rated securities. The Fund's overall quality
rating was A at the end of the year.
On April 10, 1997, shareholders at a special meeting approved a change in the
Fund's investment policy. (The shareholder votes were cast as follows:
58,519,425 in favor; 7,899,515 opposed; and 3,180,663 abstained.) In addition to
investment-grade securities (those rated from AAA to BBB), the Fund now is able
to invest up to 30% of its assets in securities rated BB or B. Our research
shows that these securities, coupled with the steady cash flow distribution of
investment-grade bonds, historically have produced good returns and relatively
stable price trends in a variety of market conditions. Of course, while offering
higher yields, lower-grade securities also contain greater risks. We plan to
gradually introduce these securities to the Fund and to continue maintaining an
overall credit-quality rating of A.
OUTLOOK
Looking toward the upcoming months, we don't expect to see too many changes in
the economic or market environments. We believe that the economy should continue
to grow at a decent pace, inflation should remain low and interest rates should
remain fairly stable. Furthermore, the U.S. budget deficit is expected to
decline.
This scenario should bode well for corporate bonds. We believe that corporate
spreads should decline only slightly relative to Treasuries, so the primary
component of total return again should be yield rather than price appreciation.
The Fund will continue to seek a higher-than-average yield.
/s/ ROGER CRAIG
- ------------------------
Roger Craig
Fund Manager
/s/ GARY J. MADICH, CFA
- ------------------------
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
73
<PAGE>
The One Group Income Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
(7/2/87)
1 Year 5 Year 10 Year
------ ------ -------
<S> <C> <C> <C>
Fiduciary 8.10% 6.37% 7.23%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
LIPPER
INERTMEDIATE
INVESTMENT GRADE
MEASUREMENT PERIOD LEHMAN BROTHERS BOND FUNDS
(FISCAL YEAR COVERED) AGGREGATE BOND INDEX INDEX FIDUCIARY
--------------------- -------------------- ----- ---------
<S> <C> <C> <C>
7/87 $10,000 $10,000 $10,000
6/88 10,814 10,673 10,406
6/89 12,135 11,746 11,168
6/90 13,088 12,414 11,882
6/91 14,488 13,482 12,974
6/92 16,522 15,362 14,770
6/93 18,469 17,169 16,340
6/94 18,229 16,940 15,977
6/95 20,516 18,821 17,781
6/96 21,545 19,737 18,603
6/97 23,301 21,240 20,110
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (2/18/92)
------ ------ ---------
<S> <C> <C> <C>
Class A 7.85% 6.14% 6.42%
Class A* 2.99% 5.16% 5.51%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
LIPPER
INTERMEDIATE
INVESTMENT GRADE
MEASUREMENT PERIOD LEHMAN BROTHERS BOND FUNDS
(FISCAL YEAR COVERED) AGGREGATE BOND INDEX INDEX CLASS A* CLASS A
--------------------- -------------------- ----- -------- -------
<S> <C> <C> <C> <C>
2/92 $10,000 $10,000 $ 9,550 $10,000
6/92 10,345 10,356 9,901 10,368
6/93 11,564 11,574 10,948 11,464
6/94 11,413 11,420 10,693 11,197
6/95 12,845 12,688 11,859 12,418
6/96 13,490 13,305 12,365 12,947
6/97 14,589 14,319 13,335 13,964
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (1/14/94)
------ ------ ---------
<S> <C> <C> <C>
Class B 7.15% NA 4.48%
Class B** 3.15% NA 3.73%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
LIPPER
INTERMEDIATE
INVESTMENT GRADE
MEASUREMENT PERIOD LEHMAN BROTHERS BOND FUNDS
(FISCAL YEAR COVERED) AGGREGATE BOND INDEX INDEX CLASS B** CLASS B
--------------------- -------------------- ----- --------- -------
<S> <C> <C> <C> <C>
1/94 $10,000 $10,000 $10,000 $10,000
6/94 9,485 9,488 9,471 9,471
6/95 10,675 10,542 10,478 10,478
6/96 11,211 11,055 10,860 10,860
6/97 12,124 11,897 11,351 11,637
</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 Income Bond Fund is measured against the Lehman Brothers
Aggregate Bond Index, an unmanaged index comprised of US Government, mortgage,
corporate and asset-backed securities. 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 Shares.
The Lipper Intermediate Investment Grade Bond Funds Index consists of the
equally weighted average monthly return of the largest funds within the universe
of all funds in the category.
74
<PAGE>
The One Group Louisiana Municipal Bond Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE
The One Group Louisiana Municipal Bond Fund Fiduciary share class posted a total
return of 6.81% for the year ended June 30, 1997. (For information on other
share classes and performance comparisons to indexes, please see page 16.)
Tax-exempt rates were in the process of falling just prior to the start of the
fiscal year. Rates quickly fell 25 basis points (one basis point equals 1/100th
of a percent) in early July, and then proceeded to trade up and down in a range
over the next 11 months, eventually falling another 25 basis points. This helped
push the Fund's SEC yield lower, at a rate that equaled the general decline in
yield on securities in the 10- to 15-year maturity sector.
The 30-day SEC yield on the Fund's Fiduciary share class was 4.16% on June 30,
1997, compared to 4.58% on June 30, 1996. (For investors in the 39.6% federal
income tax bracket and the 6.0% Louisiana state bracket, the June 30 yield
translates into a 7.32% tax-equivalent yield.)
The Fund's total return was comprised primarily of interest income. With
high-quality, intermediate-term municipal securities trading in a narrow
interest rate range during the year, there were only modest price improvements
and thus the majority of total return came from interest income.
The major factor contributing to the Fund's performance was the timing of our
duration adjustments. (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.) Initially, we maintained a shorter duration as
rates were rising. Then, as rates moved lower in the latter part of 1996, we
extended duration. During periods of rising interest rates, bond prices fall and
funds with shorter durations typically experience less price volatility. On the
other hand, when rates decline, bond prices rise and funds with longer durations
typically experience greater price appreciation.
Overall, duration was up from 4.63 years on June 30, 1996, to 5.1 years on June
30, 1997. This action helped put the Fund's duration more in line with that of
the Fund's peers.
In addition, we sold some weaker holdings, which improved the Fund's income
level and its overall performance.
STRATEGIES AND TACTICS
The Fund focused on investments in high-quality, full coupon (at par or a slight
premium price), intermediate-term bonds with good call structures. Structure is
an important consideration for the Fund's investments because the supply of
potential investments can be small. Rather than emphasize a particular strategy
or market sector, we focus on securities with good call structures--meaning that
there is little difference between the call date and the maturity date. Bonds
with these characteristics should provide slightly higher income and better
price performance during periods of interest-rate volatility.
In addition, we employ a "buy and hold" strategy rather than actively trading
the Fund. This is primarily due to the fact that this is a single-state fund,
and the ability to find good securities can be limited at times.
The Fund's average quality improved over the year, with more than 80% of the
portfolio rated AA or better on June 30, 1997, up from 70% a year ago. The
average quality of the portfolio on June 30, 1997, was AA. This good
credit-quality rating primarily was due to the fact that most bonds were
escrowed or insured.
75
<PAGE>
The One Group Louisiana Municipal Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
OUTLOOK
We believe that the current market climate, including modest interest rate
volatility, should continue over the upcoming months. This suggests that
interest income will remain the leading force in the fixed-income market for the
near term.
Looking ahead, though, there is concern among investors that the expanding
economy and a tight labor market eventually may lead to higher inflation. Fears
regarding the Federal Reserve's reaction to this scenario have caused us to take
a cautious approach toward extending the portfolio's duration.
/s/ DAVID M. SIVINSKI, CFA
David M. Sivinski, CFA
Fund Manager
/s/ GARY J. MADICH, CFA
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
76
<PAGE>
The One Group Louisiana Municipal Bond Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (12/29/89)
------ ------ ---------
<S> <C> <C> <C>
Fiduciary 6.81% 5.96% 6.83%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
LIPPER
LEHMAN BROTHERS INTERMEDIATE
MEASUREMENT PERIOD 7 YEAR MUNICIPAL MUNICIPAL BOND
(FISCAL YEAR COVERED) BOND FUNDS INDEX FIDUCIARY
- --------------------- ----------------- -------------- ---------
<S> <C> <C> <C>
12/89 $10,000 $10,000 $10,000
6/90 10,274 10,248 10,339
6/91 11,187 11,098 11,182
6/92 12,410 12,239 12,295
6/93 13,743 13,450 13,550
6/94 13,917 13,584 13,685
6/95 15,062 14,503 14,584
6/96 15,896 15,244 15,375
6/97 17,013 16,225 16,422
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Year (12/29/89)
------ ------ ---------
<S> <C> <C> <C>
Class A 6.55% 5.89% 6.79%
Class A* 1.73% 4.93% 6.13%
</TABLE>
* Reflects 4.50% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
LIPPER
LEHMAN BROTHERS INTERMEDIATE
MEASUREMENT PERIOD 7 YEAR MUNICIPAL MUNICIPAL BOND
(FISCAL YEAR COVERED) BOND FUNDS INDEX CLASS A* CLASS A
- --------------------- ---------------- -------------- -------- -------
<S> <C> <C> <C> <C>
12/89 $10,000 $10,000 $ 9,550 $10,000
6/90 10,274 10,248 9,873 10,339
6/91 11,187 11,098 10,679 11,182
6/92 12,410 12,239 11,742 12,295
6/93 13,743 13,450 12,940 13,550
6/94 13,917 13,584 13,069 13,685
6/95 15,062 14,503 13,928 14,584
6/96 15,896 15,244 14,673 15,365
6/97 17,013 16,225 15,634 16,371
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Since
Inception
1 Year (9/16/94)
------ ---------
<S> <C> <C>
Class B 5.87% 5.51%
Class B** 1.87% 4.51%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
---------------------------
LIPPER
LEHMAN BROTHERS INTERMEDIATE
MEASUREMENT PERIOD 7 YEAR MUNICIPAL MUNICIPAL BOND
(FISCAL YEAR COVERED) BOND FUNDS INDEX CLASS B** CLASS B
- --------------------- ---------------- -------------- --------- -------
<S> <C> <C> <C> <C>
9/94 $10,000 $10,000 $10,000 $10,000
6/95 10,824 10,735 10,482 10,482
6/96 11,424 11,283 10,970 10,970
6/97 12,226 12,010 11,314 11,614
</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 fund's income may be subject to the federal alternative minimum tax.
The above-quoted performance data includes the performance of the Paragon
Louisiana Tax-Free Fund for the period prior to the commencement of operations
of The One Group Louisiana Municipal Bond Fund on March 26, 1996. Performance
for the Fiduciary Shares is based on Class A Share performance adjusted to
reflect the absence of sales charges.
The performance of the Louisiana Municipal Bond Fund is measured against the
Lehman Brothers 7 Year Municipal Bond Index, an unmanaged index comprised of
investment grade municipal bonds with maturities close to seven 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 Shares.
The Lipper Intermediate Municipal Bond Funds Index consists of the equally
weighted average monthly return of the largest funds within the universe of all
funds in the category.
77
<PAGE>
The One Group U.S. Treasury Securities Money Market Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE
The seven-day yield on The One Group U.S. Treasury Securities Money Market Fund
Fiduciary share class was 5.03% on June 30, 1997, up from 4.98% on June 30,
1996.
The Fund's yield reflects the slight increase in interest rates brought on by
the Federal Reserve's only monetary policy adjustment during the fiscal year--a
0.25% federal funds rate hike on March 25, 1997. Interim rate movements were
fairly moderate, and they reflected market participants' changing views on
economic strength and whether that strength would lead to inflationary pressures
requiring Federal Reserve action.
STRATEGIES AND TACTICS
Our primary strategy during the period was to maintain a "barbell" maturity
structure, meaning that we focused on securities at the extremes of the
short-term maturity range. As such, the Fund emphasized securities with
maturities between six months and one year along with overnight repurchase
agreements.
The money market yield curve during the fiscal year remained fairly steep,
meaning that securities with longer maturities paid relatively higher yields.
The Fund's "longer" securities--those maturing in six months to one
year--enabled the Fund to take advantage of this steepness, which helped
increase the Fund's yield. At the same time, the repurchase agreements, which
matured overnight, allowed the Fund to retain a high level of liquidity.
This strategy led to an average maturity of 30 days on June 30, 1997, enabling
the Fund to maintain its "AAA" average quality rating--the best possible--from
Standard & Poor's and Moody's Investors Service. This rating indicates that the
Fund's securities are of the highest quality and offer the lowest credit risk.
In order to receive this rating, a fund must have an average maturity no greater
than 60 days.
OUTLOOK
Economic activity and how it influences the Federal Reserve's policies will have
a direct effect on the Fund over the next year. Over the near term, the Federal
Reserve may make another move to slow down the economy and take a proactive
stance against inflation. This outlook warrants the continued use of a barbell
strategy to quickly take advantage of any higher rates caused by more
tightening. If it becomes apparent that the Fed has finished its rate hikes for
awhile, we would reduce our position in repurchase agreements and invest more
heavily in money market securities with longer maturities.
LOGO
Andrew T. Linton
Fund Manager
LOGO
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
<TABLE>
<CAPTION>
AVERAGE ANNUAL
CLASS OF SHARES 7 DAY YIELD 1 YEAR TOTAL RETURN 5 YEARS SINCE
INCEPTION
<S> <C> <C> <C> <C> <C>
Fiduciary 5.03 5.07 4.27 5.51
Class A 4.78 4.81 4.01 3.95
</TABLE>
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
78
<PAGE>
The One Group Municipal Money Market Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE
The seven-day yield on The One Group Municipal Money Market Fund Fiduciary share
class was 3.63% on June 30, 1997, compared to 3.00% on June 30, 1996. (For
investors in the 39.6% federal income tax bracket, the June 30, 1997, tax-free
yield translates to a tax-equivalent yield of 6.08%.)
During the past year, short-term tax-exempt rates moved within a wide trading
range of 2.75% to 4.75%. This interest rate volatility was attributed primarily
to irregular and seasonal shifts in the supply and demand for short-term issues.
When the volume or supply of eligible issues was not able to keep pace with the
demand from short-term buyers, interest rates moved downward near the lower end
of the trading range.
These periods of market strength were apparent during January and July, as heavy
cash flows into the market exceeded the limited supply. Conversely, during April
and December, when the available market supply surpassed demand, rates moved
upward significantly to attract buyers. As these technical factors of the
short-term tax-exempt market operated against the backdrop of economic growth
and possible inflationary pressures, interest rates moved moderately upward
throughout the year.
STRATEGIES AND TACTICS
Due to the technical nature of the short-term tax-exempt market, our ongoing
investment strategy is to focus on selecting the appropriate mix of
variable-rate and fixed-rate securities to react to and take advantage of
changing market conditions. For the most part, we favored the variable-rate
sector over the fixed-rate sector to take advantage of the moderate upward shift
in interest rates evident during the year. Because variable-rate issues tend to
reset more frequently to changing market conditions, they offered more
attractive yields.
Throughout the year, the yield curve also shifted in an abrupt fashion. To help
compensate for unexpected changes in the yield curve, we maintained the Fund's
average maturity within a range of 35 days to 60 days, which was generally less
than the industry average. The Fund ended the year with an average maturity of
37 days, compared to 55 days on June 30, 1996.
OUTLOOK
We believe that the near-term outlook for the short-term tax-exempt market
continues to look favorable. As long as economic growth continues and inflation
remains under control, we don't anticipate making any changes in our ongoing
investment strategy. Furthermore, the Fund currently is positioned to take
advantage of ever-changing market conditions to seek to provide an attractive
and competitive return for our shareholders.
LOGO
Thomas W.Cary
Fund Manager
LOGO
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
<TABLE>
<CAPTION>
AVERAGE ANNUAL
CLASS OF SHARES 7 DAY YIELD 1 YEAR TOTAL RETURN 5 YEARS SINCE
INCEPTION
<S> <C> <C> <C> <C> <C>
Fiduciary 3.63 3.19 2.82 3.89
Class A 3.38 2.97 2.59 2.56
</TABLE>
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
79
<PAGE>
The One Group Treasury Only Money Market Fund
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
PERFORMANCE
The seven-day yield on The One Group Treasury Only Money Market Fund was 5.12%
on June 30, 1997, up from 5.00% on June 30, 1996.
The Fund's yield reflects the slight increase in interest rates brought on by
the Federal Reserve's only monetary policy adjustment during the fiscal year--a
0.25% federal funds rate hike on March 25, 1997. Interim rate movements were
fairly moderate, and they reflected market participants' changing views on
economic strength and whether that strength would lead to inflationary pressures
requiring Federal Reserve action.
STRATEGIES AND TACTICS
The portfolio continued to benefit from a "barbell" maturity structure, a common
technique that involves investing in securities at the long and short ends of a
particular maturity range instead of those with intermediate maturities.
This strategy led to an average maturity of 49 days on June 30, 1997, enabling
the Fund to maintain its "AAA" average quality rating--the best possible--from
Standard & Poor's and Moody's Investors Service. This rating indicates that the
Fund's securities are of the highest quality and offer the lowest risk. In order
to receive this rating, a fund must have an average maturity no greater than 60
days.
OUTLOOK
Economic activity and how it influences the Federal Reserve's policies will have
a direct effect on the Fund over the next year. Over the near term, the Federal
Reserve may make another move to slow down the economy and take a proactive
stance against inflation. As investors factor this potential rate hike into the
market, the yield curve should steepen, meaning securities with longer
maturities would offer higher yields. If this happens, we would extend the
Fund's average weighted maturity to take advantage of a steeper yield curve.
Andrew T. Linton Signature
Andrew T. Linton
Fund Manager
Gary J. Madich Signature
Gary J. Madich, CFA
Senior Managing Director of Fixed-Income Securities
<TABLE>
<CAPTION>
AVERAGE ANNUAL
7 DAY YIELD 1 YEAR TOTAL RETURN 5 YEARS SINCE INCEPTION
<S> <C> <C> <C> <C>
5.12 5.24 NA 4.67
</TABLE>
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
80
<PAGE>
INFORMATION ABOUT THE PROPOSED TRANSACTION
INTRODUCTION
This Combined Prospectus/Proxy Statement is furnished in connection with
the solicitation of proxies from the shareholders of Marquis Institutional,
Marquis Treasury Securities, Marquis Tax-Exempt, Marquis Government, Marquis
Strategic Income, Marquis Louisiana, Marquis Balanced, Marquis Value, Marquis
Growth, Marquis Small Cap and Marquis International by and on behalf of the
Trustees of Marquis Funds for use at a Meeting to approve the reorganization of
the Marquis Funds. The Meeting will be held at the offices of SEI Investments
Company at One Freedom Valley Road, Oaks, Pennsylvania on Thursday, July 30,
1998. This Combined Prospectus/Proxy Statement and the enclosed form of proxy
are being mailed to shareholders of the Marquis Funds on or about June ___,
1998.
Any shareholder may revoke a proxy once the proxy is given. The shareholder
revoking such proxy must either submit to the appropriate Marquis Fund a
subsequently dated proxy, deliver to the appropriate Marquis Fund a written
notice of revocation, or otherwise give written notice of revocation in person
at the Meeting. All properly executed proxies received in time for the Meeting
will be voted as specified in the proxy, or, if no specification is made, FOR
the proposal (set forth in Item (1) of the Notice of Special Meeting of
Shareholders).
Only shareholders of record on May 18, 1998 will be entitled to notice of
and to vote at the Meeting. Each share as of the close of business on May 18,
1998, is entitled to one vote.
The Trustees of Marquis Funds know of no matters other than those set forth
herein to be brought before the Meeting. If, however, any other matters properly
come before the Meeting, it is the Trustees' intention that proxies will be
voted on such matters in accordance with the judgment of the persons named in
the enclosed form of proxy.
TERMS OF THE PROPOSED REORGANIZATION
Shareholders of Marquis Institutional, Marquis Treasury Securities, Marquis
Tax-Exempt, Marquis Government, Marquis Strategic Income, Marquis Louisiana,
Marquis Balanced, Marquis Value, Marquis Growth, Marquis Small Cap and Marquis
International are being asked to approve or disapprove of an Agreement and Plan
of Reorganization involving the Marquis Funds and the One Group Funds.
According to the Agreement and Plan of Reorganization, Marquis Institutional,
Marquis Treasury Securities, Marquis Tax-Exempt, Marquis Government, Marquis
Strategic Income, Marquis Louisiana, Marquis Balanced, Marquis Value, Marquis
Growth, Marquis Small Cap and Marquis International would be merged with and
into One Group Treasury Only, One Group Treasury Securities, One Group
Tax-Exempt, One Group Government, One Group Income, One Group Louisiana, One
Group Balanced, One Group Value, One Group Growth, One Group Small Cap and One
Group International Index, respectively, on or about August 10, 1998 (the
"Exchange Date"). On the Exchange Date, the Marquis Funds will transfer all of
their assets and liabilities to the corresponding One Group Funds in exchange
for shares of the corresponding One Group Fund having an aggregate net asset
value equal to the aggregate value of the net assets acquired from the
corresponding Marquis Fund. The assets and liabilities of the Marquis Funds and
The One Group Funds will be valued as of the close of trading on the New York
Stock Exchange on the business day next preceding the Exchange Date. The
following discussion is qualified in its entirety by the full text of the
Agreement and Plan of Reorganization which is attached as Exhibit A to this
Combined Prospectus/Proxy Statement.
Following the transfer, the Marquis Funds will be dissolved and shares of
the respective One Group Funds received by the corresponding Marquis Fund will
be distributed to Marquis Fund shareholders in liquidation of the Marquis Funds.
As a result of the proposed transaction, a Marquis Institutional, Marquis
Treasury Securities, Marquis Tax-Exempt, Marquis Government, Marquis Strategic
Income, Marquis Louisiana, Marquis Balanced, Marquis Value, Marquis Growth,
Marquis Small Cap and Marquis International shareholder will receive, on a
tax-free basis, a number of full and fractional shares equal in value at the
date of the exchange to the value of the net
81
<PAGE>
assets of the respective Marquis Fund transferred to One Group Treasury Only,
One Group Treasury Securities, One Group Tax-Exempt, One Group Government, One
Group Income, One Group Louisiana, One Group Balanced, One Group Value, One
Group Growth, One Group Small Cap and One Group International Index
respectively, attributable to the shareholder. If you own Class A shares of the
Marquis Fund and are a financial organization authorized to act in a fiduciary,
advisory, agency, custodial or similar capacity, or you own Trust Class shares,
you will receive One Group Fiduciary Class shares. If you otherwise own Marquis
Class A, Retail Class or Sweep Class shares, you will receive One Group Class A
shares. Shareholders holding Marquis Class B shares will receive One Group
Class B shares. If you are invested in Marquis Institutional, you will receive
shares of One Group Treasury Only Fund.
Marquis Funds, on behalf of each of the Marquis Funds, will pay to the
respective One Group Funds any interest and cash dividends received by the
corresponding Marquis Fund after the Exchange Date with respect to the
investments transferred to the respective One Group Fund. In addition, Marquis
Funds, on behalf of each of the Marquis Funds, will transfer to the respective
One Group Fund any rights, stock dividends or other securities received by the
corresponding Marquis Fund after the Exchange Date as stock dividends or other
distributions with respect to the investments transferred. Such rights, stock
dividends and other securities shall be deemed included in the assets
transferred to the One Group Funds at the Exchange Date and shall not be
separately valued, in which case any such distribution that remains unpaid as of
the Exchange Date shall be included in the determination of the value of the
assets of the respective Marquis Funds acquired by the corresponding One Group
Funds.
At a meeting on May 18, 1998, the Trustees of Marquis Funds unanimously
approved the Agreement and Plan of Reorganization and determined that the
reorganization of the Marquis Funds and the One Group Funds would be in the best
interests of each Fund. The Trustees further determined that the interests of
existing shareholders of each Fund would not be diluted upon effectuation of the
reorganization. Consequently, the Trustees recommend approval of the Agreement
and Plan of Reorganization for the following reasons:
1. ENHANCED RANGE OF INVESTMENT OPTIONS
Investors in The One Group enjoy a wide array of investment options and
strategies. The One Group currently consists of thirty-three (33) operational
funds, including ten different equity funds, each with a distinct style or
strategy. In addition, The One Group offers seven municipal bond funds, each
focusing on a different state or strategy, as well as six money market funds,
six taxable bond funds and four fund of funds. This range of strategies permits
an investor in The One Group to participate at any point in time in the styles
currently prevalent in the market. Shareholders are free to make exchanges
between each of these funds (excluding The One Group Institutional Money Market
Funds). Thus, if the Agreement and Plan of Reorganization is approved, you will
have increased investment options and greater flexibility to change investments.
2. TAX-FREE CONVERSION OF MARQUIS FUNDS SHARES
If you were to redeem your investment in the Marquis Funds in order to invest in
a One Group Fund or another investment product, you would recognize gain or loss
for Federal income tax purposes upon the redemption of those shares. By
contrast, the proposed reorganization of each Marquis Fund will permit
shareholders of the Marquis Funds to exchange their investment in the Marquis
Funds for an investment in the One Group Funds without recognition of gain or
loss for Federal income tax purposes. After the reorganization, as a shareholder
of an open-end fund, you will continue to be free to redeem any or all of your
shares at net asset value (other than Class B shares) at any time. At that
time, a taxable gain or loss would be recognized.
3. INVESTMENT LEVERAGE AND MARKET PRESENCE
The merger is expected to result in greater investment leverage and market
presence for The One Group. If the Agreement and Plan of Reorganization is
approved, The One Group would have approximately $28 billion in assets under
management. Fund investment opportunities increase as assets increase.
82
<PAGE>
In addition, you could benefit from any resulting economies of scale
attributable to the larger asset size of the One Group Funds.
4. PERFORMANCE
The total returns of the One Group Funds are competitive with, and in most cases
superior to, those of the Marquis Funds. For information regarding the total
returns of each of the Funds in question, see "Financial Highlights" in the One
Group and Marquis Funds Prospectuses accompanying this Combined Prospectus/Proxy
Statement. Of course, past performance does not predict future results.
<TABLE>
<CAPTION>
Marquis Institutional The One Group Treasury
Money Market Fund Only Money Market Fund
--------------------- ----------------------
<S> <C> <C>
YTD Ending 3/31/98 1.31% 1.30%
1 Year Annualized 12/31/97 5.35% 5.28%
3 Year Annualized - 12/31/97 NA 5.39%
5 Year Annualized - 12/31/97 NA NA
Average Net Assets 12/31/97 ($MM) $66 $555
Total Fund Net Assets 12/31/97 ($MM) $55 $769
<CAPTION>
Marquis Treasury Securities The One Group U.S. Treasury
Money Market Fund Securities Money Market Fund
--------------------------- ----------------------------
Retail Trust Cash Sweep Class A Fiduciary
------ ----- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 1.25% 1.20% 1.13% 1.20% 1.26%
1 Year Annualized - 12/31/97 4.90% 5.10% NA 4.87% 5.14%
3 Year Annualized - 12/31/97 4.98% 5.18% NA 5.02% 5.28%
5 Year Annualized - 12/31/97 NA NA NA 4.24% 4.50%
Average Net Assets 12/31/97 ($MM) $598 $560 $ 86 $553 $2,321
Total Fund Net Assets - 12/31/97 $635 $599 $186 $841 $2,681
<CAPTION>
Marquis Tax-Exempt The One Group
Money Market Fund Municipal Money Market Fund
------------------ ---------------------------
Retail Class A Fiduciary
------ ------- ---------
<S> <C> <C> <C>
YTD Ending 3/31/98 0.70% 0.68% 0.74%
1 Year Annualized - 12/31/97 3.17% 3.05% 3.31%
3 Year Annualized - 12/31/97 NA 3.10% 3.35%
5 Year Annualized - 12/31/97 NA 2.70% 2.93%
Average Net Assets 12/31/97 ($MM) $ 91 $67 $489
Total Fund Net Assets - 12/31/97 $126 $96 $500
<CAPTION>
Marquis Government The One Group
Securities Fund Government Bond Fund
------------------ --------------------
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 1.58% 1.28% 1.54% 1.60% 1.39%
1 Year Annualized - 12/31/97 7.96% 7.25% 9.49% 9.76% 8.80%
3 Year Annualized - 12/31/97 8.53% 7.73% 9.68% 9.97% 9.00%
5 Year Annualized - 12/31/97 NA NA NA NA NA
Average Net Assets 12/31/97 ($MM) $151 $ 1 $35 $727 $ 12
Total Fund Net Assets - 12/31/97 $147 $ 1 $32 $810 $ 15
<CAPTION>
Marquis Strategic The One Group
Income Fund Income Bond Fund
----------- ----------------
83
<PAGE>
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 1.16% 0.98% 1.62% 1.58% 1.46%
1 Year Annualized - 12/31/97 NA NA 7.05% 7.31% 6.26%
3 Year Annualized - 12/31/97 NA NA 9.01% 9.27% 8.33%
5 Year Annualized - 12/31/97 NA NA 6.04% 6.31% NA
Average Net Assets 12/31/97 ($MM) $ 14 $ 1 $ 14 $738 $ 11
Total Fund Net Assets - 12/31/97 $ 16 < $ 1 $ 15 $816 $ 14
<CAPTION>
Marquis Louisiana The One Group Louisiana
Tax-Free Income Fund Municipal Bond Fund
---------------------- -------------------
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 0.81% 0.53% 0.94% 0.90% 0.68%
1 Year Annualized - 12/31/97 7.31% 6.54% 7.04% 7.41% 6.46%
3 Year Annualized - 12/31/97 8.45% 7.65% 7.70% 7.90% 7.03%
5 Year Annualized - 12/31/97 NA NA 5.93% 6.05% NA
Average Net Assets 12/31/97 ($MM) $ 32 $ 1 $ 50 $113 $ 4
Total Fund Net Assets - 12/31/97 $ 40 $ 2 $ 49 $103 $ 4
<CAPTION>
Marquis Balanced Fund The One Group Asset Allocation Fund
--------------------- -----------------------------------
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 7.18% 6.87% 7.92% 7.99% 7.78%
1 Year Annualized - 12/31/97 21.65% 20.78% 22.26% 22.58% 21.41%
3 Year Annualized - 12/31/97 18.02% 17.16% 19.67% 20.01% 18.84%
5 Year Annualized - 12/31/97 NA NA NA NA NA
Average Net Assets 12/31/97 ($MM) $126 $ 3 $ 30 $ 94 $45
Total Fund Net Assets - 12/31/97 $133 $ 4 $ 39 $ 95 $70
<CAPTION>
Marquis Value The One Group
Equity Fund Disciplined Value Fund
-------------------- ----------------------
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 10.27% 10.12% 8.39% 9.54% 8.22%
1 Year Annualized - 12/31/97 37.10% 36.04% 34.88% 35.10% 33.83%
3 Year Annualized - 12/31/97 28.44% 27.52% 25.32% 25.65% 24.39%
5 Year Annualized - 12/31/97 NA NA 17.16% 17.39% NA
Average Net Assets 12/31/97 ($MM) $119 $ 8 $25 $552 $20
Total Fund Net Assets - 12/31/97 $132 $ 10 $29 $591 $25
<CAPTION>
Marquis The One Group
Growth Equity Fund Growth Opportunities Fund
--------------------- -------------------------
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 11.31% 11.08% 13.63% 13.68% 13.39%
1 Year Annualized - 12/31/97 27.33% 26.45% 29.78% 30.08% 28.67%
3 Year Annualized - 12/31/97 NA NA 25.69% 26.01% 24.78%
5 Year Annualized - 12/31/97 NA NA 16.47% 16.78% NA
Average Net Assets 12/31/97 ($MM) $29 $ 1 $46 $623 $40
Total Fund Net Assets - 12/31/97 $37 $ 2 $63 $734 $62
<CAPTION>
The One Group Small
84
<PAGE>
Marquis Small Cap
Equity Fund Small Capitalization Fund
---------------------- --------------------------
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 11.67% 11.46% 11.39% 11.46% 11.20%
1 Year Annualized - 12/31/97 11.27% 10.54% 28.41% 28.78% 27.47%
3 Year Annualized - 12/31/97 22.72% 21.82% 21.90% 22.06% 20.98%
5 Year Annualized - 12/31/97 16.23% 15.37% 12.52% 12.61% NA
Average Net Assets 12/31/97 ($MM) $ 3 < $ 1 $18 $82 $ 4
Total Fund Net Assets - 12/31/97 $ 4 < $ 1 $18 $87 $ 5
<CAPTION>
Marquis International The One Group
Equity Fund International Equity Index Fund
-------------------- --------------------------------
Class A Class B Class A Fiduciary Class B
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
YTD Ending 3/31/98 15.47% 15.32% 15.36% 15.36% 15.11%
1 Year Annualized - 12/31/97 (2.66%) (3.33%) 5.44% 5.68% 4.70%
3 Year Annualized - 12/31/97 5.53% 4.73% 7.26% 7.48% 6.31%
5 Year Annualized - 12/31/97 7.49% 6.66% NA 10.83% NA
Average Net Assets 12/31/97 ($MM) $ 2 < $ 1 $13 $423 $ 11
Total Fund Net Assets - 12/31/97 $ 2 < $ 1 $16 $442 $ 11
</TABLE>
Please keep in mind, if you are a financial organization authorized to act in a
fiduciary, custodial, advisory or similar capacity and owned Class A shares of
the Marquis Funds, you will receive Fiduciary Class shares of The One Group.
5. MANAGEMENT FEES
Following the merger of the Marquis Funds with the One Group Funds, investment
advisory fees will, for the most part, be reduced. Below is a comparison of the
current investment advisory fee paid by each of the Marquis Funds and the fee
that will be assessed following the merger:
<TABLE>
<CAPTION>
Current (1) Proposed (2)
------- --------
<S> <C> <S> <C>
Marquis Institutional .04% One Group Treasury Only .08%
Marquis Treasury Securities .30% One Group Treasury Securities .30%
Marquis Tax-Exempt .44% One Group Municipal .25%
Marquis Government .51% One Group Government .45%
Marquis Strategic Income .31% One Group Income .40%
Marquis Louisiana .35% One Group Louisiana .40%
Marquis Balanced .71% One Group Asset Allocation .55%
Marquis Value .74% One Group Value .74%
Marquis Growth .72% One Group Growth .74%
Marquis Small Cap 1.19% One Group Small Cap .74%
Marquis International 1.05% One Group International .55%
</TABLE>
- ---------------------------
(1) Absent waivers, Management Fees would be .15% for Marquis
Institutional, .45% for Marquis Tax-Exempt, .55% for Marquis
Government, .74% for Marquis Strategic Income, .35% for Marquis
Louisiana, .74% for Marquis Balanced, 1.40% for Marquis Small Cap,
and 1.36% for Marquis International.
(2) Absent waivers, Management Fees would be .35% for One Group Treasury
Securities, .35% for One Group Municipal, .60% for One Group Income,
.60% for One Group Louisiana, .65% for One Group Asset Allocation.
85
<PAGE>
Although the Management Fees for One Group Treasury Only, One Group Income, One
Group Louisiana and One Group Growth are slightly higher than those paid by the
corresponding Marquis Funds, the level of fees prior to voluntary waiver of fees
is generally lower for the One Group Funds. There is no guarantee that Banc One
Investment Advisors will continue to waiver a portion of the Management Fees
that it charges the Marquis Funds.
While the Management Fees for those four funds may be slightly higher, Banc One
Investment Advisors possesses superior investment management resources that
enable the One Group Funds to achieve and sustain a high level of performance.
In order to develop and maintain a money market expertise, Banc One Investment
Advisors invested a substantial amount of resources in attracting and retaining
qualified investment professionals, as well as system support. Significant
investments also have been made to develop a dynamic equity research group that
has fifteen dedicated analysts that follow eleven major market sectors and 37
specific industries. In addition, a highly efficient and effective trading
operation exists which ultimately benefits the Funds through securities trades
executed at costs lower than industry standards.
FEDERAL TAX OPINIONS
As part of the reorganization, The One Group will have received an opinion of
Ropes & Gray, counsel to The One Group addressed to The One Group and each One
Group Fund and to Marquis Portfolio and each Marquis Fund, in a form reasonably
satisfactory to The One Group and Marquis Funds and dated the Exchange Date, to
the effect that for Federal income tax purposes (i) under Section 361 of the
Internal Revenue Code of 1986, as amended (the "Code"), no gain or loss will be
recognized by any Marquis Fund upon the transfer of its assets to the
corresponding One Group Fund in exchange for shares of such One Group Fund and
the assumption by such One Group Fund of the liabilities of the Marquis Fund;
(ii) under Section 354 of the Code, no gain or loss will be recognized by the
shareholders of any Marquis Fund upon the exchange of their shares for shares of
the corresponding One Group Fund; (iii) under Section 358 of the Code, the basis
of the shares a Marquis Fund shareholder receives in connection with the
transaction will be the same as the basis of his or her Marquis Fund shares
exchanged therefor; (iv) under Section 1223(1) of the Code, a Marquis
shareholder's holding period for his or her shares will be determined by
including the period for which he or she held the Marquis Fund shares exchanged
therefor, provided that he or she held such Marquis Fund shares as capital
assets; (v) under Section 1032 of the Code, no gain or loss will be recognized
by any One Group Fund upon the receipt of the assets of the corresponding
Marquis Fund in exchange for shares and the assumption by the One Group Fund of
the liabilities of the corresponding Marquis Fund; (vi) under Section 362 of the
Code, the basis in the hands of the One Group Fund of the assets of the
corresponding Marquis Fund transferred to the One Group Fund will be the same as
the basis of the assets in the hands of the corresponding Marquis Fund
immediately prior to the transfer; and (vii) under Section 1223(2) of the Code,
the holding periods of the Marquis Fund's assets in the hands of the
corresponding One Group Fund will include the periods during which such assets
were held by the Marquis Funds.
FEES AND EXPENSES OF THE REORGANIZATION
All fees and expenses, including accounting expenses, portfolio transfer taxes
(if any) or other similar expenses incurred in connection with the consummation
by One Group and Marquis Funds of the transactions contemplated by this
Agreement and Plan of Reorganization will be paid by the party directly
incurring such fees and expenses, except that the costs of proxy materials and
proxy solicitation, including legal expenses, will be borne by The One Group;
PROVIDED HOWEVER, that such expenses will in any event be paid by the party
directly incurring such expenses if and to the extent that the payment by the
other party of such expenses would result in the disqualification of any One
Group or Marquis Fund, as the case may be, as a "regulated investment company"
within the meaning of Section 851 of the Code.
86
<PAGE>
COMPARISON OF SHAREHOLDER RIGHTS
Both the One Group Funds and the Marquis Funds are series of open-end management
investment companies. As shown above, each Fund has substantially similar
purchase and redemption procedures, sales charge structure, exchange and
conversion privileges, and voting rights.
EXISTING AND PRO FORMA CAPITALIZATION
The following tables set forth as of December 31, 1997, (I) the capitalization
of the Marquis Funds and the One Group Funds and (ii) the pro forma
capitalization of the Marquis Funds and the One Group Funds as adjusted giving
effect to the proposed acquisition of assets at net asset value:
<TABLE>
<CAPTION>
The One Group The Marquis Funds Proforma Combined
Net Assets Net Assets Net Assets
12/31/97 12/31/97
<S> <C> <C> <C>
Municipal Money Market Fund 596,488,477.06 126,250,090.92 722,738,567.98
Treasury Only Money Market Fund 768,616,544.09 54,714,216.21 823,330,760.30
U.S. Treasury Securities Money Market Fund 3,521,750,412.00 1,420,509,488.58 4,942,259,900.58
Government Bond Fund 856,655,495.86 148,429,107.42 1,005,084,603.28
Income Bond Fund 844,256,516.13 16,097,233.37 860,353,749.50
Louisiana Municipal Bond Fund 155,949,852.52 42,278,783.52 198,228,636.04
Small Capitalization Fund 110,282,705.76 4,602,313.97 114,885,019.73
Assets Allocation Fund 203,458,349.47 136,972,926.18 340,431,275.65
International Equity Index Fund 468,551,463.80 2,699,244.31 471,250,708.11
Disciplined Value Fund 645,995,074.65 142,130,160.72 788,125,235.37
Growth Opportunities Fund 858,524,541.12 38,600,655.09 897,125,196.21
</TABLE>
VOTING INFORMATION
A proxy may be revoked at any time at or before the meeting by submitting to the
appropriate Marquis Fund a subsequently dated proxy, delivering a written notice
of revocation to the appropriate Marquis Fund at the offices of SEI Investments
Company, One Freedom Valley Road, Oaks, Pennsylvania 19456, or as otherwise
described in the "Introduction" above. Unless revoked, all valid proxies will be
voted in accordance with the instructions thereon or, in the absence of
instructions, will be voted FOR approval of the Agreement and Plan of
Reorganization. The transaction contemplated by the Agreement and Plan of
Reorganization will be consummated only if approved by the affirmative vote of a
majority of all votes attributable to the voting securities of each class of
each Marquis Fund voting separately as a class. In the event the shareholders do
not approve the reorganization, the Marquis Trustees will consider possible
alternative arrangements in the best interests of the Marquis Funds and their
shareholders. Shares of the Marquis Funds are redeemable for cash at net asset
value on Monday through Friday, except Federal holidays and Good Friday. See
"Redemption Procedures" in the One Group and Marquis Prospectuses accompanying
this Combined Prospectus/Proxy Statement.
In the event that a quorum for a particular Marquis Fund is not present at the
Meeting, or in the event that a quorum is present at the Meeting but
insufficient votes from a particular Marquis Fund have been received to approve
the Agreement and Plan of Reorganization and the transactions contemplated
therein, the persons named as proxies may propose one or more adjournments of
the Meeting with respect to that Marquis Fund in order to permit further proxy
solicitations. A majority of those shares of the Marquis Fund that are
affected by the adjournment that are represented at the Meeting in person or by
proxy must vote for the adjournment. If a quorum is present, the persons
87
<PAGE>
named as proxies will vote those proxies which they are entitled to vote FOR the
Agreement and Plan of Reorganization, for the adjournment, and will vote those
proxies required to be voted AGAINST such proposals against any adjournment. A
shareholder vote may be taken with respect to one or more Marquis Funds prior to
any adjournment if sufficient votes have been received for approval with respect
to any such Marquis Fund.
Proxies are being solicited primarily by mail, but also may be made by
telephone, telegraph or personal interview conducted by certain officers or
employees of Marquis Funds or SEI Investments Company. Shareholders of record
on the close of business on May 18, 1998 (the "Record Date"), will be entitled
to vote at the Meeting or any adjournment thereof. The holders of a majority of
votes attributable to the outstanding voting shares of each Marquis Fund
represented in person or by proxy at the Meeting will constitute a quorum for
the Meeting; however, the affirmative vote of the lesser of (a) 67% or more of
the votes attributable to all voting securities of each class of each Marquis
Fund present at such Meeting if holders of more than 50% of the votes
attributable to all voting securities of each class of each Marquis Fund are
present or represented by proxy or (b) more than 50% of the votes attributable
to the outstanding voting securities of each class of each Marquis Fund is
necessary to approve the reorganization. Shareholders are entitled to one vote
per share and a proportionate fractional vote for any fractional share.
Votes cast by proxy or in person at the Meeting will be counted by the Inspector
of Election appointed by Marquis Funds. The Inspector of Election will count the
total number of votes cast FOR approval of the proposal for purposes of
determining whether sufficient affirmative votes have been cast. The Inspector
of Election will count shares represented by proxies that reflect abstentions as
shares that are present and entitled to vote on the matter for purposes of
determining the presence of a quorum; however, the Inspector of Election will
not count "broker non-votes" (I.E., shares held by brokers or nominees as to
which (I) instructions have not been received from the beneficial owners or the
persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) as shares that are present
and entitled to vote on the matter for purposes of determining the presence of a
quorum. For purposes of determining whether an issue has been approved,
abstentions have the effect of a negative vote on the proposal, and broker
non-votes are treated as "against" votes in those instances where approval of an
issue requires a certain percentage of all votes outstanding, but are given no
effect in those instances where approval of an issue requires a certain
percentage of the votes constituting the quorum for such issue.
As of May 18, 1998, as shown on the books of Marquis Funds, there were issued
and outstanding 1,521,821,673.357 shares of beneficial interest of the Marquis
Funds allocated among the Funds and classes as follows:
<TABLE>
<S> <C>
MARQUIS INSTITUTIONAL
a. Institutional 107,052,951.010
MARQUIS TREASURY SECURITIES
a. Retail Class 660,020,895.570
b. Trust Class 466,724,488.280
c. Cash Sweep Class 181,308,422.190
MARQUIS TAX-EXEMPT
a. Retail Class 114,760,760.170
MARQUIS GOVERNMENT
a. Class A Shares 14,855,387.087
b. Class B Shares 127,018.143
MARQUIS STRATEGIC INCOME
a. Class A Shares 1,620,887.081
b. Class B Shares 58,929.640
</TABLE>
88
<PAGE>
<TABLE>
<S> <C>
MARQUIS LOUISIANA
a. Class A Shares 4,966,265.443
b. Class B Shares 196,788.867
MARQUIS BALANCED
a. Class A Shares 11,085,256.811
b. Class B Shares 376,700.205
MARQUIS GROWTH
a. Class A Shares 2,413,303.618
b. Class B Shares 135,410.068
MARQUIS SMALL CAP
a. Class A Shares 367,724.100
b. Class B Shares 47,120.594
MARQUIS INTERNATIONAL
a. Class A Shares 162,873.279
b. Class B Shares 29,789.378
</TABLE>
As of May 18, 1998, the officers and Trustees of Marquis Funds as a group
beneficially owned less than 1% of the outstanding Class A and Class B shares of
the Marquis Funds. As of May 18, 1998, to the best of the knowledge of
Marquis Funds the following owned beneficially 5% or more of the outstanding
Class A and Class B shares of the following Marquis Funds:
<TABLE>
<CAPTION>
NAME AND ADDRESS FUND/CLASS PERCENTAGE OF TYPE OF OWNERSHIP
- ---------------- ---------- OWNERSHIP -----------------
---------
<S> <C> <C> <C>
</TABLE>
89
<PAGE>
In addition, as of May 18, 1998, the following persons were the beneficial
owners of more than 25% of the outstanding shares of the following class of
shares of the following funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP TYPE OF OWNERSHIP
- ---------------- ---------- --------- -----------------
<S> <C> <C> <C>
</TABLE>
First NBC may be deemed to be a "controlling person" of Class A shares
of the Funds, other than the_________Funds under the Investment Company Act of
1940. However, First NBC will cast votes attributable to any shares for which
it serves as fiduciary in the same proportion as votes cast by other
Shareholders.
The votes of the shareholders of the One Group Funds are not being
solicited, since their approval or consent is not necessary for the approval
of the Agreement and Plan of Reorganization. However, the vote required for
approval of the proposal, including the treatment of abstention and "broker
nonvotes" would be the same as that of the Marquis Funds. Also, whole shares
of One Group Funds would be entitled to one vote and fractional shares would
be entitled to a proportionate fractional vote. As of May 18, 1998, as shown
on the books of The One Group, there were issued and outstanding
5,559,677,537 shares of beneficial interest of the One Group Funds allocated
between the Funds and classes as follows.
<TABLE>
<CAPTION>
<S> <C>
ONE GROUP TREASURY ONLY
a. Institutional 676,760,350
-------------------------------------------------------
ONE GROUP TREASURY SECURITIES
a. Class A Shares 863,245,224
b. Class B Shares 176,217
c. Class C Shares 1,159
d. Fiduciary Class 3,097,326,895
e. Service Class
-------------------------------------------------------
ONE GROUP MUNICIPAL
a. Class A Shares 102,059,027
b. Class B Shares
c. Class C
d. Fiduciary Class 471,056,102
-------------------------------------------------------
ONE GROUP GOVERNMENT
a. Class A Shares 3,175,130
b. Class B Shares 1,900,025
c. Class C Shares
d. Fiduciary Class 83,348,814
-------------------------------------------------------
ONE GROUP INCOME
a. Class A Shares 1,509,406
b. Class B Shares 1,600,183
c. Class C Shares
d. Fiduciary Class 92,822,441
-------------------------------------------------------
ONE GROUP LOUISIANA
a. Class A Shares 4,630,366
b. Class B Shares 480,255
90
<PAGE>
c. Class C Shares
d. Fiduciary Class 9,184,367
-------------------------------------------------------
ONE GROUP ASSET ALLOCATION
a. Class A Shares 3,526,228
b. Class B Shares 7,635,125
c. Class C Shares
d. Fiduciary Class 7,642,026
-------------------------------------------------------
ONE GROUP VALUE
a. Class A Shares 1,770,663
b. Class B Shares 1,752,340
c. Class C Shares
d. Fiduciary Class 36,885,759
-------------------------------------------------------
ONE GROUP GROWTH
a. Class A Shares 4,154,692
b. Class B Shares 4,027,589
c. Class C Shares 19,664
d. Fiduciary Class 38,288,065
-------------------------------------------------------
ONE GROUP SMALL CAP
a. Class A Shares 1,755,953
b. Class B Shares 633,953
c. Class C Shares 5,469
d. Fiduciary Class 9,342,159
-------------------------------------------------------
ONE GROUP INTERNATIONAL INDEX
a. Class A Shares 1,281,521
b. Class B Shares 750,325
c. Class C Shares 3,478
d. Fiduciary Class 30,926,566
</TABLE>
As of May 18, 1998, the officers and Trustees of The One Group as a
group beneficially owned less than 1% of the outstanding shares of Class A,
Class B, Class C, Fiduciary Class and Service Class shares of The One Group
Funds. As of May 18, 1998, to the best of the knowledge of The One Group the
following owned beneficially 5% or more of the outstanding Class A, Class B,
Class C, Fiduciary Class and Service Class shares of The One Group Funds:
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Disciplined Value Fund 55.32% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Disciplined Value Fund 32.87% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co FBO Disciplined Value Fund 15.41% Beneficial
Banc One Corporation Fiduciary
100 E. Broad Street
Columbus, OH 43215-3607
Dean Witter For The Benefit Of Small Capitalization Fund 36.25% Record
Linda Sue Trizila & Class C
PO Box 250 Church Street Station
New York NY 10008-0250
State Street Bank & Trust Co Small Capitalization Fund 11.53% Record
Cust For The IRA Of Class C
Linda L Cole
14 Penguin Ct
Woodlands TX 77380-1827
Dean Witter For The Benefit Of Small Capitalization Fund 7.60% Record
Wells Pickney & McHugh Class C
PO Box 250 Church Street Station
New York NY 10008-0250
Dean Witter For The Benefit Of Small Capitalization Fund 7.42% Record
Robert Kennedy And Class C
Annemarie Kennedy Reisinger JTT
Church St Station - PO Box 250
New York NY 10013-0250
Dean Witter Reynolds Cust For Small Capitalization Fund 5.99% Record
Laurence R Simon Class C
IRA STD/Rollover DTD 06/10/97
Church St Station - PO Box 250
New York NY 10013-0250
State Street Bank & Trust Co Small Capitalization Fund 5.65% Record
Cust For The IRA Of Class C
Linda Stephens
9057 E State Rd 46
Bloomington IN 47401-9241
Strafe & Co. Small Capitalization Fund 69.82% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co Small Capitalization Fund 12.84% Record
Database 2 - Attn One Group/Cash Fiduciary
235 W Schrock Road
Westerville OH 43081-2874
The One Group Investor Growth Fund Small Capitalization Fund 6.63% Record
C/O Mark S Redman Fiduciary
The One Group Services Company
3435 Stelzer Rd
Columbus OH 43219-6004
Banc One Securities Corp FBO Growth Opportunities Fund 13.84% Record
The One Investment Solution Class A
733 Greencrest Dr
Westerville OH 43081-4903
Northern Trust Company TTEE Growth Opportunities Fund 9.26% Record
Ohio Masanic Home Benevolent Endowment Class A
PO Box 92956
Chicago, IL 60675-2956
Banc One Securities Corp FBO Growth Opportunities Fund 45.46% Record
The One Investment Solution Class C
733 Greencrest Dr
Columbus, OH 43081-4903
Dean Witter Reynolds Cust For Growth Opportunities Fund 10.93% Record
Frederick J Peterson Class C
IRA Rollover Dated 09/23/96
Church St Station - PO Box 250
New York NY 10013-0250
Dean Witter For The Benefit Of Growth Opportunities Fund 5.63% Record
United Drywall & Painting Inc Class C
PO Box 250 Church Street Station
New York NY 10008-0250
Dean Witter For The Benefit Of Growth Opportunities Fund 5.63% Record
Linda Sue Trizila & Class C
PO Box 250 Church Street Station
New York NY 10008-0250
Dean Witter For The Benefit Of Growth Opportunities Fund 5.44% Record
Rosa L Peattie Class C
374 Venus Drive
Church St Station - PO Box 250
New York NY 10013-0250
Strafe & Co /Cash Div Cash Growth Opportunities Fund 55.06% Record
C/O Bank One Trust Co Fiduciary
Attn Mutual Fund 0393
100 E Broad St
Columbus OH 43215-3607
Clark & Company Growth Opportunities Fund 30.48% Record
Database 2 - Attn One Group/Cash Fiduciary
235 W Schrock Road
Westerville OH 43081-2874
Strafe & Co FBO Growth Opportunities Fund 10.11% Beneficial
Banc One Corporation Fiduciary
100 E Broad Street
Columbus, OH 43215
Dean Witter for the Benefit of Income Bond Fund 9.48% Record
Alpert Corp. Money Purchase Plan Class A
Steven Kurtz TTEE
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Gila River Health Care Corporation Income Bond Fund 6.58% Beneficial
Attn Finance Class A
PO Box 38
Sacaton AZ 85247-0038
Strafe & Co. Income Bond Fund 59.95% Record
Bank One Trust Co. Fiduciary
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Bond Fund 30.15% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Louisiana Municipal Bond Fund 97.78% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Northern Trust Company TTEE International Equity Index Fund 23.65% Record
Ohio Masanic Home Benevolent Class A
Endowment
PO Box 92956
Chicago IL 60675-2956
Firstar Trust Co TTEE International Equity Index Fund 13.59% Record
FBO Milwaukee Foundation - Equit Class A
PO Box 1787
Milwaukee WI 53201-1787
Dean Witter For The Benefit Of International Equity Index Fund 31.63% Record
John S Wagner & Class C
PO Box 250 Church St Station
New York, NY 10008-0250
Banc One Securities Corp FBO International Equity Index Fund 31.26% Record
The One Investment Solution Class C
733 Greencrest Dr
Westerville OH 43081-4903
UMB Bank Cust FBO International Equity Index Fund 11.17% Record
Darlene Y Young IRA Class C
718 Sycamore Ave SPC 200
Vista CA 92083-7952
Dean Witter For The Benefit Of International Equity Index Fund 8.57% Record
Wells Pickney & McHugh Class C
PO Box 250 Church Street Station
New York NY 10008-0250
Dean Witter Reynolds Cust For International Equity Index Fund 6.68% Record
Laurence R Simon Class C
IRA STD/Rollover DTD 06/10/97
Church St Station - PO Box 250
New York NY 10013-0250
Strafe & Co. International Equity Index Fund 57.18% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. International Equity Index Fund 30.90% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co FBO International Equity Index Fund 15.64% Beneficial
Banc One Corporation Fiduciary
100 E Broad Street
Columbus, OH 43215
BISYS Fund Services, Inc. U.S. Treasury Securities 41.20% Record
FBO Bank One Corporate Sweep Money Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
BISYS Fund Services Pittsburgh U.S. Treasury Securities 23.75% Record
FBO Bank One TX Sweep Customers Money Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
Dean Witter FBO U.S. Treasury Securities 29.99% Record
Banc One Securities Money Market
PO Box 250 Class A
Church Street Station
New York, NY 10013-0250
State Street Bank & Trust Co U.S. Treasury Securities 32.96% Record
Cust for the IRA of Money Market
Roland J Bourgeois Class B
692C W Wickenburg Way
Wickenburg AZ 85390-2268
State Street Bank & Trust Co U.S. Treasury Securities 20.66% Record
Cust for the IRA of Money Market
Edward Hillman III Class B
121 S. Walnut Street
Troy, OH 45373-3530
State Street Bank & Trust Co U.S. Treasury Securities 6.65% Record
Cust for the IRA of Money Market
Joe D Bolding Class B
803 Holly Circle
Allen, TX 75002-5216
Dean Witter For the Benefit of U.S. Treasury Securities 6.56% Record
Yo Suzuki Money Market
2031 Grandview Ave Apt B Class B
Boulder CO 80302-6552
State Street Bank & Trust Co. U.S. Treasury Securities 5.85% Record
Cust for the Rollover IRA of Money Market Fund
Pamela A Bell Class B
1692 Leighton Dr
Reynoldsburg OH 43068-8111
State Street Bank & Tr U.S. Treasury Securities 5.84% Record
SEP IRA Jeffrey S Lux Money Market
2220 Justice St Class B
Monroe LA 71201-3620
The One Group Services Company U.S. Treasury Securities 86.96% Record
C/O Fund Administration Money Market
3435 Stelzer Road Class C
Columbus, OH 43219-6004
Strafe & Co. (N) U.S. Treasury Securities 68.34% Record
Bank One Ohio Trust Co., NA Money Market
Department 0393 S.T.I.F. Fiduciary
Columbus, Ohio 43271
Bank One Trust Company NA U.S. Treasury Securities 17.71% Record
Omnibus-Corporate Cash Sweep Acct. Money Market
Attn: Cash Management DB3 Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Clark & Co. U.S. Treasury Securities 13.64% Record
Database 2 - Attn: One Group/Cash Mgmt Money Market
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co FBO U.S. Treasury Securities 9.86% Beneficial
Mrs. Baird's Bakeries Inc. Money Market
100 E. Broad Street Fiduciary
Columbus, OH 43215
Dean Witter FBO Municipal Money Market Fund 66.74% Record
Banc One Securities Class A
PO Box 250
Church Street Station
New York, NY 10013-0250
BISYS Fund Services, Inc. Municipal Money Market Fund 30.86% Record
FBO Bank One Corporate Sweep Class A
First & Market Building Suite 300
Pittsburgh, PA 15222
Strafe & Co. (D) Municipal Money Market Fund 59.25% Record
Bank One Ohio Trust Co., NA Fiduciary
Department 0393 S.T.I.F
Columbus, Ohio 43271
Clark & Co. Municipal Money Market Fund 35.91% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Government Bond Fund 60.10% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Government Bond Fund 29.75% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Clark & Co. Asset Allocation Fund 46.72% Record
Database 2-Attn: One Group/Cash Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co Asset Allocation Fund 34.10% Record
Attn Mutual Funds 0393 Fiduciary
100 E Broad Street
Columbus, OH 43215-3607
Strafe & Co Asset Allocation Fund 7.75% Beneficial
OFDA (MT2) Fiduciary
100 E Broad Street
Columbus OH 43215
Strafe & Co. Treasury Only Money Market Fund 52.71% Record
Bank One Trust Co.
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Treasury Only Money Market Fund 26.20% Record
235 W. Schrock Road
Westerville, Ohio 43081-2874
BISYS Fund Services, Inc. Treasury Only Money Market Fund 12.38% Record
FBO Bank One Corporate Sweep
First and Market Bldg-Suite 300
Pittsburg, PA 15222
Bank One Texas NA Treasury Only Money Market Fund 6.16% Record
1717 Main Street
Dallas, TX 75201-4605
</TABLE>
In addition, as of May 18, 1998, the following persons were the
beneficial owners of more than 25% of the outstanding shares of the following
class of shares of the following funds:
25% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Disciplined Value Fund 55.32% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Disciplined Value Fund 32.87% Record
Database 2 - Attn: One Group/ Fiduciary
Cash Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Dean Witter For The Benefit Of Small Capitalization Fund 36.25% Record
Linda Sue Trizila & Class C
PO Box 250 Church Street Station
New York NY 10008-0250
Strafe & Co. Small Capitalization Fund 69.82% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Banc One Securities Corp FBO Growth Opportunities Fund 45.46% Record
The One Investment Solution Class C
733 Greencrest Dr
Columbus, OH 43081-4903
Strafe & Co/Cash Div Cash Growth Opportunities Fund 55.06% Record
C/O Bank One Trust Co Fiduciary
Attn Mutual Fund 0393
100 E Broad St
Columbus OH 43215-3607
Clark & Company Growth Opportunities Fund 30.48% Record
Database 2 - Attn One Group/Cash Fiduciary
235 W Schrock Road
Westerville OH 43081-2874
Strafe & Co. Income Bond Fund 59.95% Record
Bank One Trust Co. Fiduciary
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Bond Fund 30.15% Record
Database 2 - Attn: One Group/ Fiduciary
Cash Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Louisiana Municipal Bond Fund 97.78% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Dean Witter For The Benefit Of International 31.63% Record
John S Wagner & Equity Index Fund
PO Box 250 Church St Station Class C
New York, NY 10008-0250
Banc One Securities Corp FBO International 31.26% Record
The One Investment Solution Equity Index Fund
733 Greencrest Dr Class C
Westerville OH 43081-4903
Strafe & Co. International Equity Index Fund 57.18% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. International Equity Index Fund 30.90% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
BISYS Fund Services, Inc. U.S. Treasury Securities 41.20% Record
FBO Bank One Corporate Sweep Money Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
Dean Witter FBO U.S. Treasury Securities 29.99% Record
Banc One Securities Money Market
PO Box 250 Class A
Church Street Station
New York, NY 10013-0250
State Street Bank & Trust Co U.S. Treasury Securities 32.96% Record
Cust for the IRA of Money Market
Roland J Bourgeois Class B
692C W Wickenburg Way
Wickenburg AZ 85390-2268
The One Group Services Company U.S. Treasury Securities 86.96% Record
C/O Fund Administration Money Market
3435 Stelzer Road Class C
Columbus, OH 43219-6004
Strafe & Co. (N) U.S. Treasury Securities 68.34% Record
Bank One Ohio Trust Co., NA Money Market
Department 0393 S.T.I.F. Fiduciary
Columbus, Ohio 43271
Dean Witter FBO Municipal Money Market Fund 66.74% Record
Banc One Securities Class A
PO Box 250
Church Street Station
New York, NY 10013-0250
BISYS Fund Services, Inc. Municipal Money Market Fund 30.86% Record
FBO Bank One Corporate Sweep Class A
First & Market Building Suite 300
Pittsburgh, PA 15222
Strafe & Co. (D) Municipal Money Market Fund 59.25% Record
Bank One Ohio Trust Co., NA Fiduciary
Department 0393 S.T.I.F
Columbus, Ohio 43271
Clark & Co. Municipal Money Market Fund 35.91% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Government Bond Fund 60.10% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Government Bond Fund 29.75% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Clark & Co. Asset Allocation Fund 46.72% Record
Database 2-Attn: One Group/Cash Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co Asset Allocation Fund 34.10% Record
Attn Mutual Funds 0393 Fiduciary
100 E Broad Street
Columbus, OH 43215-3607
Strafe & Co. Treasury Only Money Market Fund 52.71% Record
Bank One Trust Co.
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Treasury Only Money Market Fund 26.20% Record
235 W. Schrock Road
Westerville, Ohio 43081-2874
</TABLE>
91
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
Banc One Investment Advisors may be deemed to have an interest in the
reorganization because it provides investment advisory services to the One Group
Funds and the Marquis Funds pursuant to an advisory agreement with The One Group
and Marquis Funds. Future growth of assets of The One Group can be expected to
increase the total amount of fees payable to Banc One Investment Advisors and to
reduce the amount of fees required to be waived to maintain total fees of the
Funds at agreed upon levels.
FINANCIAL STATEMENTS
The audited financial statements of the Marquis Funds as of September 30,
1997, have been incorporated by reference into this Prospectus/Proxy Statement
in reliance on the reports of Arthur Andersen LLP, independent accountants,
given on the authority of such firm as an expert in accounting and auditing.
Unaudited financial statements for the Marquis Funds for the period ended March
31, 1998, are contained in the Marquis Funds Semi-Annual Report filed with the
Securities and Exchange Commission and incorporated by reference into the
Statement of Additional Information relating to this Prospectus/Proxy Statement.
The audited financial statements of the One Group Funds as of June 30, 1997,
have been incorporated by reference into this Prospectus/Proxy Statement in
reliance on the reports of Coopers & Lybrand, L.L.P., independent accountants,
given on authority of such firm as an expert in accounting and auditing.
Unaudited financial statements for the period ended December 31, 1997 are
contained in The One Group Semi-Annual Reports filed with the Securities and
Exchange Commission and are incorporated by reference into the Statement of
Additional Information relating to this Prospectus/Proxy Statement.
Unaudited pro forma combined financial statements of the Marquis Funds and the
One Group Funds for the twelve month period ending December 31, 1997 are
included in the Statement of Additional Information. Because the Agreement and
Plan of Reorganization provides that the One Group Funds will be the surviving
funds following the reorganization and because the One Group Funds' investment
objectives and policies will remain unchanged, the pro forma combined financial
statements reflect the transfer of the assets and liabilities of each Marquis
Fund to the corresponding One Group Fund as contemplated by the Agreement and
Plan of Reorganization.
THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMEND
APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.
92
<PAGE>
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Combined Prospectus/Proxy Statement and the related Statement of
Additional Information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which The One Group
has filed with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933 and the Investment Company Act of 1940, to which
reference is hereby made. The file number for The One Group Prospectuses and the
related Statement of Additional Information which are incorporated herein by
reference is Registration No. 2-95973. The file number for the Marquis Funds
Prospectus and the related Statement of Additional Information which are
incorporated herein by reference is Registration No. 33-31334.
The One Group and Marquis Funds are subject to the informational requirements of
the Securities Exchange Act of 1934 and in accordance therewith file reports and
other information with the SEC. Proxy material, reports, proxy and information
statements, registration statements and other information filed by The One Group
and Marquis Funds can be inspected and copied at the SEC's public reference
facilities located at 450 Fifth Street, N.W. Washington, D.C. 20549. Copies of
such filings may be available at the following SEC regional offices: 90
Devonshire Street, Suite 700, Boston, MA 02109; 500 West Madison Street, Suite
1400, Chicago, IL 60611; and 601 Walnut Street, Suite 1005E, Philadelphia, PA
19106. Copies of such materials can also be obtained by mail from the Public
Reference Branch, Office of Consumer Affairs and Informational Services, SEC,
Washington, D.C. 20549 at prescribed rates.
93
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
94
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
May __, 1998 by and between The One Group-Registered Trademark-, a Massachusetts
business trust, ("One Group") and Marquis Funds, a Massachusetts business trust
("Marquis"). The capitalized terms used herein shall have the meaning ascribed
to them in this Agreement.
I. PLAN OF REORGANIZATION
(a) Marquis will sell, assign, convey, transfer and deliver to One Group,
and One Group will acquire, on the Exchange Date all of the properties and
assets existing at the Valuation Time in Marquis' Institutional Money Market
Fund ("Marquis Institutional"), Marquis' Treasury Securities Money Market Fund
("Marquis Treasury Securities"), Marquis' Tax-Exempt Money Market Fund ("Marquis
Tax-Exempt"), Marquis' Government Securities Fund ("Marquis Government"),
Marquis' Strategic Income Bond Fund ("Marquis Strategic Income"), Marquis'
Louisiana Tax-Free Income Fund ("Marquis Louisiana"), Marquis' Balanced Fund
("Marquis Balanced"), Marquis' Value Equity Fund ("Marquis Value"), Marquis'
Growth Equity Fund ("Marquis Growth"), Marquis' Small Cap Equity Fund ("Marquis
Small Cap"), and Marquis' International Equity Fund ("Marquis International"),
(Marquis Institutional, Marquis Treasury Securities, Marquis Tax-Exempt, Marquis
Government, Marquis Strategic Income, Marquis Louisiana, Marquis Balanced,
Marquis Value, Marquis Growth, Marquis Small Cap and Marquis International, each
is a "Marquis Fund" and are collectively the "Marquis Funds"), such acquisition
to be made by The One Group Treasury Only Money Market Fund ("One Group Treasury
Only"), The One Group U.S. Treasury Securities Money Market Fund ("One Group
Treasury Securities"), The One Group Municipal Money Market Fund ("One Group
Municipal"), One Group Government Bond Fund ("One Group
95
<PAGE>
Government"), The One Group Income Bond Fund ("One Group Income"), The One Group
Louisiana Municipal Bond Fund ("One Group Louisiana"), The One Group Asset
Allocation Fund ("One Group Asset Allocation"), The One Group Disciplined Value
Fund ("One Group Value"), The One Group Growth Opportunities Fund ("One Group
Growth"), The One Group Small Capitalization Fund ("One Group Small
Capitalization"), and The One Group International Equity Index Fund ("One Group
International Index") (One Group Treasury Only, One Group Treasury Securities,
One Group Municipal, One Group Government, One Group Income, One Group
Louisiana, One Group Asset Allocation, One Group Value, One Group Growth, One
Group Small Capitalization and One Group International Index, each is a "One
Group Fund" and are collectively the "One Group Funds"), respectively, of One
Group. For purposes of this Agreement the respective Marquis Funds correspond
to the One Group Funds as follows: Marquis Institutional corresponds to One
Group Treasury Only; Marquis Treasury Securities corresponds to One Group
Treasury Securities; Marquis Tax-Exempt corresponds to One Group Municipal;
Marquis Government corresponds to One Group Government; Marquis Strategic Income
corresponds to One Group Income; Marquis Louisiana corresponds to One Group
Louisiana; Marquis Balanced corresponds to One Group Asset Allocation; Marquis
Value corresponds to One Group Value; Marquis Growth corresponds to One Group
Growth; Marquis Small Cap corresponds to One Group Small Capitalization; and
Marquis International corresponds to One Group International Index. In
consideration therefor, each One Group Fund shall, on the Exchange Date, assume
all of the liabilities of the corresponding Marquis Fund in exchange for a
number of full and fractional One Group Class A, Fiduciary Class or Class B
shares of the corresponding One Group Fund (collectively, "Shares") having an
aggregate net asset value equal to the value of all of the assets of
96
<PAGE>
each Marquis Fund transferred to the corresponding One Group Fund on such date
less the value of all of the liabilities of each Marquis Fund assumed by the
corresponding One Group Fund on that date. It is intended that each
reorganization described in this Agreement shall be a tax-free reorganization
under the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, each Marquis Fund shall distribute in complete liquidation to
its respective shareholders of record as of the Exchange Date the Shares
received by it, each shareholder being entitled to receive that number of Shares
equal to the proportion which the number of shares of beneficial interest of the
applicable class of the Marquis Fund held by such shareholder bears to the
number of such shares of such class of the Marquis Fund outstanding on such
date. If the Marquis shareholder of record is a financial organization
authorized to act in a fiduciary, advisory, custodial or similar capacity, or
holds Trust Class shares, that shareholder will receive One Group Fiduciary
Class Shares. All other Marquis Class A, Retail Class and Cash Sweep Class
shareholders will receive One Group Class A Shares. Shareholders of record
holding Marquis Class B Shares will receive One Group Class B shares.
II. AGREEMENT
One Group and Marquis represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF MARQUIS. Marquis and each Marquis
Fund jointly and severally represent and warrant to and agree with One Group and
each One Group Fund that:
(a) Marquis is a business trust duly established and validly existing
under the laws of the Commonwealth of Massachusetts and has power to own all of
its properties and assets and to carry out its obligations under this Agreement.
Marquis and each Marquis Fund is not required to qualify
97
<PAGE>
as a foreign association in any jurisdiction. Marquis and each Marquis Fund has
all necessary federal, state and local authorizations to carry on its business
as now being conducted and to fulfill the terms of this Agreement, except as set
forth in Section 1(l).
(b) Marquis is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
Each Marquis Fund has elected to qualify and has qualified as a regulated
investment company under Part 1 of Subchapter M of the Code, as of and since its
first taxable year, and qualifies and intends to continue to qualify as a
regulated investment company for its taxable year ending upon its liquidation.
Each Marquis Fund has been a regulated investment company under such sections of
the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each Marquis Fund at and for the year ended
September 30, 1997, such statements and schedules having been audited by Arthur
Anderson, LLP, independent accountants to Marquis, have been furnished to One
Group. Unaudited statements of net assets, statement of operations, statement
of changes in net assets, and schedules of portfolio investments for the period
ended March 31, 1998 also have been provided to One Group.
(d) The prospectuses of each Marquis Fund dated February 1, 1998
(collectively, the "Marquis Prospectuses") and the Statement of Additional
Information for the Marquis Funds dated February 1, 1998 and on file with the
Securities and Exchange Commission (the "Commission"), which have been
previously furnished to One Group, did not as of their dates and do not as of
the
98
<PAGE>
date hereof contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Marquis or any Marquis Fund, threatened against
Marquis or any Marquis Fund which assert liability on the part of Marquis or any
Marquis Fund.
(f) There are no material contracts outstanding to which Marquis or any
Marquis Fund is a party, other than as disclosed in the Marquis Prospectuses and
the corresponding Statement of Additional Information, or in the Registration
Statement and the Proxy Statement as defined herein.
(g) Neither Marquis nor any Marquis Fund has any known liabilities of a
material nature, contingent or otherwise, other than those shown as belonging to
it on its statement of assets and liabilities as of March 31, 1998, and those
incurred in the ordinary course of Marquis's business as an investment company
since that date. Prior to the Exchange Date, Marquis will advise One Group of
all known material liabilities, contingent or otherwise, incurred by it and each
Marquis Fund subsequent to March 31, 1998, whether or not incurred in the
ordinary course of business.
(h) As used in this Agreement, the term "Investments" shall mean each
Marquis Fund's investments shown on the schedule of its portfolio investments as
of September 30, 1997 and March 31, 1998, referred to in Section 1(c) hereof, as
supplemented with such changes as Marquis or each Marquis Fund shall make after
March 31, 1998, which changes have been disclosed to One Group, and changes made
on and after the date of this Agreement after advising One Group of such
proposed changes, and changes resulting from stock dividends, stock split-ups,
mergers and similar corporate actions.
99
<PAGE>
(i) Each Marquis Fund has filed or will file all federal and state tax
returns which, to the knowledge of Marquis's officers, are required to be filed
by each Marquis Fund and has paid or will pay all federal and state taxes shown
to be due on said returns or on any assessments received by each Marquis Fund.
All tax liabilities of each Marquis Fund have been adequately provided for on
its books, and no tax deficiency or liability of any Marquis Fund has been
asserted, and no question with respect thereto has been raised, by the Internal
Revenue Service or by any state or local tax authority for taxes in excess of
those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval as described in Section 8(a) and otherwise as described in
Section 1(1), Marquis on behalf of each Marquis Fund will have full right, power
and authority to sell, assign, transfer and deliver the Investments and any
other assets and liabilities of each Marquis Fund to be transferred to the
corresponding One Group Fund pursuant to this Agreement. At the Exchange Date,
subject only to the delivery of the Investments and any such other assets and
liabilities as contemplated by this Agreement, One Group will, on behalf of each
One Group Fund, acquire the Investments and any such other assets subject to no
encumbrances, liens or security interests in favor of any third party creditor
of Marquis or a Marquis Fund and, except as described in Section 1(k), without
any restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as amended (the
"1933 Act"), of any of the Investments would be required if they were, as of the
time of such transfer, the subject of a public distribution by either of Marquis
or One Group, except as previously disclosed to One Group by Marquis in writing.
100
<PAGE>
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Marquis or any
Marquis Fund of the transactions contemplated by this Agreement, except such as
may be required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, state securities or blue sky laws (which
term as used herein shall include the laws of the District of Columbia and of
Puerto Rico) or the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"H-S-R Act").
(m) The registration statement (the "Registration Statement") filed with
the Commission by One Group on Form N-14 relating to the Shares issuable
hereunder, and the proxy statement of Marquis included therein (the "Proxy
Statement"), on the effective date of the Registration Statement and insofar as
they relate to Marquis and the Marquis Funds, (i) will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
at the time of the shareholders' meeting referred to in Section 8(a) below and
on the Exchange Date, the prospectus contained in the Registration Statement of
which the Proxy Statement is a part (the "Prospectus"), as amended or
supplemented by any amendments or supplements filed with the Commission by One
Group, insofar as it relates to Marquis and the Marquis Funds, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the representations and warranties in this
subsection shall apply only to statements of fact relating to Marquis and any
Marquis Fund contained in the Registration Statement, the Prospectus or the
Proxy Statement, or omissions to state in any thereof a material fact relating
to Marquis or any Marquis
101
<PAGE>
Fund, as such Registration Statement, Prospectus and Proxy Statement shall be
furnished to Marquis in definitive form as soon as practicable following
effectiveness of the Registration Statement and before any public distribution
of the Prospectus or Proxy Statement.
(n) All of the issued and outstanding shares of beneficial interest of
each Marquis Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws.
(o) Each of the Marquis Funds is qualified, and will at all times through
the Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code.
(p) At the Exchange Date, each of the Marquis Funds, as One Group may
reasonably direct via written instructions, will have sold such of its assets,
if any, as necessary to assure that, after giving effect to the acquisition of
the assets pursuant to this Agreement, each of the One Group Funds (other than
One Group Louisiana) will remain a "diversified company" within the meaning of
Section 5(b) (l) of the 1940 Act and in compliance with such other mandatory
investment restrictions as are set forth in the One Group Prospectuses
previously furnished to Marquis.
2. REPRESENTATIONS AND WARRANTIES OF ONE GROUP. One Group and each One
Group Fund jointly and severally represent and warrant to and agree with Marquis
and each Marquis Fund that:
(a) One Group is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts and has power to carry on
its business as it is now being conducted and to carry out this Agreement. One
Group and each One Group Fund is not required to qualify as a foreign
association in any jurisdiction. One Group and each One Group Fund has all
necessary federal, state and local authorizations to own all of its properties
and assets and to carry on its
102
<PAGE>
business as now being conducted and to fulfill the terms of this Agreement,
except as set forth in Section 2(i).
(b) One Group is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect. Each One Group Fund has elected to qualify and has
qualified as a regulated investment company under Part 1 of Subchapter M of the
Code, as of and since its first taxable year, and qualifies and intends to
continue to qualify as a regulated investment company for its taxable year
ending June 30, 1998. Each One Group Fund has been a regulated investment
company under such sections of the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each One Group Fund for the year ended June
30, 1997, such statements and schedules having been audited by Coopers &
Lybrand, independent accountants to One Group, have been furnished to Marquis.
Unaudited statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each One Group Fund as of December 31, 1997
have also been furnished to Marquis. Such statements of assets and liabilities
and schedules fairly present the financial position of the One Group Funds as of
their respective dates, and said statements of operations and changes in net
assets fairly reflect the results of its operations and changes in financial
position for the periods covered thereby in conformity with generally accepted
accounting principles.
(d) The prospectuses of each One Group Fund dated November 1, 1997,
(collectively, the "One Group Prospectuses"), and the Statement of Additional
Information for the One Group Funds,
103
<PAGE>
dated November 1, 1997, and on file with the Commission, which have been
previously furnished to Marquis, did not as of their dates and do not as of the
date hereof contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of One Group or any One Group Fund, threatened
against One Group or any One Group Fund which assert liability on the part of
One Group or any One Group Fund.
(f) There are no material contracts outstanding to which One Group or any
One Group Fund is a party, other than as disclosed in the One Group Prospectuses
and the corresponding Statement of Additional Information or in the Registration
Statement and the Proxy Statement.
(g) Neither One Group nor any One Group Fund has any known liabilities of
a material nature, contingent or otherwise, other than those shown on its
statement of assets and liabilities as of December 31, 1997 referred to above
and those incurred in the ordinary course of the business of One Group as an
investment company or any One Group Fund since such date. Prior to the Exchange
Date, One Group will advise Marquis of all known material liabilities,
contingent or otherwise, incurred by it and each One Group Fund subsequent to
December 31, 1997, whether or not incurred in the ordinary course of business.
(h) Each One Group Fund has filed or will file all federal and state tax
returns which, to the knowledge of One Group's officers, are required to be
filed by each One Group Fund and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by each One
Group Fund. All tax liabilities of each One Group Fund have been adequately
provided for on its books, and no tax deficiency or liability of any One Group
Fund has been asserted, and no
104
<PAGE>
question with respect thereto has been raised, by the Internal Revenue Service
or by any state or local tax authority for taxes in excess of those already
paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by One Group or any One Group Fund of
the transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, state securities or Blue Sky
laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise as
described in Section 2 (i), One Group on behalf of each One Group Fund will have
full right, power and authority to purchase the Investments and any other assets
and assume the liabilities of each Marquis Fund to be transferred to the
corresponding One Group Fund pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement, on
the effective date of the Registration Statement and insofar as they relate to
One Group and the One Group Funds: (i) will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of the
shareholders' meeting referred to in Section 8(a) and at the Exchange Date, the
Prospectus, as amended or supplemented by any amendments or supplements filed
with the Commission by One Group or any One Group Fund, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the Registration
Statement, the Prospectus or the Proxy Statement made in reliance upon and in
105
<PAGE>
conformity with information furnished by Marquis or any Marquis Fund for use in
the Registration Statement, the Prospectus or the Proxy Statement.
(l) Shares to be issued to each Marquis Fund have been duly authorized
and, when issued and delivered pursuant to this Agreement and the Prospectus,
will be legally and validly issued and will be fully paid and nonassessable by
One Group and no shareholder of One Group will have any preemptive right of
subscription or purchase in respect thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each One Group Fund is qualified and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code.
3. REORGANIZATION. (a) Subject to the requisite shareholder approval as
described in Section 8(a) and to the other terms and conditions contained herein
(including each Marquis Fund's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof ), Marquis and each Marquis Fund agree to
sell, assign, convey, transfer and deliver to the corresponding One Group Fund,
and One Group and each One Group Fund agree to acquire from the corresponding
Marquis Fund, on the Exchange Date all of the Investments and all of the cash
and other assets of each Marquis Fund in exchange for that number of Shares of
the corresponding One Group Fund provided for in Section 4 and the assumption by
the corresponding One Group Fund of all the liabilities of the Marquis Fund.
Pursuant to this Agreement, each Marquis Fund will, as soon as practicable after
the Exchange Date, distribute in liquidation all of the Shares received by it to
its shareholders in exchange for their shares of beneficial interest of such
Marquis Fund.
106
<PAGE>
(b) Marquis, on behalf of each Marquis Fund, will pay or cause to be paid
to the corresponding One Group Fund any interest and cash dividends received by
it on or after the Exchange Date with respect to the Investments transferred to
the One Group Funds hereunder. Marquis, on behalf of each Marquis Fund, will
transfer to the corresponding One Group Fund any rights, stock dividends or
other securities received by Marquis or any Marquis Fund after the Exchange Date
as stock dividends or other distributions on or with respect to the Investments
transferred, which rights, stock dividends and other securities shall be deemed
included in the assets transferred to each One Group Fund at the Exchange Date
and shall not be separately valued, in which case any such distribution that
remains unpaid as of the Exchange Date shall be included in the determination of
the value of the assets of the Marquis Fund acquired by the corresponding One
Group Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, One Group will
deliver to Marquis a number of Shares having an aggregate net asset value equal
to the value of the assets of the corresponding Marquis Fund acquired by each
One Group Fund, less the value of the liabilities of such Marquis Fund assumed,
determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each Marquis Fund's net
assets will be computed as of the Valuation Time using the valuation procedures
for the corresponding One Group Fund as set forth in the One Group Prospectus
for the particular One Group Fund
(b) Subject to Section 4(d) hereof, the net asset value of a share of each
One Group Fund will be determined to the nearest full cent as of the Valuation
Time, using the valuation procedures set forth in the One Group Prospectus for
the particular One Group Fund.
107
<PAGE>
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m. Eastern
Standard time on August 7, 1998 or such earlier or later day as may be mutually
agreed upon in writing by the parties hereto (the "Valuation Time").
(d) No formula will be used to adjust the net asset value of any Marquis
Fund or One Group Fund to take into account differences in realized and
unrealized gains and losses.
(e) Each One Group Fund shall issue its Shares to the corresponding
Marquis Fund on one share deposit receipt registered in the name of the
corresponding Marquis Fund. Each Marquis Fund shall distribute in liquidation
the Shares received by it hereunder pro rata to its shareholders of each class
of shares by redelivering such share deposit receipt to One Group's transfer
agent which will as soon as practicable set up open accounts for each Marquis
Fund shareholder in accordance with written instructions furnished by Marquis.
(f) Each One Group Fund shall assume all liabilities of the corresponding
Marquis Fund, whether accrued or contingent, in connection with the acquisition
of assets and subsequent dissolution of the corresponding Marquis Fund or
otherwise, except that recourse for assumed liabilities relating to a particular
Marquis Fund will be limited to the corresponding One Group Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5(e),
all fees and expenses, including accounting expenses, portfolio transfer
taxes (if any) or other similar expenses incurred in connection with the
consummation by One Group and Marquis of the transactions contemplated by
this Agreement will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including the costs of drafting, filing, printing and mailing the proxy, the
retention of proxy solicitors, and legal and tax opinions, will be borne by
Banc One Investment Advisors Corporation; PROVIDED, HOWEVER, that such
expenses will in any event be paid by the party directly
108
<PAGE>
incurring such expenses if and to the extent that the payment by the other
party of such expenses would result in the disqualification of any One Group
Fund or any Marquis Fund, as the case may be, as a "regulated investment
company" within the meaning of Section 851 of the Code.
(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of Marquis being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Marquis's obligations referred to in Section 8(a) or Section 10) Marquis shall
pay directly all reasonable fees and expenses incurred by One Group in
connection with such transactions, including, without limitation, legal,
accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of One Group being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to One Group's obligations referred to in Section 8(a) or Section 9), One Group
shall pay directly all reasonable fees and expenses incurred by Marquis in
connection with such transactions, including without limitation legal,
accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) One Group or Marquis being either
unwilling or unable to go forward or (ii) the nonfulfillment or failure of any
condition to Marquis or One Group's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of Marquis and One Group
shall bear the expenses it has actually incurred in connection with such
transactions.
(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
109
<PAGE>
6. PERMITTED ASSETS. One Group agrees to advise Marquis promptly if at
any time prior to the Exchange Date the assets of any Marquis Fund include any
assets that the corresponding One Group Fund is not permitted, or reasonably
believes to be unsuitable for it, to acquire, including without limitation any
security that, prior to its acquisition by any Marquis Fund, One Group has
informed Marquis is unsuitable for the corresponding One Group Fund to acquire.
7. EXCHANGE DATE. Delivery of the assets of the Marquis Funds to be
transferred, assumption of the liabilities of the Marquis Funds to be assumed,
and the delivery of Shares to be issued shall be made at the offices of Banc One
Investment Advisors Corporation at 9:00 am. on August 10, 1998, or at such
other time and date agreed to by Marquis and One Group, the date and time upon
which such delivery is to take place being referred to herein as the "Exchange
Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Marquis agrees to
call a special meeting of the shareholders of each Marquis Fund as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of each Marquis Fund to and
the assumption of all of the liabilities of each Marquis Fund by the
corresponding One Group Fund as herein provided, adopting this Agreement, and
authorizing the liquidation and dissolution of any Marquis Fund, and, except as
set forth in Section 13, it shall be a condition to the obligations of each of
the parties hereto that the holders of the shares of beneficial interest of each
Marquis Fund, and each class of shares of each Marquis Fund if such is required
under the 1940 Act, shall have approved this Agreement and the transactions
contemplated herein in the manner required by law and Marquis's Declaration of
Trust at such a meeting on or before the Valuation Time.
110
<PAGE>
(b) Marquis and each Marquis Fund agree that the liquidation and
dissolution of each Marquis Fund will be effected in the manner provided in
Marquis's Declaration of Trust in accordance with applicable law, and that it
will not make any distributions of any Shares to the shareholders of a Marquis
Fund without first paying or adequately providing for the payment of all of such
Marquis Fund's known debts, obligations and liabilities.
(c) Each of One Group and Marquis will cooperate with the other, and each
will furnish to the other the information relating to itself required by the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
to be set forth in the Registration Statement, including the Prospectus and the
Proxy Statement.
9. CONDITIONS TO ONE GROUP'S OBLIGATIONS. The obligations of One Group
and each One Group Fund hereunder shall be subject to the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Marquis
Funds, shall have been approved as set forth in Section 8(a).
(b) Marquis shall have furnished to One Group a statement of each Marquis
Fund's assets and liabilities, with values determined as provided in Section 4
of this Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on Marquis's behalf by its
President (or any Vice President) and Treasurer, and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation Time
and as of the Exchange Date there has been no material adverse change in the
financial position of any Marquis Fund since March 31, 1998, other than changes
in the Investments since that date or changes in the market value
111
<PAGE>
of the Investments, or changes due to net redemptions of shares of the Marquis
Funds, dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Marquis and each Marquis Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, Marquis and each Marquis Fund has complied with this Agreement and
satisfied all the conditions on its part to be performed or satisfied at or
prior to each of such dates, and Marquis shall have furnished to One Group a
statement, dated the Exchange Date, signed by Marquis's President (or any Vice
President) and Treasurer certifying those facts as of such dates.
(d) Marquis shall have delivered to One Group a letter from SEI
Investments Company dated the Exchange Date stating that such firm prepared
the federal and state income tax returns of each Marquis Fund for the year
ended September 30, 1997.
(e) There shall not be any material litigation pending with respect to the
matters contemplated by this Agreement.
(f) One Group shall have received an opinion of Morgan, Lewis & Bockius
LLP, in form reasonably satisfactory to One Group and dated the Exchange Date,
to the effect that (i) Marquis is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts, and neither
Marquis nor any Marquis Fund is, to the knowledge of such counsel, required to
qualify to do business as a foreign association in any jurisdiction, (ii) this
Agreement has been duly authorized, executed, and delivered by Marquis and,
assuming that the Registration Statement, the Prospectus and the Proxy Statement
comply with the 1933 Act, the 1934 Act and the 1940 Act and assuming due
authorization, execution and delivery of this Agreement by One Group,
112
<PAGE>
is a valid and binding obligation of Marquis subject to applicable bankruptcy,
insolvency, fraudulent conveyance and similar laws or court decisions regarding
enforcement of creditor's rights generally, (iii) Marquis and each Marquis Fund
has power to sell, assign, convey, transfer and deliver the Investments and
other assets contemplated hereby and, upon consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement, Marquis and
each Marquis Fund will have duly sold, assigned, conveyed, transferred and
delivered such Investments and other assets to One Group, (iv) the execution and
delivery of this Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate Marquis's Declaration of Trust, or Bylaws,
as amended, or any provision of any agreement known to such counsel to which
Marquis or any Marquis Fund is a party or by which it is bound, it being
understood that with respect to investment restrictions as contained in
Marquis's Declaration of Trust, or Bylaws, or then-current prospectus or
statement of additional information of each Marquis Fund, such counsel may rely
upon a certificate of an officer of Marquis whose responsibility it is to advise
Marquis with respect to such matters and (v) to the best of counsel's knowledge
after reasonable inquiry, no consent, approval, authorization or order of any
court or governmental authority is required for the consummation by Marquis or
any Marquis Fund of the transactions contemplated herein, except (a) such as
have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as
may be required under state securities or blue sky laws and the H-S-R Act, and
it being understood that such opinion shall not be deemed to apply to One
Group's compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state
securities or blue sky laws and H-S-R Act, and (b) where the failure to obtain
any such consent, approval, authorization or order would not have a material
adverse effect. For purposes of analysis regarding the 1940 Act, Morgan, Lewis
& Bockius LLP may assume as fact that the Marquis Funds
113
<PAGE>
and the One Group Funds may be considered affiliated persons or affiliated
persons of an affiliated person solely by reason of having a common investment
adviser.
(g) One Group shall have received an opinion of Ropes & Gray, counsel to
One Group addressed to The One Group and each One Group Fund, in form reasonably
satisfactory to One Group and dated the Exchange Date, to the effect that for
Federal income tax purposes (i) no gain or loss will be recognized by any
Marquis Fund upon the transfer of the assets to the corresponding One Group Fund
in exchange for Shares and the assumption by such One Group Fund of the
liabilities of the Marquis Fund or upon the distribution of Shares by the
Marquis Fund to its shareholders in liquidation; (ii) no gain or loss will be
recognized by the shareholders of any Marquis Fund upon the exchange of their
shares for Shares; (iii) the basis of the Shares a Marquis shareholder receives
in connection with the transaction will be the same as the basis of his or her
Marquis Fund shares exchanged therefor; (iv) a Marquis shareholder's holding
period for his or her Shares will be determined by including the period for
which he or she held the Marquis Fund shares exchanged therefor, provided that
he or she held such Marquis Fund shares as capital assets; (v) no gain or loss
will be recognized by any One Group Fund upon the receipt of the assets of the
corresponding Marquis Fund in exchange for Shares and the assumption by the One
Group Fund of the liabilities of the corresponding Marquis Fund; (vi) the basis
in the hands of the One Group Fund of the assets of the corresponding Marquis
Fund transferred to the One Group Fund in the transaction will be the same as
the basis of the assets in the hands of the corresponding Marquis Fund
immediately prior to the transfer; and (vii) the holding periods of the assets
of the corresponding Marquis Fund in the hands of the One Group Fund will
include the periods for which such assets were held by the corresponding Marquis
Fund.
114
<PAGE>
(h) The assets of each Marquis Fund to be acquired by the corresponding
One Group Fund will include no assets which the corresponding One Group Fund, by
reason of limitations contained in its Declaration of Trust or of investment
restrictions disclosed in the One Group Prospectuses in effect on the Exchange
Date, may not properly acquire.
(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of One Group
contemplated by the Commission and or any state regulatory authority.
(j) All proceedings taken by Marquis in connection with the transactions
contemplated by this Agreement and all documents incidental thereto reasonably
shall be satisfactory in form and substance to One Group and Ropes & Gray.
(k) Prior to the Exchange Date, each Marquis Fund shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its shareholders all of its investment
company taxable income for its taxable year ended September 30, 1997 and the
short taxable year beginning on October 1, 1997 and ending on the Exchange Date
(computed without regard to any deduction for dividends paid), and all of its
net capital gain realized in its taxable year ended September 30, 1997 and the
short taxable year beginning on October 1, 1997 and ending on the Exchange Date
(after reduction for any capital loss carryover).
(l) Marquis shall have furnished to One Group a certificate, signed by the
President (or any Vice President) and the Treasurer of Marquis, as to the tax
cost to One Group of the securities delivered to One Group pursuant to this
Agreement, together with any such other evidence as to such tax cost as One
Group may reasonably request.
115
<PAGE>
(m) Marquis's custodian shall have delivered to One Group a certificate
identifying all of the assets of each Marquis Fund held by such custodian as of
the Valuation Time.
(n) Marquis's transfer agent shall have provided to One Group (i) the
originals or true copies of all of the records of each Marquis Fund in the
possession of such transfer agent as of the Exchange Date, (ii) a certificate
setting forth the number of shares of each class of Marquis Fund outstanding as
of the Valuation Time and (iii) the name and address of each holder of record of
any such shares of each Marquis Fund and the number of shares of each class held
of record by each such shareholder.
(o) All of the issued and outstanding shares of beneficial interest of
each Marquis Fund shall have been offered for sale and sold in conformity with
all applicable federal or state securities or blue sky laws and, to the extent
that any audit of the records of Marquis or any Marquis Fund or its transfer
agent by One Group or its agents shall have revealed otherwise, either (i)
Marquis and each Marquis Fund shall have taken all actions that in the
reasonable opinion of One Group or Ropes & Gray are necessary to remedy any
prior failure on the part of Marquis to have offered for sale and sold such
shares in conformity with such laws or (ii) Marquis shall have furnished (or
caused to be furnished) surety, or deposited (or caused to be deposited) assets
in escrow, for the benefit of One Group in amounts sufficient and upon terms
satisfactory, in the opinion of One Group or its counsel, to indemnify One Group
against any expense, loss, claim, damage or liability whatsoever that may be
asserted or threatened by reason of such failure on the part of Marquis to have
offered and sold such shares in conformity with such laws.
(p) Marquis shall have duly executed and delivered to One Group bills of
sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as One Group may deem
116
<PAGE>
necessary or desirable to transfer all of Marquis's and each Marquis Fund's
entire right, title and interest in and to the Investments and all other assets
of each Marquis Fund.
10. CONDITIONS TO MARQUIS'S OBLIGATIONS. The obligations of Marquis and
each Marquis Fund hereunder shall be subject to the following conditions:
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Marquis
Funds, shall have been approved as described in Section 8(a).
(b) One Group shall have furnished to Marquis a Statement of each One
Group Fund's net assets, together with a list of portfolio holdings with values
determined as provided in Section 4, all as of the Valuation Time, certified on
One Group's behalf by its President (or any Vice President) and Treasurer (or
any Assistant Treasurer), and a certificate of both such officers, dated the
Exchange Date, to the effect that as of the Valuation Time and as of the
Exchange Date there has been no material adverse change in the financial
position of any One Group Fund since December 31, 1997, other than changes in
its portfolio securities since that date, changes in the market value of its
portfolio securities, changes due to net redemptions, dividends paid or losses
from operations.
(c) One Group shall have executed and delivered to Marquis an Assumption
of Liabilities Certificate and other instruments as Marquis may deem necessary
and desirable dated as of the Exchange Date pursuant to which each One Group
Fund will assume all of the liabilities of the corresponding Marquis Fund
existing at the Valuation Time in connection with the transactions contemplated
by this Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of One Group and each One Group Fund made in this
Agreement are true and correct in all material
117
<PAGE>
respects as if made at and as of such dates, One Group and each One Group Fund
has complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied at or prior to each of such dates, and One
Group shall have furnished to Marquis a statement, dated the Exchange Date,
signed by One Group's President (or any Vice President) and Treasurer certifying
those facts as of such dates.
(e) There shall not be any material litigation pending with respect to the
matters contemplated by this Agreement.
(f) Marquis shall have received an opinion of Ropes & Gray, in form
reasonably satisfactory to Marquis and dated the Exchange Date, to the effect
that (i) One Group is a business trust and validly existing in conformity with
the laws of The Commonwealth of Massachusetts, and, (to the knowledge of such
counsel), neither One Group nor any One Group Fund is required to qualify to do
business as a foreign association in any jurisdiction, (ii) the Shares to be
delivered to Marquis as provided for by this Agreement are duly authorized and
upon such delivery will be validly issued and will be fully paid and
nonassessable by One Group and no shareholder of One Group has any preemptive
right to subscription or purchase in respect thereof, (iii) this Agreement has
been duly authorized, executed and delivered by One Group and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Marquis, is a valid and binding
obligation of One Group, subject to applicable bankruptcy, insolvency,
fraudulant conveyance and similar laws or court decisions regarding the
enforcement of credit rights generally, (iv) One Group and each One Group Fund
has the power to acquire and assume all of the liabilities of Marquis and the
Marquis Funds and, upon consumation of the transactions contemplated hereby
118
<PAGE>
in accordance with the terms of this Agreement, One Group and each respective
One Group Fund shall have duly aquired and assumed such liabilities, and (v) the
execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate One Group's Declaration of
Trust, as amended, or Code of Regulations, or any provision of any agreement
known to such counsel to which One Group or any One Group Fund is a party or by
which it is bound, it being understood that with respect to investment
restrictions as contained in One Group's Declaration of Trust, as amended, Code
of Regulations or then-current prospectus or statement of additional information
of each One Group Fund, such counsel may rely upon a certificate of an officer
of One Group whose responsibility it is to advise One Group with respect to such
matters, (vi) no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by One Group or any One
Group Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act and it being
understood that such opinion shall not be deemed to apply to Marquis's
compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state securities
or blue sky laws and the H-S-R Act; and (vii) the Registration Statement has
become effective under the 1933 Act, and to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
(g) Marquis shall have received an opinion of Ropes & Gray addressed to
Marquis, and each Marquis Fund, and in a form reasonably satisfactory to Marquis
and dated the Exchange Date, with respect to the matters specified in Section
9(g) of this Agreement.
119
<PAGE>
(h) All proceedings taken by One Group in connection with the transactions
contemplated by this Agreement and all documents incidental thereto reasonably
shall be satisfactory in form and substance to Marquis and Morgan, Lewis &
Bockius LLP.
(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of Marquis,
contemplated by the Commission or any state regulatory authority.
11. INDEMNIFICATION. (a) The Marquis Funds will indemnify and hold
harmless One Group, its trustees and its officers (for purposes of this
subsection, the "Indemnified Parties") against any and all expenses, losses,
claims, damages and liabilities at any time imposed upon or reasonably incurred
by any one or more of the Indemnified Parties in connection with, arising out
of, or resulting from any claim, action, suit or proceeding in which any one or
more of the Indemnified Parties may be involved or with which any one or more of
the Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to Marquis or any Marquis
Fund contained in the Registration Statement, the Prospectus or the Proxy
Statement or any amendment or supplement to any of the foregoing, or arising out
of or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to Marquis or any Marquis Fund required to be
stated therein or necessary to make the statements relating to Marquis or any
Marquis Fund therein not misleading, including, without limitation, any amounts
paid by any one or more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding or threatened claim,
action, suit or proceeding made with the prior consent of Marquis. The
Indemnified Parties will notify Marquis in writing within ten days after the
receipt
120
<PAGE>
by any one or more of the Indemnified Parties of any notice of legal process or
any suit brought against or claim made against any Indemnified Party as to any
matters covered by this Section 11(a). Marquis shall be entitled to participate
at its own expense in the defense of any claim, action, suit or proceeding
covered by this Section 11(a), or, if it so elects, to assume at its expense by
counsel satisfactory to the Indemnified Parties the defense of any such claim,
action, suit or proceeding, and if Marquis elects to assume such defense, the
Indemnified Parties shall be entitled to participate in the defense of any such
claim, action, suit or proceeding at their expense. The Marquis Funds'
obligation under this Section 11(a) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the Marquis
Funds will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this Section 11(a) without the
necessity of the Indemnified Parties first paying the same.
(b) The One Group Funds will indemnify and hold harmless Marquis, its
trustees and its officers (for purposes of this subsection, the "Indemnified
Parties") against any and all expenses, losses, claims, damages and liabilities
at any time imposed upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or resulting from any
claim, action, suit or proceeding in which any one or more of the Indemnified
Parties may be involved or with which any one or more of the Indemnified Parties
may be threatened by reason of any untrue statement or alleged untrue statement
of a material fact relating to One Group or any One Group Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any amendment
or supplement to any of the foregoing, or arising out of or based upon the
omission or alleged omission to state in any of the foregoing a material fact
relating to One Group or any One Group Fund required to be stated therein or
necessary to make the statements relating to One Group
121
<PAGE>
or any One Group Fund therein not misleading, including, without limitation, any
amounts paid by any one or more of the Indemnified Parties in a reasonable
compromise or settlement of any such claim, action, suit or proceeding, or
threatened claim, action, suit or proceeding made with the prior consent of One
Group. The Indemnified Parties will notify One Group in writing within ten days
after the receipt by any one or more of the Indemnified Parties of any notice of
legal process or any suit brought against or claim made against any Indemnified
Party as to any matters covered by this Section 11(b). One Group shall be
entitled to participate at its own expense in the defense of any claim, action,
suit or proceeding covered by this Section 11(b), or, if it so elects, to assume
at its expense by counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and, if One Group elects to assume
such defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their own expense. The
One Group Funds' obligation under this Section 11(b) to indemnify and hold
harmless the Indemnified Parties shall constitute a guarantee of payment so that
the One Group Funds will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this Section 11(b)
without the necessity of the Indemnified Parties first paying the same.
12. NO BROKER, ETC. Each of One Group and Marquis represents that there
is no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
13. TERMINATION. One Group and Marquis may, by mutual consent of their
respective trustees, terminate this Agreement, and One Group or Marquis, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this
122
<PAGE>
Agreement have not been substantially completed by October 30, 1998, this
Agreement shall automatically terminate on that date unless a later date is
agreed to by One Group and Marquis.
Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by this
Agreement is obtained with respect to only one or more Marquis Funds but not all
of the Marquis Funds, One Group and Marquis agree to consummate those
transactions with respect to those Marquis Funds whose shareholders have
approved this Agreement and those transactions.
In the event that shareholder approval of this Agreement and the
transactions contemplated by this Agreement is required, but is obtained with
respect to only one class of shares of a Marquis Fund, the transaction with
respect to that Marquis Fund will not be consummated unless and until
shareholder approval is obtained with respect to both classes.
14. RULE 145. Pursuant to Rule 145 under the 1933 Act, One Group will, in
connection with the issuance of any Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a party to the
transaction pursuant to Rule 145 (c), cause to be affixed upon the certificates
issued to such person (if any) a legend as follows:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
TO THE ONE GROUP OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) IN THE OPINION OF COUNSEL
REASONABLY
123
<PAGE>
SATISFACTORY TO THE ONE GROUP SUCH REGISTRATION IS NOT REQUIRED."
and, further, One Group will issue stop transfer instructions to One Group's
transfer agent with respect to such shares. Marquis will provide One Group on
the Exchange Date with the name of any shareholder of the Marquis Funds who is
to the knowledge of Marquis an affiliate of Marquis on such date.
15. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
16. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts provided, however, that no such amendment may
have the effect of changing the provisions for determining the number or value
of shares to be paid to the Marquis Fund's shareholders under Sections I(b) and
II(4)(b) this Agreement to the material detriment of such shareholder's without
their further approval.
17. AGREEMENT AND DECLARATION OF TRUST. The names "Marquis Funds" and
"Trustees of Marquis Funds" refer respectively to Marquis and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust, to which reference is hereby made and a copy of which is
on file at the office of the Secretary of The Commonwealth of Massachusetts
124
<PAGE>
and elsewhere as required by law, and to any and all amendments thereto so filed
or hereafter filed. The obligations of "Marquis Funds" entered into in the name
or on behalf thereof by any of the Trustees, officers, employees or agents are
made not individually, but in such capacities, and are not binding upon any of
the Trustees, officers, employees, agents or shareholders of Marquis personally,
but bind only the assets of Marquis, and all persons dealing with any of the
series or funds of Marquis, such as Marquis Funds, must look solely to the
assets of Marquis belonging to such series or funds for the enforcement of any
claims against Marquis.
The names "The One Group" and "Trustees of The One Group" refer
respectively to One Group and the Trustees, as trustees but not individually or
personally, acting from time to time under a Declaration of Trust dated May 23,
1985 to which reference is hereby made and a copy of which is on file at the
office of the Secretary of The Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The One Group" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders or representatives of One Group personally, but bind only
the assets of One Group, and all persons dealilng with any series or fund of One
Group, such as the One Group Funds, must look solely to the assets of One Group
belonging to such series for the enforcement of any claims against One Group.
125
<PAGE>
This Agreement may be executed in any number of counter-parts, each of
which, when executed and delivered, shall be deemed to be an original.
MARQUIS FUNDS
By: /s/ Mark E. Nagle
----------------------------
THE ONE GROUP
By: /s/ Mark S. Redman
82717
126
<PAGE>
MARQUIS FUNDS INSTITUTIONAL MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 199
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________, _________________, ______________
and _____________ each of them with full power of substitution as proxies of
the undersigned, to vote, as designated below, at the Special Meeting of
Shareholders of Marquis Funds Institutional Money Market Fund ("Marquis
Institutional") on July 30, 1998 at 10:00 am., Eastern time, and at any
adjournments thereof, all of the shares of beneficial interest in Marquis
Institutional which the undersigned would be entitled to vote upon the following
matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Institutional will be transferred
to The One Group Treasury Only Money Market Fund ("One Group Treasury Only") in
return for of One Group Treasury Only, followed by the dissolution and
liquidation of Marquis Institutional, and the distribution of shares of One
Group Treasury Only to the shareholders of Marquis Institutional.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
127
<PAGE>
MARQUIS TREASURY SECURITIES MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 199
RETAIL CLASS SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
Treasury Securities Money Market Fund ("Marquis Treasury Securities") on July
30, 1998 at 10:00 am., Eastern time, and at any adjournments thereof, all of the
shares of beneficial interest in Paragon Money Market which the undersigned
would be entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Treasury Securities will be
transferred to The One Group U.S. Treasury Securities Money Market Fund ("One
Group Money Market") in return for Class A shares of One Group Money Market,
followed by the dissolution and liquidation of Marquis Treasury Securities, and
the distribution of shares of One Group Money Market to the shareholders of
Marquis Treasury Securities.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
128
<PAGE>
MARQUIS TREASURY SECURITIES MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 199
TRUST SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
Treasury Securities Money Market Fund ("Marquis Treasury Securities") on July
30, 1998 at 10:00 am., Eastern time, and at any adjournments thereof, all of the
shares of beneficial interest in Marquis Treasury Securities which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Treasury Securities will be
transferred to The One Group U.S. Treasury Securities Money Market Fund ("One
Group Money Market") in return for Fiduciary class shares of One Group Money
Market, followed by the dissolution and liquidation of Marquis Treasury
Securities, and the distribution of shares of One Group Money Market to the
shareholders of Marquis Treasury Securities.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
129
<PAGE>
MARQUIS TREASURY SECURITIES MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 199
CASH SWEEP SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
Treasury Securities Money Market Fund ("Marquis Treasury Securities") on July
30, 1998 at 10:00 am., Eastern time, and at any adjournments thereof, all of the
shares of beneficial interest in Marquis Treasury Securities which the
undersigned would be entitled to vote upon the following matter if personally
present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Treasury Securities will be
transferred to The One Group U.S. Treasury Securities Money Market Fund ("One
Group Money Market") in return for Class A shares of One Group Money Market,
followed by the dissolution and liquidation of Marquis Treasury Securities, and
the distribution of shares of One Group Money Market to the shareholders of
Marquis Treasury Securities.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
130
<PAGE>
131
<PAGE>
MARQUIS TAX-EXEMPT MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 199
RETAIL SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
Tax-Exempt Money Market Fund ("Marquis Tax-Exempt") on July 30, 1998 at 10:00
am., Eastern time, and at any adjournments thereof, all of the shares of
beneficial interest in Marquis Tax-Exempt which the undersigned would be
entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Tax-Exempt will be transferred to
The One Group Municipal Money Market Fund ("One Group Municipal") in return for
Class A shares of One Group Municipal, followed by the dissolution and
liquidation of Marquis Tax-Exempt, and the distribution of shares of One Group
Municipal to the shareholders of Marquis Tax-Exempt.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
132
<PAGE>
MARQUIS FUNDS GOVERNMENT SECURITIES FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints_______________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds
Government Securities Fund ("Marquis Government") on July 30, 1998 at 10:00 am.,
Eastern time, and at any adjournments thereof, all of the shares of beneficial
interest in Marquis Government which the undersigned would be entitled to vote
upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Government will be transferred to
The One Group Government Bond Fund ("One Group Government") in return for
Class A and Fiduciary class shares of One Group Government, followed by the
dissolution and liquidation of Marquis Government, and the distribution of
shares of One Group Government to the shareholders of Marquis Government.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
133
<PAGE>
MARQUIS FUNDS GOVERNMENT SECURITIES FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints ___________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds
Government Securities Fund ("Marquis Government") on July 30, 1998 at 10:00 am.,
Eastern time, and at any adjournments thereof, all of the shares of beneficial
interest in Marquis Government which the undersigned would be entitled to vote
upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Government will be transferred to
The One Group Government Bond Fund ("One Group Government") in return for
Class B shares of One Group Government, followed by the dissolution and
liquidation of Marquis Government, and the distribution of shares of One Group
Government to the shareholders of Marquis Government.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
134
<PAGE>
MARQUIS FUNDS STRATEGIC INCOME FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds
Strategic Income Fund ("Marquis Strategic Income") on July 30, 1998 at 10:00
am., Eastern time, and at any adjournments thereof, all of the shares of
beneficial interest in Marquis Strategic Income which the undersigned would be
entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Strategic Income will be
transferred to The One Group Income Bond Fund ("One Group Income") in return for
Class A and Fiduciary class shares of One Group Income, followed by the
dissolution and liquidation of Marquis Strategic Income, and the distribution of
shares of One Group Income to the shareholders of Marquis Strategic Income.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
135
<PAGE>
MARQUIS FUNDS STRATEGIC INCOME FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints __________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds
Strategic Income Fund ("Marquis Strategic Income") on July 30, 1998 at 10:00
am., Eastern time, and at any adjournments thereof, all of the shares of
beneficial interest in Marquis Strategic Income which the undersigned would be
entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Strategic Income will be
transferred to The One Group Income Bond Fund ("One Group Income") in return for
Class B shares of One Group Income, followed by the dissolution and liquidation
of Marquis Strategic Income, and the distribution of shares of One Group Bond to
the shareholders of Marquis Strategic Income.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
136
<PAGE>
MARQUIS FUNDS BALANCED FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints ________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds
Balanced Fund ("Marquis Balanced") on July 30, 1998 at 10:00 am., Eastern time,
and at any adjournments thereof, all of the shares of beneficial interest in
Marquis Balanced which the undersigned would be entitled to vote upon the
following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Balanced will be transferred to The
One Group Asset Allocation Fund ("One Group Asset Allocation") in return for
Class A and Fiduciary class shares of One Group Asset Allocation, followed by
the dissolution and liquidation of Marquis Balanced, and the distribution of
shares of One Group Asset Allocation to the shareholders of Marquis Balanced.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated: _______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
137
<PAGE>
MARQUIS FUNDS BALANCED FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds
Balanced Fund ("Marquis Balanced") on July 30, 1998 at 10:00 am., Eastern time,
and at any adjournments thereof, all of the shares of beneficial interest in
Marquis Balanced which the undersigned would be entitled to vote upon the
following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Balanced will be transferred to The
One Group Asset Allocation Fund ("One Group Asset Allocation") in return for
Class B shares of One Group Asset Allocation, followed by the dissolution and
liquidation of Marquis Balanced, and the distribution of shares of One Group
Asset Allocation to the shareholders of Marquis Balanced.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
138
<PAGE>
MARQUIS FUNDS LOUISIANA TAX-EXEMPT INCOME FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds
Louisiana Tax-Exempt Income Fund ("Marquis Louisiana") on July 30, 1998 at 10:00
am., Eastern time, and at any adjournments thereof, all of the shares of
beneficial interest in Marquis Louisiana which the undersigned would be entitled
to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Louisiana will be transferred to
The One Group Louisiana Municipal Bond Fund ("One Group Louisiana") in return
for Class A and Fiduciary class shares of One Group Louisiana, followed by the
dissolution and liquidation of Marquis Louisiana, and the distribution of shares
of One Group Louisiana to the shareholders of Marquis Louisiana.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
139
<PAGE>
MARQUIS FUNDS LOUISIANA TAX-EXEMPT INCOME FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Louisiana
Tax-Exempt Income Fund ("Marquis Louisiana") on July 30, 1998 at 10:00 am.,
Eastern time, and at any adjournments thereof, all of the shares of beneficial
interest in Marquis Louisiana which the undersigned would be entitled to vote
upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Louisiana will be transferred to
The One Group Louisiana Municipal Bond Fund ("One Group Louisiana") in return
for Class B shares of One Group Louisiana, followed by the dissolution and
liquidation of Marquis Louisiana, and the distribution of shares of One Group
Louisiana to the shareholders of Marquis Louisiana.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
140
<PAGE>
MARQUIS FUNDS VALUE EQUITY FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints __________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds Value
Equity Fund ("Marquis Value") on July 30, 1998 at 10:00 am., Eastern time, and
at any adjournments thereof, all of the shares of beneficial interest in Marquis
Value which the undersigned would be entitled to vote upon the following matter
if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Value will be transferred to The
One Group Disciplined Value Fund ("One Group Value") in return for Class A and
Fiduciary class shares of One Group Value, followed by the dissolution and
liquidation of Marquis Value, and the distribution of shares of One Group Value
to the shareholders of Marquis Value.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
141
<PAGE>
MARQUIS FUNDS VALUE EQUITY FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds Value
Equity Fund ("Marquis Value") on July 30, 1998 at 10:00 am., Eastern time, and
at any adjournments thereof, all of the shares of beneficial interest in Marquis
Value which the undersigned would be entitled to vote upon the following matter
if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Value will be transferred to The
One Group Disciplined Value Fund ("One Group Value") in return for Class B
shares of One Group Value, followed by the dissolution and liquidation of
Marquis Value, and the distribution of shares of One Group Value to the
shareholders of Marquis Value.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
142
<PAGE>
MARQUIS FUNDS GROWTH EQUITY FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints __________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds Growth
Equity Fund ("Marquis Growth") on July 30, 1998 at 10:00 am., Eastern time, and
at any adjournments thereof, all of the shares of beneficial interest in Marquis
Growth which the undersigned would be entitled to vote upon the following matter
if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Growth will be transferred to The
One Group Growth Opportunities Fund ("One Group Growth") in return for Class A
and Fiduciary class shares of One Group Growth, followed by the dissolution and
liquidation of Marquis Growth, and the distribution of shares of One Group
Growth to the shareholders of Marquis Growth.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
143
<PAGE>
MARQUIS FUNDS GROWTH EQUITY FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints ________________________________ each of them
with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of Marquis Funds Growth
Equity Fund ("Marquis Growth") on July 30, 1998 at 10:00 am., Eastern time, and
at any adjournments thereof, all of the shares of beneficial interest in Marquis
Growth which the undersigned would be entitled to vote upon the following matter
if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Growth will be transferred to The
One Group Growth Opportunities Fund ("One Group Growth") in return for Class B
shares of One Group Growth, followed by the dissolution and liquidation of
Marquis Growth, and the distribution of shares of One Group Growth to the
shareholders of Marquis Growth.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
144
<PAGE>
MARQUIS FUNDS SMALL CAP FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
Small Cap Fund ("Marquis Small Cap") on July 30, 1998 at 10:00 am., Eastern
time, and at any adjournments thereof, all of the shares of beneficial interest
in Marquis Small Cap which the undersigned would be entitled to vote upon the
following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Small Cap will be transferred to
The One Group Small Capitalization Fund ("One Group Small Capitalization") in
return for Class A and Fiduciary class shares of One Group Small Capitalization,
followed by the dissolution and liquidation of Marquis Small Cap, and the
distribution of shares of One Group Small Capitalization to the shareholders of
Marquis Small Cap.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
145
<PAGE>
MARQUIS FUNDS SMALL CAP FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 1998
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
Small Cap Fund ("Marquis Small Cap") on July 30, 1998 at 10:00 am., Eastern
time, and at any adjournments thereof, all of the shares of beneficial interest
in Marquis Small Cap which the undersigned would be entitled to vote upon the
following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis Small Cap will be transferred to
The One Group Small Capitalization Fund ("One Group Small Capitalization") in
return for Class B shares of One Group Small Capitalization, followed by the
dissolution and liquidation of Marquis Small Cap, and the distribution of shares
of One Group Small Capitalization to the shareholders of Marquis Small Cap.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
146
<PAGE>
MARQUIS FUNDS INTERNATIONAL EQUITY FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 199
CLASS A SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
International Equity Fund ("Marquis International") on July 30, 1998 at 10:00
am., Eastern time, and at any adjournments thereof, all of the shares of
beneficial interest in Marquis International which the undersigned would be
entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis International will be transferred
to The One Group International Equity Index Fund ("One Group International
Index") in return for Class A and Fiduciary class shares of One Group
International Index, followed by the dissolution and liquidation of Marquis
Internaitonal, and the distribution of shares of One Group International Index
to the shareholders of Marquis International.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
147
<PAGE>
MARQUIS FUNDS INTERNATIONAL EQUITY FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS,
JULY 30, 199
CLASS B SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MARQUIS FUNDS.
The undersigned hereby appoints _____________________________________ each of
them with full power of substitution as proxies of the undersigned, to vote, as
designated below, at the Special Meeting of Shareholders of the Marquis Funds
International Equity Index ("Marquis International") on July 30, 1998 at 10:00
am., Eastern time, and at any adjournments thereof, all of the shares of
beneficial interest in Marquis International which the undersigned would be
entitled to vote upon the following matter if personally present.
1. Approval of an Agreement and Plan of Reorganization pursuant to which
all of the assets and liabilities of Marquis International will be transferred
to The One Group International Equity Index Fund ("One Group International
Index") in return for Class B shares of One Group International Index, followed
by the dissolution and liquidation of Marquis International, and the
distribution of shares of One Group International Index to the shareholders of
Marquis International.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1). IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
NOTE: Please sign exactly as the name appears on this card. EACH Joint owner
must sign the proxy. When signing as executor, administrator, attorney, trustee
or guardian, or as custodian for a minor, please give the FULL title of such. If
a corporation, please give the FULL corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Signature of Shareholder(s)
Signature of Shareholder(s)
Dated:_______________, 1998.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
148
<PAGE>
THE ONE GROUP
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information contains information which may be of
interest to investors but which is not included in the Combined Prospectus/Proxy
(the "Prospectus") of The One Group dated June ____, 1998 relating to the
transfer of the assets and liabilities of Marquis Institutional, Marquis
Treasury Securities, Marquis Tax-Exempt, Marquis Government, Marquis Strategic
Income, Marquis Louisiana, Marquis Balanced, Marquis Value, Marquis Growth,
Marquis Small Cap and Marquis International to One Group Treasury Only, One
Group Treasury Securities, One Group Municipal, One Group Government, One Group
Income, One Group Louisiana, One Group Asset Allocation, One Group Value, One
Group Growth, One Group Small Capitalization and One Group International Index.
This Statement of Additional Information is not a prospectus and is authorized
for distribution only when it accompanies or follows delivery of the Prospectus.
This Statement of Additional Information should be read in conjunction with the
Prospectus. A copy of the Prospectus may be obtained, without charge, by
writing The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219,
or by calling 1-800-554-3882.
The Statement of Additional Information for The One Group dated November 1, 1997
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Statement of Additional Information for Marquis Funds
dated February 1, 1998 has been filed with the Securities and Exchange
Commission and is incorporated herein by reference.
Unaudited financial statements for Marquis Institutional, Marquis Treasury
Securities, Marquis Tax-Exempt, Marquis Government, Marquis Strategic Income,
Marquis Louisiana, Marquis Balanced, Marquis Value, Marquis Growth, Marquis
Small Cap and Marquis International for the period ended March 31, 1998, are
contained in the Marquis Funds Semi-Annual Report, which was filed with the
Securities and Exchange Commission and is incorporated herein by reference.
Unaudited financial statements for One Group Treasury Only, One Group Municipal,
One Group Government, One Group Income, One Group Louisiana, One Group Asset
Allocation, One Group Discipline, One Group Growth, One Group Small
Capitalization and One Group International Index for the period ended December
31, 1997, are contained in The One Group Semi-Annual Report, which was filed
with the Securities and Exchange Commission and is incorporated herein by
reference.
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS JUNE ____, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
Financial Statements of the Combined Funds on a pro-forma basis for the periods
ended December 31, 1997 Marquis Institutional, Marquis Treasury Securities,
Marquis Tax-Exempt, Marquis Government, Marquis Louisiana, Marquis Balanced,
Marquis Value and Marquis Growth to One Group Treasury Only, One Group Treasury
Securities, One Group Municipal, One Group Government, One Group Louisiana, One
Group Asset Allocation, One Group Discipline and One Group Growth.
<PAGE>
THE ONE GROUP U.S TREASURY SECURITIES MONEY MARKET FUND / MARQUIS TREASURY
SECURITIES MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
- ---------- ----------- ------------- --------------------------------------------------- -------------- ------------- -----------
<S><C>
U.S. TREASURY OBLIGATIONS (16.6%)
U.S. Treasury Bills (11.3%)
175,000 175,000 1/22/98 174,479 174,479
60,000 55,000 115,000 3/5/98 (b) 59,420 54,484 113,904
150,000 150,000 3/26/98 148,202 148,202
25,000 25,000 6/25/98 24,348 24,348
100,000 100,000 11/12/98 95,398 95,398
--------- --------- ---------
Total U.S. Treasury Bills 233,899 322,432 556,331
--------- --------- ---------
U.S. TREASURY NOTES (5.3%)
120,000 120,000 5.25%, 7/31/98 119,759 119,759
95,000 95,000 6.13%, 8/31/98 95,232 95,232
50,000 50,000 5.88%, 10/31/98 50,113 50,113
--------- ---------
Total U.S. Treasury Notes 265,104 265,104
--------- ---------
REPURCHASE AGREEMENTS (83.6%)
175,000 175,000 Aubrey G. Lanston & Co., 6.50%, 1/2/98
(Collateralized by $169,891 various U.S.
Treasury Securities, 5.88% - 6.63%,
11/15/05 - 2/15/27, market value - $179,385) 175,000 175,000
60,000 60,000 Aubrey G. Lanston & Co., 6.50%, 1/2/98
(Collateralized by $61,224 various U.S.
Treasury Notes, 5.00% - 6.38%,
1/31/99 - 4/30/99, market value - $62,285) 60,000 60,000
175,000 175,000 Barclays De Zoette Wedd, 6.63%, 1/2/98
(Collateralized by $202,633 various U.S.
Treasury Securities, 0.00% - 12.38%,
7/31/98 - 2/15/26, market value - $178,501) 175,000 175,000
160,000 160,000 CIBC Wood Gundy, 6.50%, 1/2/98
(Collateralized by $121,298 various U.S
Treasury Securities, 7.25% - 12.00%,
8/15/13 - 8/15/22, market value - $163,604) 160,000 160,000
70,085 70,085 Deutsche Morgan Grenfell, 5.18%, 1/2/98
(Collateralized by $81,458 various
U.S. Treasury Securities, 0.00% - 10.75%,
5/15/98 - 5/15/23, market value - $71,487) 70,085 70,085
299,317 299,317 Deutsche Morgan Grenfell, 6.80%, 1/2/98
(Collateralized by $291,824 various
U.S.Treasury Securities, 0.00% - 12.50%,
8/15/98 - 5/15/21, market value - $305,303) 299,317 299,317
250,000 250,000 Deutsche Morgan Grenfell, 7.30%, 1/5/98
(Collateralized by $243,743 various
U.S. Treasury Securities, 0.00% - 12.50%,
8/15/98 - 5/15/21, market value - $255,000) 250,000 250,000
170,000 170,000 Donaldson, Lufkin & Jenrette, 6.50%, 1/2/98
(Collateralized by $143,145
various U.S. Treasury Securities,
5.63% - 10.38%, 2/15/99 - 2/15/19,
market value - $173,400) 170,000 170,000
165,000 165,000 Dresdner Securities, 5.00%, 1/2/98
(Collateralized by $140,996 various U.S.
Treasury Securities, 6.25% - 8.13%,
8/15/21 - 8/15/25, market value -$167,391) 165,000 165,000
865,000 865,000 Goldman Sachs, 6.53%, 1/2/98 (Collateralized by
$799,232 various U.S. Treasury Securities,
0.00% - 13.13%, 1/2/98 - 11/15/27,
market value - $882,300) 865,000 865,000
175,000 175,000 HSBC Securities, 6.55%, 1/2/98 (Collateralized by
$307,505 various U.S. Treasury Securities,
0.00% - 11.75%, 6/30/02 - 2/15/27,
market value - $178,504) 175,000 175,000
60,000 60,000 HSBC Securities, 6.60%, 1/2/98 (Collateralized
by $159,600 various U.S Treasury Strips, 0.00%,
11/15/01 - 8/15/20, market value - $61,212 60,000 60,000
175,000 175,000 J.P. Morgan Securities, 6.30%, 1/2/98 (Collateralized
by $169,587 various U.S. Treasury Securities,
5.63% - 7.25%, 12/31/99 - 8/15/26,
market value - $178,501) 175,000 175,000
11,674 11,674 J.P. Morgan Securities, 6.40%, 1/2/98
(Collateralized by $9,449 various U.S.
Treasury Securities, 7.25% - 9.88%,
8/15/04 - 11/15/15, market value - $11,908) 11,674 11,674
310,000 310,000 J.P. Morgan Securities, 6.60%, 1/2/98 (Collateralized
by $595,513 various U.S. Treasury Strips, 0.00 %,
5/15/98 - 11/15/21, market value - $316,363) 310,000 310,000
175,000 175,000 Lehman Brothers Holding, Inc., 6.40%, 1/2/98
(Collateralized by $377,778 various U.S.
Treasury Securities, 0.00%,
11/15/98 - 2/15/23, market value - $178,503) 175,000 175,000
300,000 300,000 Lehman Brothers Holding, Inc., 6.57%, 1/2/98
(Collateralized by $588,235 various U.S. Treasury
Strips, 0.00%, 2/15/09, market value - $306,717) 300,000 300,000
58,411 58,411 Merrill Lynch, 6.45%, 1/2/98 (Collateralized by
$45,297 U.S Treasury Bonds, 8.13% - 9.13%,
8/15/17 - 2/15/20, market value - $59,582 58,411 58,411
160,000 160,000 Morgan Stanley, 6.20%, 1/2/98 (Collateralized by
$158,825 U.S Treasury Notes, 6.75% - 7.50%,
6/30/99 - 11/15/01, market value - $163,282 160,000 160,000
70,085 70,085 Morgan Stanley, 6.50%,1/2/98 (Collateralized by
$71,601 various U.S. Treasury Securities,
5.50% - 6.13%, 11/30/98 - 11/15/27,
market value - $71,515) 70,085 70,085
58,411 58,411 Nomura Securities, 6.58%, 1/2/98 (Collateralized by
$56,529 various U.S. Treasury Securities,
0.00% - 7.50%, 1/22/98 - 2/15/20,
market value - $59,579) 58,411 58,411
60,000 60,000 Prudential Securities, 6.60%, 1/2/98
(Collateralized by $54,965 various U.S.
Treasury Notes, 6.88%, 5/15/06 - 8/15/25,
market value - $61,207) 60,000 60,000
70,085 70,085 UBS Securities, 6.70%, 1/2/98 (Collateralized by
$238,542 U.S. Treasury Strips, 0.00 %,
5/15/13 - 8/15/22, market value - $71,487) 70,085 70,085
60,000 60,000 Wachovia, 6.00%, 1/2/98 (Collateralized by $61,515
various U.S. Treasury
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP U.S TREASURY SECURITIES MONEY MARKET FUND / MARQUIS TREASURY
SECURITIES MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
- ---------- ----------- ------------- --------------------------------------------------- -------------- ------------- -----------
<S><C>
Securities, 0.00% - 8.00%, 3/26/98 - 8/15/99,
market value - $61,217) 60,000 60,000
--------- --------- ---------
Total Repurchase Agreements 1,188,751 2,944,317 4,133,068
--------- --------- ---------
Total (Cost $4,954,503)(a) 1,422,650 3,531,853 4,954,503
--------- --------- ---------
--------- --------- ---------
</TABLE>
_________
Percentages indicated are based on net assets of $4,942,249.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) With respect to the One Group Fund only, a portion of this security was
loaned as of December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
DAILY DEMAND NOTES (8.4%):
Alabama (1.0%):
4,100 4,100 Phenix City, IDR for Mead, AMT, 5.10%, 3/1/31, LOC:
Bayerische Landesbank* 4,100 4,100
3,000 3,000 Phenix City, IDR for Mead, Series 93-A, AMT, 5.10%,
6/1/28, LOC: Toronto Domimion Bank* 3,000 3,000
-------
7,100 7,100
------- -------
District of Columbia (0.4%):
2,700 2,700 General Fund Recovery, Series B-3, 5.00%, 6/1/03* 2,700 2,700
------- -------
Georgia (0.2%):
700 700 Burke County Pollution Control Authority, Georgia
Power Company Project, 5.05%, 9/1/25* 700 700
200 200 Effingham County Pollution Control Development
Authority, Savannah Electric & Power Co. Project,
5.05%, 4/1/37* 200 200
500 500 Hospital Finance Authority, 4.95%, 3/1/01* 500 500
------- -------
1,400 1,400
------- -------
Illinois (0.5%):
3,400 3,400 Health Facilities Authority Revenue, Central Dupage
- Healthcorp Project, 5.10%, 11/1/20, LOC: Rabobank* 3,400 3,400
------- -------
Indiana (0.0%):
200 200 Rockport Pollution Control Revenue Refunding, AEP
Generating Co., Project B, 5.10%, 7/1/25* 200 200
------- -------
Iowa (0.0%):
100 100 State Higher Education Loan Authority Revenue,
Educational Facility, Palmer Chiropractor Project,
5.35%, 4/1/27* 100 100
------- -------
Michigan (1.1%):
5,700 5,700 Cornell Township Economic Development Corp., Mead
Escanaba Paper, 5.00%, 11/1/16, LOC: Swiss Bank* 5,700 5,700
2,600 2,600 University of Michigan, Hospital Revenues, Series
92A, 5.10%, 12/1/19* 2,600 2,600
------- -------
8,300 8,300
------- -------
Missouri (0.3%):
2,000 2,000 Development Finance Board, Union Station Project
1997 B, 4.50%, 12/1/03, LOC: CIBC* 2,000 2,000
------- -------
Ohio (0.5%):
800 800 State Air Quality Development Authority, Cincinnati
Gas & Electric, 4.50%, 12/1/15, LOC: J.P. Morgan* 800 800
1,600 1,600 State Air Quality Development Authority, Cincinnati
Gas & Electric, 4.50%, 12/1/15, LOC: Union Bank of
Switzerland* 1,600 1,600
1,000 1,000 Twinsburg, IDR, United Stationers Project, AMT,
5.35%, 12/1/11, LOC: PNC Bank* 1,000 1,000
------- -------
3,400 3,400
------- -------
Oregon (0.3%):
2,500 2,500 Port of Portland, PCR, Reynolds Metals, 5.00%,
12/1/09, LOC: Bank of Nova Scotia* 2,500 2,500
------- -------
Pennsylvania (0.0%):
300 300 Schuylkill County Resource Recovery Revenue
Authority, Northeastern Power Company Project,
Series A, 5.10%, 12/1/22* 300 300
------- -------
Texas (2.1%):
11,400 11,400 Matagorda County, IDR, Houston Light & Power, 4.95%,
11/1/28, AMBAC 11,400 11,400
3,500 3,500 North Central Health Facility Development Corp.
Revenue, Presbyterian Medical Center, Series D,
5.00%, 12/1/15, MBIA* 3,500 3,500
------- -------
14,900 14,900
------- -------
Utah (0.1%):
800 800 West Valley City Industrial Development Revenue
Authority, Johnson Matthey Inc. Project, 5.00%,
11/1/11* 800 800
------- -------
Washington (0.5%):
1,250 1,250 Health Care Facilities, Fred Hutchinson, Series A,
5.10%, 1/1/18, LOC: Morgan Guaranty* 1,250 1,250
2,110 2,110 Health Care Facilities, Fred Hutchinson, Series B,
5.10%, 1/1/18, LOC: Morgan Guaranty* 2,110 2,110
------- -------
3,360 3,360
------- -------
Wyoming (1.4%):
6,200 6,200 Sublette County, PCR, 5.10%, 7/1/17, GTY: Exxon* 6,200 6,200
4,300 4,300 Sweetwater County, PCR, Refunding, Idaho Power Co.,
Project C, 5.10%, 7/15/26* 4,300 4,300
4,300 6,200 10,500
------- ------- -------
Total Daily Demand Notes 9,800 51,160 60,960
------- ------- -------
MONTHLY DEMAND NOTES (3.1%):
Hawaii (0.2%):
1,560 1,560 State Department of Budget & Finance, Kuakini
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
Medical Center Project, 3.80%, 7/1/04* 1,560 1,560
------- -------
Indiana (2.0%):
14,800 14,800 Gary Environmental Improvement Revenue, U.S.
Steel Corp. Project, 4.05%, 7/15/02, LOC: Bank
of Nova Scotia* 14,800 14,800
------- -------
Missouri (0.3%):
2,065 2,065 Osage Beach, Industrial Development Authority,
Health Care Realty, 4.05%, 1/1/11* 2,065 2,065
------- -------
Ohio (0.2%):
1,300 1,300 Columbus Electrical Systems Revenue, 3.70%, 9/1/09* 1,300 1,300
------- -------
Tennessee (0.3%):
360 360 Franklin County Health & Education Facilities
Revenue, 3.80%, 9/1/10* 360 360
1,800 1,800 Knox County Industrial Development Board,
Weisgarber Partners, 3.95%, 12/1/14* 1,800 1,800
------- -------
2,160 2,160
------- -------
West Virginia (0.1%):
800 800 Wood County Industrial Devlopment Revenue
Authority, AGA Gas Inc. Project, 3.90%, 10/1/98* 800 800
------- -------
Total Monthly Demand Notes
7,885 14,800 22,685
------- ------- -------
MUNICIPAL NOTES (18.7%):
California (2.5%):
3,250 15,000 18,250 State Revenue Anticipation Notes, 4.50%, 6/30/98 3,261 15,048 18,309
------- ------- -------
Colorado (1.4%):
10,000 10,000 State General Fund, Series A, 4.50%, 6/26/98 10,031 10,031
------- -------
Idaho (0.3%):
2,500 2,500 State Tansportation, GO, 4.63%, 6/30/98 2,509 2,509
------- -------
Illinois (0.1%):
295 295 Elgin, GO, Series A, 7.13%, 1/1/98 295 295
750 750 Kendall and Kane Counties, Community School
Districts Number 115, Yorkville Tax Anticipation
Notes, 4.40%, 1/21/98 750 750
------- -------
1,045 1,045
------- -------
Indiana (1.0%):
1,000 1,000 Benton, Community School Corp., Tax Anticipation
Warrants, 4.25%, 12/31/98 1,002 1,002
819 819 Bond Bank, Advance Funding Notes, 4.00% 1/21/98 819 819
885 885 Hammond Local Public Improvement, Advance Funding
Program Notes, Series A-1, 3.75%, 7/9/98 885 885
1,000 1,000 Perry Township, Multiple School Building
Corporation Revenue, 4.00%, 6/25/98 1,000 1,000
250 250 Purdue University, Student Fee Revenue, 6.10%,
7/1/98 253 253
2,000 2,000 Residential Apartments, 1 Portfolio Cert. Trust
1996, Series A, 4.30%, 12/1/02 2,000 2,000
1,500 1,500 State Advance Funding Notes, 3.90% 2/2/98 1,500 1,500
------- -------
7,459 7,459
------- -------
Kansas (0.1%):
940 940 Shawnee County, Tax Anticipation, Notes Series 1,
4.25%, 2/1/98 940 940
------- -------
Louisiana (0.1%):
501 501 State Recovery District Sales Tax, 4.25%, 7/1/98 501 501
------- -------
Maine (0.2%):
1,600 1,600 Health and Higher Education Facilities, New
England Incorporated Series C, 3.70%, 12/1/25* 1,600 1,600
------- -------
Massachusetts (0.6%):
800 800 Brockton GO, Revenue Anticipation Notes, 4.50%,
6/30/98 801 801
1,200 1,200 Fall River, Anticipation Notes, 4.25%, 6/15/98 1,201 1,201
1,000 1,000 Holyoke, Anticipation Notes, 4.25%, 3/6/98 1,001 1,001
1,000 1,000 New England Education Loan Marketing Corporation
Refunding, Student Loans Series C, 4.75%, 7/1/98 1,003 1,003
------- -------
4,006 4,006
------- -------
Michigan (2.9%):
105 105 Grand Rapids, Water Supply Revenue, Series 1988,
7.88%, 1/1/18, Callabe 1/1/98 @ 102 107 107
370 370 Kent Hospital Finance Authority, 6.50% 1/1/98 370 370
20,000 20,000 State Note, GO, 4.50%, 9/30/98 20,108 20,108
------- ------- -------
477 20,108 20,585
------- ------- -------
New Jersey (0.1%):
1,000 1,000 Ventnor City, Anticipation Notes, Series A,
4.25%, 4/30/98 1,000 1,000
------- -------
New Mexico (1.4%):
10,000 10,000 State Tax & Revenue Anticipation Notes, 4.50%,
6/30/98 10,031 10,031
------- -------
New York (0.5%):
500 500 Freeport, Tax and Revenue Anticipation Notes,
4.25%, 6/29/98 500 500
500 500 Lindenhurst, Tax and Revenue Anticipation Notes,
4.25%, 6/24/98 501 501
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
700 700 Nassau County, Revenue Anticipation Notes, 4.25%,
10/31/98 701 701
1,000 1,000 North Hempstead, Anticipation Notes, Series A,
4.00% 1/29/98 1,000 1,000
750 750 North Hempstead, Anticipation Notes, Series C,
4.38% 5/6/98 750 750
------- -------
3,452 3,452
------- -------
North Dakota (0.1%):
215 215 Grand Forks Sales Tax Revenue, Aurora Project,
Series A, 3.80%, 6/15/98 215 215
------- -------
Ohio (0.1%):
1,000 1,000 Warren Anticipation Notes, Series 2, 4.70%,
1/13/98 1,000 1,000
------- -------
Pennsylvania (0.2%):
1,000 1,000 Norristown, Tax and Revenue Anticpation Notes,
4.05%, 12/31/98 1,000 1,000
750 750 Philadelphia School District Authority, Tax &
Revenue Anticipation Notes, 4.50%, 6/30/98 752 752
------- -------
1,752 1,752
------- -------
South Carolina (0.1%):
500 500 State Institution, Go, Series B, 7.00%, 4/1/98 504 504
------- -------
Tennessee (0.1%):
505 505 Germantown Refunding, 3.80%, 1/1/98 505 505
500 500 Nashville & Davidson County, Metro Government
Water and Sewer Revenue, 5.70%, 4/1/98 502 502
------- -------
1,007 1,007
------- -------
Texas (1.6%):
200 200 Bexar County Detention Facilities, GO, 7.25%,
6/15/98 203 203
290 290 San Antonio River Authority Import Revenue,
6.55%, 7/1/98 294 294
825 825 School District Limited Tax Obligation, Texas
Association of School Boards, Series D, 4.00%,
2/15/98 825 825
10,000 10,000 State Tax & Revenue Anticipation Notes, Series
97A, 4.75%, 8/31/98 10,058 10,058
------- ------- -------
1,322 10,058 11,380
------- ------- -------
Wisconsin (5.2%):
475 475 Clinton Community School District, Tax and
Revenue Anticipation Note, 4.19%, 8/31/98 475 475
500 500 Cudahy School District, Tax and Revenue
Anticipation Note, 4.19%, 9/29/98 500 500
775 775 Fox Point and Bayside Joint School District,
Unlimited Tax, GO, 4.20%, 4/10/98 775 775
11,405 11,405 Green Bay, Area Public School District, 3.84%,
2/2/98 11,405 11,405
1,000 1,000 Janesville Promissary Notes, 4.70%, 6/1/98 1,003 1,003
380 380 Janesville Unlimited Tax, GO, Water Utility
Improvements, 4.80%, 6/1/98 381 381
1,350 1,350 Menasha JT School District, 4.25% 10/13/98 1,352 1,352
315 315 Middletown Cross Plains Area School District,
4.88%, 4/1/98 316 316
1,000 1,000 Oregon School District, Tax and Revenue
Anticipation Notes, 4.22%, 9/16/98 1,001 1,001
20,000 20,000 State Operating Notes, 4.50%, 6/15/98 20,059 20,059
------- ------- -------
5,803 31,464 37,267
------- ------- -------
Wyoming (0.1%):
265 265 University of Wyoming, Revenue Refunding,
4.00%, 6/1/98 265 265
------- -------
Total Municipal Notes 35,609 99,249 134,858
------- ------- -------
PUT BONDS (3.4%):
Arizona (0.8%):
6,000 6,000 Cochise County, PCR, Arizona Electric Power Corp.,
Series A, AMT, 3.80%, 9/1/24 6,000 6,000
------- -------
Missouri (0.6%):
4,175 4,175 State Environmental Improvement & Energy, Union
Electric Co., Series B, 3.95%, 6/1/14, LOC:
Union Bank of Switzerland 4,175 4,175
------- -------
North Dakota (0.3%):
2,100 2,100 Mercer County, Solid Waste Disposal Revenue,
National Rural Utility Power Project, Series U,
3.80%, 12/1/18 2,100 2,100
------- -------
Ohio (1.5%):
380 380 Bellevue, Revenue Bonds, Bellevue Hospital
Project, 3.85%, 3/1/17* 380 380
11,000 11,000 Housing Finance Agency, Series 1997 A-2, ATM,
3.65%, 3/2/98, GIC: AIG 11,000 11,000
------- ------- -------
380 11,000 11,380
------- ------- -------
Pennsylvania (0.2%):
1,200 1,200 State Higher Education Facility Authority, Thomas
Jefferson University, Series B, 3.80%, 2/18/98 1,200 1,200
------- -------
Total Put Bonds 1,580 23,275 24,855
------- ------- -------
SEMI ANNUAL DEMAND NOTES (0.4%):
Florida (0.1%):
530 530 Orange County Industrial Development Authority,
Orlando Hawaiian Motel Company, 3.90%, 10/1/15* 530 530
------- -------
Michigan (0.1%):
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
620 620 Oakland County, Economic Development Corp.,
Limited Obligation Revenue, Corners Shopping
Center, 3.65%, 8/1/15* 620 620
------- -------
Minnesota (0.1%):
325 325 Hutchinson Economic Development Authority
Revenue, Diversified Developer Project, 3.85%,
8/15/06, Callable 2/16/98 @ 100 325 325
------- -------
Ohio (0.0%):
260 260 Clermont County, Economic Development Revenue,
Eastmark Center Association Project, 3.80%,
12/1/09* 260 260
------- -------
South Carolina (0.1%):
1,000 1,000 Charleston Center Mortgage Authority,
Adjustable Rate Certificate Project, 3.75%,
3/1/02 1,000 1,000
------- -------
Texas (0.0%):
125 125 Corpus Christi, Industrial Development Authority,
Air Inventory Co. Project, 3.90%, 8/1/11* 125 125
------- -------
Wyoming (0.0%):
250 250 Cheyenne County, Revenue Refunding, Holiday Inn
Project, 3.90%, 10/1/10* 250 250
------- -------
Total Semi Annual Demand Notes 3,110 3,110
------- -------
TAX FREE COMMERCIAL PAPER (6.7%):
Alabama (2.0%):
5,000 5,000 Phenix IDR, Mead Paper, AMT, 3.75%, 1/26/98,
LOC: ABN AMRO 5,000 5,000
5,000 5,000 Phenix IDR, Mead Paper, AMT, 3.80%, 2/2/98,
LOC: ABN AMRO 5,000 5,000
4,000 4,000 Phenix IDR, Mead Paper, AMT, 3.80%, 2/2/98,
LOC: ABN AMRO 4,000 4,000
------- -------
14,000 14,000
------- -------
Arizona (0.3%):
2,000 2,000 Mesa Municipal Development Corp., 3.70%, 1/15/98,
LOC: West Deutsche Landesbank 2,000 2,000
------- -------
Illinois (0.1%):
1,000 1,000 Education Facilities Authority, 3.75%, 4/7/98 1,000 1,000
------- -------
Michigan (1.0%):
7,500 7,500 State Builders Authority Revenue, 3.75%, 3/2/98,
LOC: CIBC 7,500 7,500
------- -------
Ohio (1.2%):
5,100 5,100 Air Quality Development Authority, CEI, 3.80%,
1/14/98, FGIC 5,100 5,100
3,500 3,500 Water Development Authority, CEI, 3.75%, 2/2/98, FGIC 3,500 3,500
------- -------
8,600 8,600
------- -------
Pennsylvania (0.8%):
6,100 6,100 Delaware IDR, Philadelphia Electric, 3.70%,
1/21/98, FGIC 6,100 6,100
------- -------
Texas (0.7%):
5,000 5,000 Brazos River Utilities, AMT, 3.80%, 2/6/98, LOC:
Union Bank of Switzerland 5,000 5,000
------- -------
West Virginia (0.6%):
4,500 4,500 State Public Authority Energy Revenue, Morgantown
Assoc. Project, AMT, 3.90%, 2/9/98, LOC: Swiss Bank 4,500 4,500
------- -------
Total Tax Free Commercial Paper 1,000 47,700 48,700
------- ------- -------
WEEKLY DEMAND NOTES (59.4%)::
Alabama (0.2%):
1,095 1,095 State Housing Finance Authority, Multifamily
Residential Development Series B, 3.95%, 12/1/14* 1,095 1,095
------- -------
Alaska (0.8%):
5,900 5,900 Anchorage, Higher Education Revenue, Alaska
Pacific University, 3.75%, 7/1/17, LOC:
Seattle-First National Bank* 5,900 5,900
------- -------
Arizona (0.1%):
500 500 Tuscon Industrial Development Authorithy,
Tuscon City Center Parking Garage Project, 4.28%,
6/1/15* 500 500
------- -------
Arkansas (1.5%):
8,100 8,100 Clark County, Solid Waste Disposal Revenue,
Reynolds Metals Co. Project, AMT, 3.95%, 8/1/22,
LOC: Trust Co. Bank* 8,100 8,100
2,900 2,900 Clark County, Solid Waste Disposal, AMT, 3.95%,
8/1/22, LOC: SunTrust Bank 2,900 2,900
------- -------
11,000 11,000
------- -------
Colorado (2.3%):
3,000 3,000 Housing Finance Authority, Pool I, Series B,
Coventry Village, 3.85%, 10/15/16, FNMA* 3,000 3,000
2,150 2,150 Housing Financing Authority, Cambray Park
Project, 4.25%, 5/1/15* 2,150 2,150
1,500 1,500 Smith Creek Metropolitan District Authority,
4.20%, 10/1/35* 1,500 1,500
2,500 2,500 Student Obligation Bond Authority, 90-A, AMT,
3.75%, 9/1/24, SLMA* 2,500 2,500
5,600 5,600 Student Obligation Bond Authority, AMT, 3.75%,
7/1/20, SLMA* 5,600 5,600
1,860 1,860 Woodstream Housing Financial Authority, 4.25%,
6/1/05* 1,860 1,860
------- ------- -------
5,510 11,100 16,610
------- ------- -------
District of Columbia (1.3%):
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
9,705 9,705 Metro Washington D.C. Airports Authority
Trust Receipts, 4.30%, 10/1/16, LIQ: Societe
General* 9,705 9,705
------- -------
Florida (2.4%):
1,425 1,425 Brevard County Housing Finance Authority
Revenue, Park Village & Malobar Lakes Project,
3.85%, 12/1/10* 1,425 1,425
825 825 Lee County Industrial Development Authority,
Christ Mission-Shell Point Villiage, 4.07%,
4/1/10* 825 825
2,450 2,450 Putnam County Pollution Control Revenue,
Seminole Electric H-2, 3.85%, 3/15/14* 2,450 2,450
10,000 10,000 State Housing Finance Authority, Woodlands Apt.
Project 85S, 3.65%, 12/1/17, LOC: Citibank* 10,000 10,000
430 430 State Multi-Family Housing Finance Authority,
Lakeside Project, Series B, 4.28%, 8/1/06* 430 430
2,395 2,395 State, Gulf Coast University, 4.15%, 8/1/27* 2,395 2,395
------- ------- -------
7,525 10,000 17,525
------- ------- -------
Georgia (4.8%):
700 700 De Kalb County Industrial Development Authority,
4.40%, 2/1/03* 700 700
13,000 13,000 De Kalb Private Hospital Authority Revenue,
Egleston Children's Hospital, Series A, 3.70%,
3/1/24, LOC: SunTrust Bank* 13,000 13,000
3,735 3,735 Gwinnett County Housing Authority, Herrington
Woods Apts., Series 96A, AMT,4.31%, 9/15/26,
LOC: KeyBank* 3,735 3,735
2,500 2,500 Marietta Multi-Family Revenue Authority, Franklin
Walk Apartments Project, 3.80%, 8/1/08* 2,500 2,500
15,000 15,000 Municipal Electric Authority, 3.85%, 1/1/26,
LOC: ABN-AMRO* 15,000 15,000
------- ------- -------
3,200 31,735 34,935
------- ------- -------
Hawaii (0.1%):
State Multifamily Housing Authority, Tropicana
1,000 1,000 West Project, Series A, 3.80%, 8/1/10 1,000 1,000
------- -------
Idaho (0.2%):
1,025 1,025 Nez Perce County Pollution Control Revenue,
4.05%, 2/1/14* 1,025 1,025
------- -------
Illinois (8.4%):
11,300 11,300 Chicago O'Hare International Airport Revenue,
Second Lien, Series B, AMT, 3.75%, 1/1/18, LOC:
Societe Generale* 11,300 11,300
5,200 5,200 Development Finance Authority Revenue, Aurora
Central Catholic High School, 4.00%, 4/1/24, LOC:
Nothern Trust* 5,200 5,200
1,000 1,000 Development Finance Authority Revenue, Casa Central
Padres Project, 4.23%, 8/1/26* 1,000 1,000
3,000 3,000 Development Finance Authority Revenue, Catholic
Charities Housing Project, Series B, 4.05%, 1/1/28* 3,000 3,000
3,700 3,700 Development Finance Authority Revenue,
Presbyterian Home Lake Forrest Place Project,
4.00%, 9/1/31, LOC: LaSalle National Bank* 3,700 3,700
4,500 4,500 Development Finance Authority Revenue, Roosevelt
University Project, 4.00%, 4/1/25, LOC: American
National Bank* 4,500 4,500
5,900 5,900 Development Finance Authority Revenue, Special
Facility, Little City Foundation, 4.00%, 2/1/19,
LOC: LaSalle National Bank* 5,900 5,900
1,625 1,625 Development Finance Authority Revenue, St. Pauls,
House Project, 4.00%, 2/1/25, LOC: LaSalle
National Bank* 1,625 1,625
1,300 1,300 Development Financial Authority Revenue, Series
84, 4.29%, 12/1/09* 1,300 1,300
1,000 1,000 Development Financial Authority Revenue, Village
of Oak Park Residence, 4.10%, 9/1/26* 1,000 1,000
1,700 1,700 Health Facility Authority Revenue, Advocate Health
Care Project, Series B, 3.80%, 8/15/22* 1,700 1,700
1,700 1,700 Health Facility Authority Revenue, Central Health &
Community Project, Series C, 4.00%, 10/1/15* 1,700 1,700
1,500 1,500 Health Facility Authority Revenue, Pekin Memorial
Hospital Project, 4.20%, 8/15/17* 1,500 1,500
3,000 3,000 Health Facility Authority Revenue, Washington &
Jane Smith Home, 3.85%, 7/1/26, LOC: Comerica Bank* 3,000 3,000
7,640 7,640 Jacksonville Industrial Project Revenue, AGI, Inc.
Project, AMT, 4.25%, 2/1/26, LOC: Bank of America* 7,640 7,640
1,230 1,230 Lombard IDR, Chicago Roll Co. Project, 4.45%,
2/1/10, LOC: American National Bank* 1,230 1,230
200 200 McCook, Revenue, St. Andrew Society Project Ser.
1996 A, 4.10%, 12/1/21 200 200
600 2,000 2,600 Orland Hills, Mulit-Family Mortgage Revenue, 88th
Avenue Project, 4.00%, 12/1/04, LOC: LaSalle
National Bank* 600 2,000 2,600
2,500 2,500 Regional Transportation Authority Trust Receipts,
4.25%, 6/1/25, LIQ: Societe Generale* 2,500 2,500
------- ------- -------
12,000 48,595 60,595
------- ------- -------
Indiana (7.2%):
2,400 2,400 Fort Wayne Hospital Authority, Parkview Memorial
Hospital, Series B, 3.65%, 1/1/16* 2,400 2,400
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
14,600 14,600 Health Facility Financing Authority,
Rehabilitation Hospital, Inc., 3.70%,
11/1/20, LOC: National Bank of Detroit* 14,600 14,600
2,300 2,300 Health Facility Financing Authority Revenue,
Capital Access Designated Pool, 3.75%, 12/1/02,
LOC: Comercia Bank* 2,300 2,300
2,000 2,000 Health Facility Funding Revenue, Community
Hartsfield Village Project, Series B, 4.00%,
8/15/27* 2,000 2,000
5,400 5,400 Hospital Equipment Financing Authority, Revenue
Insured, Series A, 3.75%, 12/1/15, MBIA 5,400 5,400
5,600 5,600 Indianapolis Economic Development Revenue,
Children's Museum Project, 4.15%, 10/1/25,
LOC: National Bank of Detroit* 5,600 5,600
3,450 3,450 Jasper Economic Development Revenue, Best Chairs,
Inc. Project, AMT, 4.40%, 3/1/19, LOC: PNC Bank* 3,450 3,450
16,200 16,200 Rockport, PCR, Indiana & Michigan Electric Co.,
Series A, 3.85%, 8/1/14, LOC: Swiss Bank* 16,200 16,200
------- ------- -------
4,400 47,550 51,950
------- ------- -------
Kentucky (0.7%):
490 490 Calloway County Fire Revenue Bond, 4.22%,
12/1/31* 490 490
455 455 Covington Industrial Building Revenue Authority,
Atkins & Pearce Inc. Project, 4.20%, 4/1/05* 455 455
750 750 Louisville Industrial Development Revenue,
Zeochem Project, 4.00%, 9/1/01* 750 750
3,500 3,500 Mayfield, League of Cities Lease Finance Program
96, 3.90%, 7/1/26, LOC: PNC Bank* 3,500 3,500
------- ------- -------
1,695 3,500 5,195
------- ------- -------
Louisiana (0.7%):
2,300 2,300 New Orleans Industrial Development Board,
Spectrum Control Technology Project, 4.25%,
3/1/07* 2,300 2,300
2,700 2,700 Public Facilities, Sisters of Charity, 3.70%,
7/1/23* 2,700 2,700
------- -------
5,000 5,000
------- -------
Michigan (5.0%):
19,500 19,500 Higher Education Student Loan, Series B, AMT,
3.75%, 10/1/13, AMBAC* 19,500 19,500
800 800 Jackson County, Economic Development Corp.
Ltd, Thrifty Leoni Inc. Project, 4.28%, 12/1/14* 800 800
1,560 1,560 State Strategic Fund, Limited Obligation, Wayne
Disposal Oakland 1,560 1,560
Project, AMT, 4.00%, 3/1/05, LOC: Credit Suisse-
First Boston*
13,940 13,940 Wayne County Airport Revenue (Detroit Airport),
Series B, AMT, 3.75%, 12/1/16, LOC: Bayerische
Landesbank* 13,940 13,940
------- ------- -------
800 35,000 35,800
------- ------- -------
Minnesota (0.2%):
1,530 1,530 Roseville Multifamily Housing Revenue, Rosepointe
II Project, 4.25%, 10/1/27* 1,530 1,530
------- -------
Missouri (0.4%):
1,965 1,965 Kansas City Industrial Development Hospital
Authority Revenue, Baptist Health System
Project, Series A, 4.00%, 8/1/18* 1,965 1,965
965 965 Saint Louis Industrial Revenue, Kinder Care,
Series C, 3.90%, 2/1/01* 965 965
------- -------
2,930 2,930
------- -------
Nebraska (0.1%):
1,020 1,020 Hamilton County Industrial Development Revenue,
The Iams Co. Project, 4.25%, 7/1/05, Callable
2/1/98 @ 100* 1,020 1,020
------- -------
Nevada (5.4%):
11,200 11,200 Clark County, IDR, Nevada Power Co. Project,
Series A, 3.95%, 10/1/30, LOC: Barclays Bank* 11,200 11,200
5,000 5,000 Clark County, Limited Tax GO, 1996 Las Vegas
Convention Trust Receipts, 4.25%, 7/1/26, FSA,
LIQ: Societe Generale* 5,000 5,000
2,215 2,215 Clark County, PCR, Nevada Power Co. Project,
Series C, 3.85%, 10/1/30, LOC: Barclays Bank* 2,215 2,215
375 375 Henderson Public Improvement Trust Mutlifamily
Housing Revenue Authority, Pueblo II Project,
Series B, 4.35%, 8/1/26 375 375
9,300 9,300 Lancaster County, Hospital Authority, Bryan
Memorial Hospital, 3.65%, 6/1/12, MBIA* 9,300 9,300
11,000 11,000 Muninipal Securities Trust Receipts, SGB 31,
GO, 4.25%, 3/1/23, LIQ: Societe Generale* 11,000 11,000
------- ------- -------
375 38,715 39,090
------- ------- -------
North Carolina (0.2%):
1,525 1,525 Beaufort County, Industrial Facility & Pollution
Control Authority, Texasgulf Inc. Project,
4.25%, 12/1/00 1,525 1,525
------- -------
Ohio (3.9%):
3,500 3,500 Franklin County Hospital Revenue, Holy Cross
Health Systems, 4.15%, 6/1/16, LIQ: Morgan
Guaranty* 3,500 3,500
800 800 Loraine County Hospital Revenue Authority,
Elyria United Methodist Project, Series B,
4.00%, 6/1/12* 800 800
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
7,900 7,900 State Air Quality Development Authority
Revenue, JMG Funding Ltd. Partnership,
Series A, AMT, 3.90%, 4/1/28, LOC: Societe
Generale* 7,900 7,900
5,300 5,300 State Air Quality Development Authority,
JMG Funding Ltd. Partnership, AMT, 3.90%,
4/1/29, LOC: Societe Generale* 5,300 5,300
2,800 2,800 State Air Quality Development Revenue Bond,
Timken Co. Project, AMT, 3.70%, 6/1/01, LOC:
Credit Suisse* 2,800 2,800
2,000 2,000 State Water Development Authority, Timken Co.
Project, 3.70%, 6/1/01, LOC: Credit Suisse* 2,000 2,000
5,500 5,500 State Water Development Authority Revenue, Timken
Co. Project, 3.70%, 5/1/07, LOC: Wachovia Bank* 5,500 5,500
------- ------- -------
800 27,000 27,800
------- ------- -------
Oklahoma (0.1%)::
1,000 1,000 Muskogee Industrial Trust Revenue, Warmack-
Muskogee Ltd., 4.20%, 12/1/15* 1,000 1,000
------- -------
Oregon (0.2%):
1,200 1,200 Hillsboro, Graduate Institute, 4.25%, 8/1/11* 1,200 1,200
------- -------
Pennsylvania (3.4%):
100 100 Bucks County Industrial Development Authority,
Edgecomb Metals Project, 4.15%, 10/1/09 100 100
1,500 1,500 Chester County, Health & Education Facilities
Authority, Barclay Friends Project, Series A,
3.70%, 8/1/25* 1,500 1,500
1,100 1,100 Clarion County, Industrial Development
Authority, Meritcare Inc. Project, Series A,
4.25%, 12/1/12* 1,100 1,100
5,000 5,000 Dauphin County, General Authority, Pooled
Finance, Project II, 3.90%, 9/1/32* 5,000 5,000
100 100 Emmaus General Revenue Authority, 4.00%, 12/1/28* 100 100
5,400 5,400 Montgomery County, Higher Education and Health
Revenue Authority, Series A, 4.00%, 6/1/21* 5,400 5,400
10,115 10,115 New Castle Area Jameson Hospital, 3.85%, 7/1/26,
FSA* 10,115 10,115
1,000 1,000 Schuylkill County Industrial Development Authority,
Gilberton Power Project, 3.70%, 12/1/02* 1,000 1,000
------- ------- -------
14,200 10,115 24,315
------- ------- -------
South Carolina (0.2%):
1,700 1,700 Cherokee County, Industrial Revenue, Oshkosh
Truck Corp. Project, AMT, 4.20%, 8/1/19, LOC:
Bank of Nova Scotia* 1,700 1,700
------- -------
Tennessee (0.7%):
1,000 1,000 Jefferson County Industrial Development, Ball
Corp. Project, 4.40%, 4/1/98, LOC: PNC Bank* 1,000 1,000
3,800 3,800 Oak Ridge Industrial Development Board,
Economic Development Revenue, Limited
Obligation, 3.90%, 5/1/09, LOC: ABN AMRO* 3,800 3,800
------- ------- -------
1,000 3,800 4,800
------- ------- -------
Texas (5.3%):
14,100 14,100 Capital Health Facilities Development Corp.,
Island on Lake Travis Ltd. Project, AMT, 3.75%,
12/1/16, LOC: Credit Suisse* 14,100 14,100
4,000 4,000 Lower Colorado River Authority, Texas Electricity
Revenue, 3.65%, 1/1/13, MBIA* 4,000 4,000
12,000 12,000 Panhandle Plains Higher Education Inc., Student
Loan Revenue, Series A, AMT, 3.75% 6/1/21, SMLA* 12,000 12,000
8,400 8,400 Panhandle Plains Higher Education Inc., Student
Loan Revenue, Series A, AMT, 3.75%, 6/1/23, SLMA* 8,400 8,400
------- -------
38,500 38,500
------- -------
Utah (1.8%):
1,200 1,200 Salt Lake City Airport Revenue, Sub Series A,
AMT 3.75%, 6/1/98, LOC: Credit Suisse* 1,200 1,200
1,800 1,800 Salt Lake City Revenue Authority, Pooled Project,
3.65%, 1/1/20* 1,800 1,800
10,000 10,000 University Revenues, Auxiliary & Campus Facilities,
Series A, 3.85%, 4/1/27, LOC: Bank of Nova Scotia* 10,000 10,000
------- ------- -------
1,800 11,200 13,000
------- ------- -------
Washington (0.9%):
3,925 3,925 Pierce County, NN Banking Co., AMT, 4.30%, 7/1/03,
LOC: U.S. Bank of Washington* 3,925 3,925
2,500 2,500 State GO, Municipal Securities, Trust Receipts,
4.25%, 7/1/16, LIQ: Societe Generale* 2,500 2,500
------- -------
6,425 6,425
------- -------
West Virginia (0.9%):
2,300 2,300 Marion County Community Solid Waste Disposal
Facility Revenue, Grant Town, AMT, 3.80%,
10/1/17, LOC: National Westminister* 2,300 2,300
4,500 4,500 Marion County Community Solid Waste Disposal
Facility Revenue, Grant Town, AMT, 3.75%,
10/1/17, LOC: National Westminister* 4,500 4,500
------- -------
6,800 6,800
------- -------
Total Weekly Demand Notes 71,130 358,340 429,470
------- ------- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP MUNICIPAL MONEY FUND / MARQUIS TAX EXEMPT MONEY MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
---------- -------- -------- ----------------------------------------------------- --------- --------- ---------
<S><C>
Total (Cost $724,638) (a) 130,114 594,524 724,638
------- ------- -------
------- ------- -------
</TABLE>
_______________
Percentages indicated are based on net assets of $722,731.
(a) Cost and value for frderal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of of market rates.
The rate reflected on the Schedule of Portfolio Investments is the rate in
effect at December 31, 1997.
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BAN Bond Anticipation Notes
FGIC Insured by Financial Guaranty Insurance Corp.
FSA Insured by Financial Security Assurance
GIC Guaranteed Investment Contract
GNMA Government National Mortgage Association
GO Gereral Obligation
GTY Guaranty
FNMA Federal National Mortgage Association
IDR Industrial Development Revenue
LIQ Liquidity Agreement
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
SLMA Student Loan Marketing Association
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND / MARQUIS GOVERNMENT SECURITIES FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- ----------- --------- --------- --------------------------------------------------- -------- ---------- -----------
<S><C>
CORPORATE OBLIGATIONS (0.2%):
600 600 Anheuser Busch Co., Inc., 8.75%, 12/1/99 630 630
500 500 General Foods Corp., 6.00%, 6/15/01 495 495
500 500 Lehman Brothers Holdings, Inc., 6.38%, 6/1/98 501 501
500 500 Pepsico, Inc., 7.63%, 12/18/98 506 506
--------- ---------
Total Corporate Obligations 2,132 2,132
--------- ---------
U.S. GOVERNMENT AGENCY MORTGAGES (66.7%):
Federal Home Loan Mortgage Corp. (27.6%):
10 10 7.00%, 4/1/00, Pool #253036 10 10
8,480 8,480 6.00%, 4/15/01, Gold Balloon, Pool # G50347 8,430 8,430
4,086 4,086 7.50%, 11/15/01, Pool #1318-JB, CMO 4,168 4,168
1,925 1,925 6.70%, 5/15/05, Pool #1233-F, CMO 1,939 1,939
673 673 9.00%, 11/1/05, Pool # B0-0203 703 703
920 920 9.00%, 5/1/06, Series # B0-0282 961 961
1,000 1,000 7.00%, 10/15/06, Series 1150, Class I 1,004 1,004
3,425 3,425 7.00%, 9/15/07, Series 1457-PJ, CMO 3,420 3,420
4,850 4,850 6.50%, 4/15/08, Pool #1489-I, CMO 4,851 4,851
5,181 5,181 7.50%, 4/1/09, Gold Pool #E00315 5,346 5,346
16,500 16,500 6.50%, 9/15/09, Series 1838 G, CMO 16,546 16,546
4,152 4,152 8.50%, 1/1/10, Gold Pool #G10305 4,312 4,312
30,000 30,000 6.50%, 7/1/12 30,188 30,188
4 4 9.50%, 4/1/16, Pool #170161 5 5
271 271 9.00%, 10/1/17, Gold Pool #A00756 290 290
201 201 9.00%, 4/1/18, Gold Pool #A01143 216 216
503 503 7.75%, 1/15/20, Pool #1136-F, CMO 503 503
62 62 9.00%, 10/1/20, Gold Pool #A01134 66 66
66 66 9.00%, 1/1/21, Gold Pool #A00948 71 71
500 500 7.25%, 2/15/21, Series 1464, CMO 510 510
59 59 9.00%, 4/1/21, Gold Pool #D04193 63 63
99 99 9.00%, 6/1/21, Gold Pool #A01017 106 106
103 103 9.00%, 7/1/21, Gold Pool #A01093 111 111
68 68 9.00%, 9/1/21, Gold Pool #D32271 72 72
53 53 9.00%, 11/1/21, Gold Pool #C00078 57 57
102 102 9.00%, 11/1/21, Gold Pool #D11191 109 109
108 108 9.00%, 11/1/21, Gold Pool #D11866 115 115
216 216 9.00%, 5/1/22, Gold Pool #D19203 231 231
76 76 9.00%, 5/1/22, Gold Pool #D19142 81 81
900 900 7.00%, 8/25/22, Series 13, Class PL 916 916
10,000 10,000 5.50%, 9/15/22, Series 1367 - K 9,124 9,124
5,200 5,200 6.50%, 11/15/22, Pool #1152 5,129 5,129
3,845 3,845 7.00%, 4/15/23, Pool #348645 3,896 3,896
6,680 6,680 10.00%, 10/15/23, Series 1591 E, CMO 7,593 7,593
8,837 8,837 6.00%, 10/15/23, Series 1785A 8,522 8,522
17,851 17,851 5.00%, 11/15/23, Series 1686 PG, CMO 16,979 16,979
4,432 4,432 8.50%, 5/1/24, Gold Pool #G00229 4,676 4,676
3,985 3,985 8.50%, 7/1/24, Gold Pool #C00354 4,175 4,175
6,916 6,916 7.50%, 9/1/24, Gold Pool #D56307 7,108 7,108
6,616 6,616 8.00%, 11/1/24, Gold Pool #C00376 6,870 6,870
2,873 2,873 7.50%, 5/1/25, Gold Pool #D59996 2,952 2,952
5,051 5,051 7.50%, 6/1/25, Gold Pool #C80321 5,192 5,192
4,001 4,001 7.50%, 8/1/25, Gold Pool #C00414 4,111 4,111
3,996 3,996 7.50%, 8/1/25, Gold Pool #C80334 4,106 4,106
4,348 4,348 7.00%, 8/1/25, Gold Pool #C00418 4,404 4,404
4,080 4,080 8.00%, 9/1/25, Gold Pool #D63705 4,233 4,233
4,270 4,270 7.00%, 9/1/25, Gold Pool #D63303 4,324 4,324
8,267 8,267 7.50%, 10/1/25, Gold Pool #C80349 8,489 8,489
9,011 9,011 6.50%, 2/1/26, Gold Pool #D68098 8,929 8,929
9,188 9,188 6.50%, 3/1/26, Gold Pool #G00453 9,105 9,105
11,884 11,884 7.00%, 4/1/26, Gold Pool #D69810 12,017 12,017
11,144 11,144 7.00%, 4/1/26, Gold Pool #D69811 11,269 11,269
4,796 4,796 6.50%, 6/1/26, Pool #250575 4,744 4,744
10,000 10,000 6.50%, 10/17/26, Series 1985, Class PL 9,815 9,815
- - 7.00%, 3/1/27, Pool #D78691 (c) - -
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND / MARQUIS GOVERNMENT SECURITIES FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- ----------- --------- --------- --------------------------------------------------- -------- ---------- -----------
<S><C>
- - 7.00%, 4/1/27, Pool #C00512 (c) - -
14,983 14,983 6.50%, 11/1/27, Pool # C00568 14,810 14,810
9,900 9,900 7.00%, 12/1/27 9,974 9,974
--------- --------- ---------
21,689 256,257 277,946
--------- --------- ---------
Federal National Mortgage Assoc. (19.8%):
98 98 8.50%, 3/1/98, Pool #050418 101 101
8 8 8.50%, 3/1/98, Pool #115590 8 8
9,333 9,333 6.00%, 3/1/01, Pool #50783 9,222 9,222
174 174 7.00%, 9/1/02, Pool #250355 176 176
8,275 8,275 7.00%, 4/1/03, Pool #303876 8,386 8,386
1,282 1,282 7.50%, 5/1/03, Pool #347175 1,307 1,307
2,617 2,617 7.50%, 7/1/03, Pool #250656 2,669 2,669
61 61 6.50%, 4/1/04, Pool #85019 60 60
100 100 8.00%, 5/25/05, Series 1992-146 D, REMIC 105 105
6,703 6,703 7.00%, 7/17/05, Series 97-26 GD 6,844 6,844
150 150 6.25%, 2/25/07, Series 1993-129 Class E, REMIC 151 151
10,000 10,000 6.70%, 6/19/07 10,477 10,477
2,000 2,000 7.35%, 6/25/07, Pool 1993-11-N 2,010 2,010
2,892 2,892 7.00%, 9/1/07, Pool #185265 2,935 2,935
3,769 3,769 7.00%, 4/1/08, Pool #211750 3,824 3,824
1,000 1,000 6.25%, 1/25/09 989 989
8,000 8,000 6.00%, 6/25/09, Series 1994-86 PJ, CMO 7,802 7,802
3,620 3,620 7.00%, 7/1/10, Pool #250326 3,694 3,694
2,351 2,351 6.50%, 12/1/10, Pool #332301 2,362 2,362
13,132 13,132 6.00%, 3/1/11, Pool #340683 12,985 12,985
943 943 6.25%, 2/25/13, Series 1993-2 PC, CMO 939 939
3,596 3,596 6.35%, 8/25/13, Series 1993-225B VG, CMO 3,581 3,581
3,815 3,815 7.50%, 6/1/14, Pool #250081 3,918 3,918
3,156 3,156 7.50%, 7/1/14, Pool #250082 3,241 3,241
146 146 10.00%, 10/1/16, Pool #70110 159 159
7,109 7,109 10.00%, 9/1/17, Pool #303969 7,720 7,720
357 357 10.00%, 10/1/19, Pool #231675 389 389
10,000 10,000 7.00%, 5/25/20, Pool #1990-57 10,103 10,103
252 252 10.00%, 7/1/20, Pool #050318 274 274
5,584 5,584 6.50%, 5/25/21, Series 1992-205 K, CMO 5,539 5,539
5,000 5,000 7.00%, 9/25/21, Series G92-64 K, CMO 5,057 5,057
567 567 10.00%, 11/1/21, Pool #208374 618 618
528 528 10.00%, 11/1/21, Pool #208372 576 576
150 5,000 5,150 6.55%, 12/25/21, Pool #1993-137 PH, CMO 151 5,025 5,176
1,000 1,000 7.25%, 5/25/22, Series G93-9, Class K 1,007 1,007
800 800 7.50%, 7/25/22, Series G92-35, CMO 816 816
51 51 6.25%, 10/25/22, Pool #G92-61-B, REMIC 51 51
10,785 10,785 6.50%, 2/17/23, Series #G94-12 C, CMO 10,424 10,424
5,000 5,000 6.50%, 5/25/23, Series 1994-110 H, CMO 4,973 4,973
9,094 9,094 6.35%, 12/25/23, Series 1994-43 PJ, CMO 8,844 8,844
5,042 5,042 7.00%, 1/25/24, Series 1994-62 PJ, CMO 5,094 5,094
7,998 7,998 7.00%, 2/1/24, Pool #190257 8,085 8,085
3,114 3,114 9.00%, 12/1/24, Pool #353898 3,313 3,313
3,832 3,832 7.50%, 6/1/25, Pool #312899 3,935 3,935
4,294 4,294 7.00%, 8/1/25, Pool #315500 4,339 4,339
825 825 7.50%, 9/1/25, Pool #324749 846 846
3,656 3,656 7.50%, 9/1/25, Pool #322899 3,751 3,751
20,000 20,000 6.50%, 12/1/27, Pool #406732 19,744 19,744
--------- --------- ---------
6,737 191,882 198,619
--------- --------- ---------
Government National Mortgage Assoc. (19.3%):
2 2 10.50%, 6/15/98, Pool #068842 2 2
11 11 10.00%, 9/15/00, Pool #138814 12 12
8 8 10.00%, 12/15/00, Pool #136214 8 8
34 34 8.50%, 6/15/01, Pool #166491 35 35
4 4 8.50%, 7/15/01, Pool #161997 4 4
48 48 9.50%, 9/15/01, Pool #180786 51 51
5 5 9.00%, 9/15/01, Pool #174330 5 5
66 66 9.00%, 9/15/01, Pool #166928 69 69
16 16 9.50%, 11/15/01, Pool #182995 17 17
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND / MARQUIS GOVERNMENT SECURITIES FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- ----------- --------- --------- --------------------------------------------------- -------- ---------- -----------
<S><C>
63 63 8.50%, 11/15/01, Pool #179383 65 65
68 68 9.00%, 12/15/01, Pool #187723 72 72
44 44 8.50%, 12/15/01, Pool #199837 46 46
69 69 8.00%, 3/15/02, Pool #205933 72 72
9 9 9.00%, 7/15/02, Pool #227176 10 10
155 155 9.00%, 5/15/03, Pool #154134 163 163
117 117 9.00%, 6/15/05, Pool #283904 123 123
43 43 9.00%, 8/15/05, Pool #291836 45 45
24 24 9.00%, 9/15/05, Pool #295227 26 26
53 53 9.00%, 9/15/05, Pool #292898 55 55
62 62 8.00%, 7/15/06, Pool #11337 65 65
31 31 7.50%, 7/15/07, Pool #17316 32 32
76 76 8.00%, 8/15/07, Pool #18677 80 80
66 66 8.00%, 8/15/07, Pool #18539 69 69
291 291 7.50%, 12/15/07, Pool #338189 300 300
1,121 1,121 6.50%, 7/15/08, Pool #349693 1,126 1,126
55 55 9.00%, 11/15/08, Pool #27932 59 59
109 109 6.50%, 3/15/09, Pool #367398 109 109
94 94 9.00%, 4/15/09, Pool #30352 101 101
16 16 9.00%, 5/15/09, Pool #32214 18 18
2,696 2,696 6.50%, 5/15/09, Pool #366779 2,709 2,709
6 6 9.50%, 7/15/09, Pool #34487 7 7
146 146 9.50%, 9/15/09, Pool #34878 159 159
37 37 9.50%, 10/15/09, Pool #36804 41 41
31 31 11.00%, 11/15/09, Pool #37615 34 34
1 1 12.00%, 4/15/15, Pool #125262 2 2
13 13 11.00%, 6/15/15, Pool #130125 14 14
76 76 9.00%, 5/15/16, Pool #149877 82 82
84 84 9.00%, 6/15/16, Pool #166130 91 91
15 15 9.00%, 6/15/16, Pool #157147 16 16
12 12 9.50%, 7/15/16, Pool #166772 14 14
166 166 9.00%, 7/15/16, Pool #151273 177 177
172 172 9.00%, 7/15/16, Pool #144968 184 184
88 88 9.00%, 7/15/16, Pool #167475 94 94
96 96 9.00%, 7/15/16, Pool #158921 105 105
75 75 9.50%, 8/15/16, Pool #177531 82 82
130 130 9.00%, 9/15/16, Pool #179044 142 142
289 289 9.00%, 9/15/16, Pool #169908 309 309
89 89 9.00%, 10/15/16, Pool #173089 95 95
149 149 9.00%, 11/15/16, Pool #156478 160 160
83 83 9.00%, 11/15/16, Pool #183868 89 89
22 22 9.50%, 1/15/17, Pool #185619 23 23
26 26 9.00%, 2/15/17, Pool #201757 27 27
343 343 9.00%, 2/15/17, Pool #195058 373 373
256 256 9.00%, 6/15/17, Pool #219079 278 278
43 43 9.50%, 8/15/17, Pool #224015 46 46
77 77 9.50%, 8/15/17, Pool #218841 84 84
411 411 9.50%, 8/15/17, Pool #201217 444 444
23 23 9.00%, 8/15/17, Pool #225825 25 25
103 103 9.00%, 6/15/18, Pool #238161 112 112
66 66 9.50%, 8/15/18, Pool #248390 72 72
19 19 9.00%, 10/15/18, Pool #253188 21 21
119 119 9.50%, 12/15/18, Pool #263400 130 130
159 159 10.00%, 4/15/19, Pool #257047 173 173
34 34 10.00%, 5/15/19, Pool #269607 37 37
5 5 10.00%, 6/15/19, Pool #271525 6 6
3 3 9.00%, 10/15/19, Pool #267676 3 3
59 59 9.00%, 11/15/19, Pool #162768 64 64
353 353 9.50%, 12/15/19, Pool #281696 382 382
65 65 9.00%, 1/15/20, Pool #283138 71 71
71 71 9.00%, 2/15/20, Pool #276157 77 77
123 123 9.00%, 3/15/20, Pool #285283 134 134
55 55 9.50%, 9/15/20, Pool #292918 60 60
79 79 9.50%, 12/15/20, Pool #291865 86 86
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND / MARQUIS GOVERNMENT SECURITIES FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- ----------- --------- --------- --------------------------------------------------- -------- ---------- -----------
<S><C>
243 243 9.00%, 6/15/21, Pool #307120 264 264
14,334 14,334 9.00%, 8/15/21, Pool #306081 15,521 15,521
4,205 4,205 9.00%, 12/15/21, Pool #780284 4,512 4,512
32 32 7.50%, 2/15/22, Pool #324025 33 33
544 544 8.00%, 7/15/22, Pool #321560 568 568
713 713 7.50%, 8/15/22, Pool #337141 735 735
34 34 7.00%, 10/15/22, Pool #337175 35 35
193 193 7.00%, 11/15/22, Pool #323008 196 196
33 33 7.00%, 12/15/22, Pool #339969 33 33
40 40 7.00%, 1/15/23, Pool #321675 41 41
474 474 7.00%, 1/15/23, Pool #332022 480 480
391 391 7.00%, 1/15/23, Pool #342248 396 396
376 376 7.00%, 1/15/23, Pool #341536 381 381
235 235 7.00%, 1/15/23, Pool #346214 238 238
51 51 7.00%, 3/15/23, Pool #350110 52 52
698 698 7.00%, 5/15/23, Pool #351041 708 708
58 58 7.00%, 5/15/23, Pool #338005 59 59
765 765 7.00%, 5/15/23, Pool #346572 775 775
734 734 7.00%, 5/15/23, Pool #342348 744 744
620 620 7.00%, 5/15/23, Pool #221604 629 629
322 322 6.50%, 5/15/23, Pool #343208 321 321
3,791 3,791 7.50%, 6/15/23, Pool #358801 3,884 3,884
53 53 6.50%, 6/15/23, Pool #349788 53 53
76 76 6.50%, 6/15/23, Pool #346624 76 76
53 53 6.50%, 6/15/23, Pool #358250 52 52
378 378 6.50%, 6/15/23, Pool #348677 377 377
242 242 7.00%, 7/15/23, Pool #325977 246 246
544 544 7.00%, 7/15/23, Pool #360697 551 551
436 436 7.00%, 7/15/23, Pool #360889 442 442
344 344 7.00%, 7/15/23, Pool #353569 349 349
809 809 7.00%, 7/15/23, Pool #346673 820 820
433 433 7.00%, 7/15/23, Pool #358382 439 439
811 811 7.00%, 7/15/23, Pool #362982 822 822
30 30 7.00%, 7/15/23, Pool #354538 30 30
174 174 7.00%, 7/15/23, Pool #357782 176 176
23 23 7.00%, 7/15/23, Pool #350709 23 23
267 267 6.50%, 7/15/23, Pool #322200 266 266
310 310 6.50%, 8/15/23, Pool #344505 309 309
444 444 6.50%, 8/15/23, Pool #353137 443 443
174 174 6.50%, 8/15/23, Pool #359027 173 173
152 152 6.50%, 8/15/23, Pool #360713 152 152
591 591 6.50%, 8/15/23, Pool #356717 589 589
286 286 6.50%, 8/15/23, Pool #360738 285 285
764 764 6.50%, 9/15/23, Pool #345375 762 762
50 50 6.50%, 9/15/23, Pool #339041 50 50
3,615 3,615 8.00%, 10/15/23, Pool #354681 3,766 3,766
214 214 6.50%, 10/15/23, Pool #345391 213 213
392 392 6.00%, 10/15/23, Pool #345389 382 382
454 454 6.00%, 10/15/23, Pool #364717 442 442
34 34 6.00%, 10/15/23, Pool #370006 33 33
611 611 6.50%, 11/15/23, Pool #369356 609 609
19 19 6.50%, 11/15/23, Pool #370927 19 19
33 33 6.50%, 12/15/23, Pool #370289 33 33
603 603 6.50%, 12/15/23, Pool #369830 602 602
101 101 6.50%, 12/15/23, Pool #365740 101 101
954 954 6.50%, 12/15/23, Pool #349265 951 951
140 140 6.50%, 12/15/23, Pool #349944 140 140
650 650 6.50%, 1/15/24, Pool #379127 648 648
343 343 6.50%, 2/15/24, Pool #389200 342 342
1,177 1,177 6.50%, 2/15/24, Pool #362341 1,173 1,173
345 345 6.50%, 2/15/24, Pool #371999 344 344
21,202 21,202 6.50%, 2/15/24, Pool #354747 21,136 21,136
166 166 6.50%, 2/15/24, Pool #380818 166 166
282 282 6.50%, 2/15/24, Pool #370338 281 281
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND / MARQUIS GOVERNMENT SECURITIES FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- ----------- --------- --------- --------------------------------------------------- -------- ---------- -----------
<S><C>
933 933 7.00%, 2/16/24, Series 1996-21, CMO 935 935
1,402 1,402 7.00%, 3/15/24, Pool #379328 1,413 1,413
688 688 7.00%, 3/15/24, Pool #391552 694 694
1,222 1,222 7.00%, 4/15/24, Pool #355128 1,232 1,232
1,724 1,724 7.00%, 4/15/24, Pool #379001 1,738 1,738
79 79 7.50%, 6/15/24, Pool #389827 82 82
524 524 7.50%, 6/15/24, Pool #388747 539 539
3,562 3,562 8.00%, 9/15/24, Pool #403212 3,711 3,711
377 377 8.00%, 9/15/24, Pool #393908 393 393
1,232 1,232 8.50%, 10/15/24, Pool # 407073 1,294 1,294
8,730 8,730 9.00% 11/15/24, Pool #780029 9,478 9,478
195 195 8.00%, 6/15/25, Pool # 385370 203 203
217 217 7.50%, 6/15/25, Pool #401860 222 222
2,000 2,000 8.00%, 7/15/25, Pool #377557 2,074 2,074
1,079 1,079 7.25%, 12/15/25, Pool #411361 1,100 1,100
4,657 4,657 7.00%, 1/15/26, Pool #417192 4,695 4,695
4,461 4,461 7.50%, 3/15/26, Pool #422308 4,583 4,583
142 142 7.50%, 3/15/26, Pool #381163 145 145
6,627 6,627 8.00% 5/15/26, Pool #416233 6,882 6,882
10,842 10,842 8.00%, 5/15/26, Pool #422690 11,260 11,260
9,463 9,463 8.00%, 7/15/26, Pool #412644 9,827 9,827
8,963 8,963 8.00%, 7/15/26, Pool #423877 9,308 9,308
231 231 8.00%, 8/15/26, Pool #436445 239 239
13,700 13,700 8.00%, 12/20/26, G2 Pool #2344 14,158 14,158
2,821 2,821 7.50%, 3/15/27, Pool #432398 2,891 2,891
4,893 4,893 6.50%, 7/20/27, Pool #80095 4,966 4,966
9,852 9,852 6.00%, 7/20/27, Pool #80094 9,975 9,975
10,000 10,000 7.00%, 12/15/27, Pool # 449494 10,087 10,087
--------- --------- ---------
26,873 166,895 193,768
--------- --------- ---------
Total U.S. Government Agency Mortgages 55,299 615,034 670,333
--------- --------- ---------
U.S. GOVERNMENT AGENCY SECURITIES (13.6%):
Federal Agricultural Mortgage Corp. (0.1%):
500 500 7.56%, 5/28/02 531 531
--------- ---------
Federal Farm Credit Bank (0.6%):
250 250 7.51%, 2/13/98 250 250
255 255 8.65%, 10/1/99 267 267
5,000 5,000 6.88%, 5/1/00 5,116 5,116
--------- --------- ---------
517 5,116 5,633
--------- --------- ---------
Federal Home Loan Bank (2.4%):
2,000 2,000 9.25%, 11/25/98 2,054 2,054
2,000 2,000 9.30%, 1/25/99 2,073 2,073
3,000 3,000 8.60%, 6/25/99 3,119 3,119
500 500 5.37%, 11/3/00 494 494
10,000 10,000 5.91%, 12/23/02 10,003 10,003
5,000 5,000 6.27%, 1/14/04 (b) 4,977 4,977
500 500 7.50%, 8/10/04 540 540
--------- --------- ---------
1,034 22,226 23,260
--------- --------- ---------
Federal Home Loan Mortgage Corp. (0.9%):
2,000 2,000 6.44%, 1/28/00 2,025 2,025
4,500 4,500 7.13%, 11/18/02 4,719 4,719
135 135 6.30%, 3/15/03 135 135
250 250 6.28%, 7/15/03 249 249
250 250 7.93%, 1/20/05 276 276
37 37 7.25%, 5/1/07, Pool #185801 38 38
680 680 9.00%, 8/1/09, Pool #279063 706 706
1,004 1,004 9.00%, 12/1/09, Pool #256360 1,067 1,067
--------- --------- ---------
2,471 6,744 9,215
--------- --------- ---------
Federal National Mortgage Assoc. (4.8%):
1,175 1,175 9.15%, 4/10/98 1,186 1,186
255 255 9.55%, 3/10/99 266 266
4,000 4,000 8.70%, 6/10/99 4,157 4,157
3,000 3,000 8.90%, 6/12/00 3,204 3,204
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND / MARQUIS GOVERNMENT SECURITIES FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- ----------- --------- --------- --------------------------------------------------- -------- ---------- -----------
<S><C>
3,000 3,000 6.20%, 11/12/03 2,979 2,979
15,000 15,000 7.16%, 5/11/05 15,973 15,973
5000 10,000 15,000 5.88%, 2/2/06 (b) 4,944 9,902 14,846
5,000 5,000 6.67%, 2/6/06, Callable 2/6/98 @ 100 4,981 4,981
--------- --------- ---------
6,396 41,196 47,592
--------- --------- ---------
FICO STRIPS (0.2%):
180 180 10/5/05 113 113
334 334 12/27/05 207 207
500 500 10/6/06 295 295
1,000 1,000 11/11/06 587 587
500 500 12/27/06 291 291
--------- ---------
1,493 1,493
--------- ---------
Resolution Funding Corp. (1.9%):
50,000 50,000 Principal STRIPS, 7/15/20 (b) 12,436 12,436
15,000 15,000 Principal STRIPS, 10/15/20 3,674 3,674
15,000 15,000 Principal STRIPS, 4/15/28 2,431 2,431
5,000 5,000 Principal STRIPS, 4/15/30 719 719
--------- ---------
19,260 19,260
--------- ---------
Small Business Administration (0.0%):
7 7 9.35%, 7/1/98, Series 1988-10-C 7 7
--------- ---------
Tennessee Valley Authority (2.9%):
400 400 6.25%, 8/1/99 401 401
3,000 3,000 8.38%, 10/1/99 3,116 3,116
25,000 25,000 6.24%, 7/15/45, Putable on 7/15/01 @ 100 25,874 25,874
--------- --------- ---------
3,517 25,874 29,391
--------- --------- ---------
Total U.S. Government Agency Securities 15,966 120,416 136,382
--------- --------- ---------
U.S. TREASURY OBLIGATIONS (17.7%):
Treasury LINCS (0.2%):
2,500 2,500 6.00%, 8/15/09 2,434 2,434
--------- ---------
U.S. Treasury Bonds (4.5%):
1,000 1,000 9.38%, 2/15/06 1,229 1,229
25,000 25,000 8.13%, 8/15/19 (b) 31,278 31,278
2,500 2,500 7.13%, 2/15/23 2,854 2,854
10,000 10,000 6.13%, 11/15/27 (b) 10,285 10,285
--------- --------- ---------
4,083 41,563 45,646
--------- --------- ---------
U.S. Treasury Notes (11.0%):
1,800 1,800 5.13%, 4/30/98 1,798 1,798
1,550 1,550 9.00%, 5/15/98 1,570 1,570
200 200 6.13%, 5/15/98 200 200
2,650 2,650 5.13%, 6/30/98 2,648 2,648
100 100 8.25%, 7/15/98 101 101
2,500 2,500 9.25% 08/15/98 2,555 2,555
50 50 8.88%, 11/15/98 51 51
3,000 3,000 5.63%, 11/30/98 3,000 3,000
1,500 1,500 6.38%, 1/15/99 1,512 1,512
100 100 8.00%, 8/15/99 104 104
3,000 3,000 7.13%, 9/30/99 3,071 3,071
1,500 1,500 6.00%, 10/15/99 1,509 1,509
1,400 1,400 7.88%, 11/15/99 1,454 1,454
150 150 6.38%, 1/15/00 152 152
2,850 2,850 8.50%, 2/15/00 3,008 3,008
650 650 5.50%, 4/15/00 648 648
1,350 1,350 6.75%, 4/30/00 1,381 1,381
1,500 1,500 6.25%, 5/31/00 1,519 1,519
4,500 4,500 6.13%, 7/31/00 4,547 4,547
2,775 2,775 8.75%, 8/15/00 2,977 2,977
7,500 7,500 6.00%, 8/15/00 7,553 7,553
2,800 2,800 6.25%, 4/30/01(b) 2,845 2,845
1,000 1,000 7.88%, 8/15/01 1,069 1,069
5425 500 5,925 6.38%, 8/15/02 5,564 513 6,077
15,000 15,000 5.63%, 12/31/02 14,945 14,945
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GOVERNMENT BOND FUND / MARQUIS GOVERNMENT SECURITIES FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- ----------- --------- --------- --------------------------------------------------- -------- ---------- -----------
<S><C>
150 250 400 6.25%, 2/15/03 (b) 153 255 408
2,150 2,150 5.75%, 8/15/03 2,151 2,151
1,500 1,500 5.88%, 2/15/04 1,513 1,513
3000 2,500 5,500 6.50%, 8/15/05 (b) 3,129 2,609 5,738
12,500 12,500 5.63%, 2/15/06 12,359 12,359
20,700 20,700 6.50%, 10/15/06 (b) 21,686 21,686
--------- --------- ---------
58,780 51,369 110,149
--------- --------- ---------
U.S. Treasury STRIPS (2.0%):
25,000 25,000 7/15/20 6,218 6,218
5,000 5,000 2/15/25 (b) 3,855 3,855
50,000 50,000 2/15/25 (b) 9,956 9,956
20,029 20,029
--------- --------- ---------
Total U.S. Treasury Obligations 65,297 112,961 178,258
--------- --------- ---------
INVESTMENT COMPANIES (0.4%):
1,919 1,919 SEI Liquid Asset Trust, Treasury Portfolio 1,919 1,919
2,238 2,238 SEI Liquid Asset Trust, Government Portfolio 2,238 2,238
--------- ---------
Total Investment Companies 4,157 4,157
--------- ---------
REPURCHASE AGREEMENTS (5.0%):
46,298 46,298 Prudential Securities, 6.80%, 1/2/98 (Collateralized
by $48,271 various U.S. Government Agency Securities,
6.19% - 7.04%, 6/1/07 - 10/1/24, market value $47,687) 46,298 46,298
4,337 4,337 UBS Securities, 6.50%, 1/2/98 (Collateralized by
$5,076 various U.S. Government Agency Securities,
6.50% - 7.50%, 1/1/11 - 12/01/27,
market value - $4,424) 4,337 4,337
--------- --------- ---------
Total Repurchase Agreements 4,337 46,298 50,635
--------- --------- ---------
Total (Cost $1,012,053) (a) 147,188 894,709 1,041,897
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $1,005,082.
(a) Represents cost for financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows
(amounts in thousands) :
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . $30,898
Unrealized depreciation . . . . . . . . . . . . . . (1,054)
Net unrealized appreciation. . . . . . . . . . . . . $29,844
</TABLE>
(b) With respect to the One Group Fund only, a portion of
this security was loaned as of December 31, 1997.
(c) Amount is less than $1,000.
CMO Collateralized Mortgage Obligation
REMIC Real Estate Mortgage Investment Conduit
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND / MARQUIS LOUSIANA TAX - FREE
INCOME FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- -------- --------- --------- --------------------------------------------------------- --------- ---------- ---------
<S><C>
MUNICIPAL BONDS (97.9%):
Louisiana (97.9%):
150 150 Alexandria, Utilities Revenue, Series B, 4.65%, 5/1/04 153 153
100 100 Alexandria, Utilities Revenue, 5.25%, 5/1/11, FGIC 103 103
150 150 Ascension Parish, Parish Wide School District, GO, 4.90%,
3/1/09, AMBAC 153 153
1,165 1,165 Ascension Parish, Gravity Drain, Sales & Use Tax, 5.40%,
12/1/07,
Callable 12/1/06 @100, FGIC 1,248 1,248
1,230 1,230 Ascension Parish, Gravity Drain, Sales & Use Tax, 5.50%,
12/1/08,
Callable 12/1/06 @ 100, FGIC 1,320 1,320
2,500 2,500 Bastrop Industrial Development Board, Pollution Control
Revenue,
International Paper Co. Project, 6.90%, 3/1/07, Callable
3/1/02 @ 102 2,764 2,764
700 700 Baton Rouge, Public Improvements Sales & Use Tax, 6.85%,
8/1/00,
Callable 8/1/99 @ 102, AMBAC 743 743
800 800 Baton Rouge, Public Improvements Sales & Use Tax, 6.90%,
8/1/01,
Callable 8/1/99 @ 102, AMBAC 851 851
2,000 2,000 Baton Rouge, Public Improvements Sales & Use Tax, 6.00%,
8/1/04,
Callable 8/1/01 @ 101.5, FSA 2,146 2,146
765 765 Baton Rouge, Public Improvements Sales & Use Tax, 6.38%,
8/1/09,
Callable 8/1/01 @ 101.5, FSA 830 830
200 200 Baton Rouge, Sales & Use Tax Revenue, 6.00%, 8/1/08, FSA 214 214
700 700 Bossier City, Public Improvements Sales & Use Tax Revenue,
5.05%,11/01/11, Callable 11/1/07 @ 100, FGIC 715 715
805 805 Bossier City, Public Improvements Sales & Use Tax Revenue,
Series ST, 6.20%, 11/1/07, Callable 11/1/01 @ 102, AMBAC 876 876
400 400 Bossier City, Public Improvements Sales & Use Tax, Series
ST-1989, 6.88%, 11/1/06, Callable 11/1/99 @ 101.5, FGIC 427 427
400 400 Bossier City, Public Improvements Sales & Use Tax, Series
ST-1989, 6.88%, 11/1/07, Callable 11/1/99 @ 101.5, FGIC 427 427
550 550 Bossier City, Public Improvements Sales & Use Tax, Series
ST-1989, 6.88%, 11/1/08, Callable 11/1/99 @ 101.5, FGIC 586 586
500 500 Bossier City, Utility Revenue, 4.80%, 10/1/05, FGIC 515 515
350 350 Caddo Parish, GO, 5.00%, 2/1/05, MBIA 364 364
1,415 1,415 Caddo Parish, GO, 5.25%, 2/1/06, Callable 2/1/05
@ 100, MBIA 1,492 1,492
750 750 Caddo Parish, GO, 5.25%, 2/1/08, Callable 2/1/05
@ 100, MBIA 783 783
470 470 Caddo Parish Industrial Developement Board, Wal-Mart
Stores, Inc.
Project, 5.95%, 11/1/07, Callable 5/1/98 @ 101.5 479 479
500 500 Calcasieu Parish, School District #22, Ward 3,
Series A, GO,
7.10%, 2/1/01, Callable 2/1/99 @ 100, BIG 517 517
1,500 1,500 De Soto Parish, Pollution Control Revenue,
International Paper
Co. Project, Series A, 5.05%, 12/1/02 1,570 1,570
75 75 East Baton Rouge, Mortgage Financing Authority, Series B,
4.35%, 10/1/00 76 76
85 85 East Baton Rouge, Mortgage Financing Authority, Series B,
5.30%,10/1/14 85 85
650 650 East Baton Rouge Parish, Sales & Use Tax Revenue, 4.80%,
2/1/06,FGIC 669 669
340 340 East Baton Rouge Parish, Sales & Use Tax Revenue, 4.80%,
2/1/09,FGIC 345 345
500 500 East Baton Rouge Parish, Sales & Use Tax Revenue, 5.90%,
2/1/16,FGIC 536 536
500 500 East Baton Rouge Parish, Sales & Use Tax, 7.10%, 2/1/00,
Callable 2/1/99 @ 101.5, MBIA 525 525
500 500 East Baton Rouge Parish, Sales & Use Tax, 5.80%, 2/1/07,
Callable 2/1/05 @ 101.5, FGIC 547 547
845 845 East Baton Rouge Parish, Sales & Use Tax, 5.80%, 2/1/08,
Callable 2/1/05 @ 101.5, FGIC 921 921
910 910 East Baton Rouge Parish, Sales & Use Tax, 5.80%, 2/1/09,
Callable 2/1/05 @ 101.5, FGIC 990 990
2,280 2,280 East Baton Rouge Parish, Series A, 8.00%, 2/1/02, FGIC 2,608 2,608
1,085 1,085 East Baton Rouge Parish, Series ST, 5.15%, 2/1/05,
Callable 2/1/03 1,133 1,133
1,000 1,000 East Baton Rouge Parish, Series ST, 5.10%, 2/1/07,
Callable 2/1/06 @101.5, FGIC 1,050 1,050
1,280 1,280 East Baton Rouge, Mortgage Financial Authority, 5.45%
10/1/03, Callable 10/1/20 @ 100, GNMA 1,323 1,323
115 115 Ernest N. Morial Exhibition Hall Special Tax, 4.70%,
7/15/05, MBIA 118 118
515 515 Ernest N. Morial Exhibition Hall Special Tax, 4.90%,
7/15/07, MBIA 533 533
225 225 Gretna, Refunding - Sales Tax Revenue, 5.20%, 6/1/06,
AMBAC 232 232
1,560 1,560 Houma, Utilities Revenue, 6.13%, 1/1/07, Callable 1/1/02
@ 102, FGIC 1,692 1,692
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND / MARQUIS LOUSIANA TAX - FREE
INCOME FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- -------- ---------- --------- -------------------------------------------------------- --------- ---------- ---------
<S><C>
820 820 Housing Finance Agency, Mortgage Revenue, Single Family,
Series B, 6.00%, 6/1/15 857 857
490 490 Housing Finance Agency, Mortgage Revenue, Series D-2,
AMT, 6.10%, 12/1/11, Callable 12/1/06 @ 102 524 524
575 575 Housing Finance Agency, Mortgage Revenue, Single Family
A-1, 5.70%, 6/1/15, Callable 6/1/05 @ 102 595 595
1,185 1,185 Iberia Home Mortgage Authority, Single Family Mortgage
Revenue, 7.38%, 1/1/11, Callable 7/1/03 @ 103 1,288 1,288
250 250 Iberville School District #5, 5.75%, 10/1/03, FSA 269 269
250 250 Jefferson Parish, Ad Valorem Property Tax, GO, Series A,
5.25%, 9/1/05, FGIC 264 264
400 400 Jefferson Parish, Construction Waterworks, Revenue,
District #2, 7.25%, 1/15/00, Callable 1/15/98 @ 100, 407 407
1,680 1,680 Jefferson Parish, Drain Sales Tax Revenue, 6.50%,
11/1/06, Callable 11/1/01 @ 100, AMBAC 1,822 1,822
290 290 Jefferson Parish, Home Mortgage Authority, Single Family
Mortgage Revenue, Sub-Series B, 4.50%, 6/1/13, Callable
12/1/03 @ 102 293 293
300 300 Jefferson Parish, Hospital Services, District #1, 5.10%,
1/1/05, FGIC 313 313
100 100 Jefferson Parish, Hospital Services, District #1, 5.30%,
12/1/07, FGIC 105 105
130 130 Jefferson Parish, Sales & Use Tax Revenue, 5.00%, 2/1/08,
AMBAC 134 134
700 700 Jefferson Parish, Sales & Use Tax Revenue, 5.00%, 2/1/13,
AMBAC 704 704
500 500 Jefferson Parish, School Board Sales & Use Tax Revenue,
6.05%, 2/1/02, MBIA 537 537
1,100 1,100 Jefferson Parish, School Board Sales & Use Tax Revenue,
6.15%, 2/1/03, Callable 2/1/02 @ 102, MBIA 1,200 1,200
300 5,760 6,060 Jefferson Parish, School Board Sales & Use Tax Revenue,
6.25%, 2/1/08, MBIA 327 6,279 6,606
4,670 4,670 Jefferson, Sales Tax District Special, Tax Revenue,
Series A, 6.75%, 12/1/06, Callable 12/1/02 @ 100, FGIC 5,176 5,176
100 755 855 Kenner, Sales Tax Revenue, 5.75%, 6/1/06, Callable 6/1/02
@103, FGIC 108 813 921
1,525 1,525 La Fourche Parish, School District # 1 Parish Wide, GO,
5.00%, 2/1/13, Callable 2/1/08 @ 100, FSA 1,536 1,536
1,000 1,000 Lafayette Parish, GO, 7.80%, 3/1/01, Callable 3/1/98
@ 102, FGIC 1,026 1,026
505 505 Lafayette Parish, Public Improvement Sales Tax Revenue,
Series A, 4.90%, 3/1/03, FGIC 520 520
300 300 Lafayette Parish, Public Improvement Sales Tax Revenue,
4.63%, 5/1/05, FGIC 305 305
200 200 Lafayette Parish, Public Improvement Sales Tax Revenue,
5.50%, 3/1/07, FGIC 212 212
250 250 Lafayette Parish, Public Power Authority, 5.00%, 11/1/06,
AMBAC 259 259
510 510 Lafayette Parish, Public Power Authority, 5.30%, 11/01/07,
AMBAC 531 531
250 250 Lafayette Parish, Public Power Authority, 5.25%, 11/1/09,
AMBAC 259 259
575 575 Lafayette Parish, School Board Sales Tax Revenue, 4.88%,
4/1/04, FSA 592 592
275 275 Lafayette Parish, Utilities Revenue, 4.10%, 11/1/99, AMBAC 276 276
125 125 Lafayette Parish, Utilities Revenue, 4.70%, 11/1/04, AMBAC 128 128
750 750 Lafourche Parish, Hospital Service, District #3, Hospital
Revenue, 5.50%, 10/1/04, Callable 10/1/03 @ 102 784 784
650 650 Lafourche Parish, Water District #1, Water Revenue, 5.63%,
1/1/01 676 676
500 500 Lincoln Parish, School District #1, GO, Ruston, 6.20%,
3/1/03, Callable 3/1/01 @ 100, MBIA 530 530
1,465 1,465 Lincoln Parish, School District #1, GO, Ruston, 6.40%,
3/1/05, Callable 3/1/01 @ 100, MBIA 1,562 1,562
150 150 Louisiana State University Agricultural & Mechanical
College, 5.40%, 7/1/05, FGIC 159 159
250 250 Louisiana State University Agricultural & Mechanical
College, 5.50%, 7/1/06, FGIC 268 268
580 1,000 1,580 Louisiana State University Agricultural & Mechanical
College, 6.00%, 7/1/07, Callable 7/1/06 @ 102, MBIA 650 1,121 1,771
500 500 Louisiana State University Agricultural & Mechanical
College, 5.75%, 7/1/14, FGIC 531 531
1,120 1,120 Louisiana State University Agricultural & Mechanical
College, University Revenues, 5.50%, 7/1/13,
Callable 7/1/06 @ 102, MBIA 1,182 1,182
100 100 Mandeville Water Utility Improvements, Ad Valorem
Property Tax, 5.15%, 2/1/10 102 102
1,220 1,220 Monroe Parish, Special School District, GO, 8.00%,
3/1/01, MBIA 1,363 1,363
1,300 1,300 Monroe Parish, Special School District, GO, 7.00%,
3/1/02, MBIA 1,442 1,442
1,390 1,390 Monroe Parish, Special School District, GO, 7.00%,
3/1/03, MBIA 1,570 1,570
1,230 1,230 Monroe Parish, Special School District, GO, 5.35%,
3/1/05, FGIC 1,309 1,309
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND / MARQUIS LOUSIANA TAX - FREE
INCOME FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- -------- --------- --------- --------------------------------------------------------- --------- ---------- ---------
<S><C>
1,320 1,320 Monroe Parish, Special School District, GO, 5.35%,
3/1/06, Callable 3/1/05 @ 100, FGIC 1,400 1,400
500 500 Monroe Parish, Special School District, GO, 5.35%,
3/1/09, Callable 3/1/05 @ 100, FGIC 523 523
190 190 Natchitoches Parish, School District #7, GO, 4.90%,
3/1/07, FSA 194 194
1,000 1,000 New Orleans Audubon Park, Revenue, 5.00%, 4/1/12,
Callable 4/1/07@ 101, MBIA 1,004 1,004
350 350 New Orleans GO, 5.85%, 11/1/09, Callable 11/1/05 @ 100,
FGIC 378 378
500 500 New Orleans Home Mortgage Special Obligation, 6.25%,
1/15/11 562 562
1,215 1,215 New Orleans Sewer Service Revenue, 6.25%, 6/1/07, FGIC 1,383 1,383
1,000 1,000 New Orleans Sewer Service Revenue, 5.25%, 6/1/11,
Callable 6/1/07 @ 101, FGIC 1,038 1,038
1,000 1,000 New Orleans, GO, 5.88%, 10/1/11, Callable 10/1/05 @ 101,
AMBAC 1,090 1,090
3,250 3,250 New Orleans, GO, 0.00%, 9/1/17, AMBAC 1,200 1,200
550 550 New Orleans, GO, Public Improvement, Revenue, 5.85%,
11/1/07, Callable 11/1/05 @ 100, FGIC 599 599
1,235 1,235 New Orleans, GO, Public Improvement, Series A, 5.00%,
12/01/13, Callable 12/1/07 @ 100, AMBAC 1,238 1,238
250 250 Orleans Parish School Board, Public School Capital
Refinancing, 5.00%, 12/1/05, MBIA 261 261
555 555 Orleans Parish School Board, Revenue Bond, Public School
Capital Refinancing, 6.00%, 6/1/09, MBIA 627 627
250 250 Orleans Parish School District, GO, 5.30%, 9/1/10, MBIA 259 259
1,000 1,000 Orleans Parish School District, GO, 5.13%, 9/1/13,
Callable 3/1/08 @ 100, MBIA 1,016 1,016
1,000 1,000 Ouachita Parish Hospital Service District #1, Glenwood
Regional Medical Center, 5.70%, 05/15/16, Callable
5/15/10 @ 100, FSA 1,066 1,066
2,525 2,525 Ouachita Parish Hospital Service District #1, Glenwood
Regional Medical Center, Health Care Revenue, 7.50%,
7/1/06, Callable 7/1/01 102 2,839 2,839
1,655 1,655 Ouachita Parish West School District, Series A, GO, 6.70%,
3/1/06, Callable 3/1/01 @ 102, FSA 1,811 1,811
2,000 2,000 Ouachita Parish West School District, Series A, Revenue,
6.50%, 3/1/03, Callable 3/1/01 @ 102, FSA 2,177 2,177
420 420 Plaquemine Parish, Sales & Use Tax, 6.70%, 12/1/08,
Callable 12/1/01 @ 102 457 457
410 410 Plaquemine Parish, Sales & Use Tax, 6.70%, 12/1/09,
Callable 12/1/01 @ 102 446 446
1,440 1,440 Plaquemines Parish, GO, 6.40%, 8/1/04, Callable 8/1/01
@ 102, AMBAC 1,570 1,570
605 605 Plaquemines Parish, School Board, Sales & Use Tax, 6.65%,
3/1/05, Callable 3/1/02 @ 102 667 667
2,180 2,180 Public Facilities Authority Revenue, Alton Ochsner Medical
Foundation, Series A, 6.30%, 5/15/04, Callable 5/15/02 @
102, MBIA 2,388 2,388
100 100 Public Facilities Authority Revenue, Alton Ochsner Medical
Foundation Project, Series A, 6.00%, 5/15/01, MBIA 106 106
100 100 Public Facilities Authority Revenue, Alton Ochsner Medical
Foundation, Series PJ-B, 6.00%, 5/15/17, MBIA 105 105
1,000 1,000 Public Facilities Authority Revenue, Alton Ochsner Medical
Project, Series B, 5.75%, 5/15/11, Callable 5/15/02 @ 100,
MBIA 1,048 1,048
500 500 Public Facilities Authority Revenue, Department of Public
Safety,
Department of Public Safety, 4.90%, 8/1/04, AMBAC 514 514
400 400 Public Facilities Authority Revenue, Department of Public
Safety,
5.00%, 8/1/05, AMBAC 414 414
1,000 1,000 Public Facilities Authority Revenue, Indexed Caps, 5.88%,
2/15/11, Callable 2/15/03 @ 102, FGIC 1,071 1,071
250 250 Public Facilities Authority Revenue, Jefferson Parish,
Eastbank Project, 4.85%, 8/1/06, FGIC 257 257
1,000 1,000 Public Facilities Authority Revenue, Lafayette General
Medical Center Project, Hospital Revenue,
6.05%, 10/1/04, Callable 10/1/02 @102, FSA 1,089 1,089
1,960 1,960 Public Facilities Authority Revenue, Loyola University
Project, 6.60%, 4/1/05, Callable 04/01/02 @ 102 2,164 2,164
1,000 1,000 Public Facilities Authority Revenue, Loyola University
Project, 4.90%,10/1/05, MBIA 1,035 1,035
2,525 2,525 Public Facilities Authority Revenue, Loyola University
Project, 5.63%, 10/1/10, Callable 10/1/07 @ 102, MBIA 2,749 2,749
500 500 Public Facilities Authority Revenue, Loyola University
Project, Series A, 7.20%, 10/1/00, Callable 10/1/99 @ 102 537 537
1,135 1,135 Public Facilities Authority Revenue, Mary Bird Perkins
Cancer Center, 5.50%, 1/1/04, FSA 1,206 1,206
5,000 5,000 Public Facilities Authority Revenue, Multi-Family,
Series A, 0.00%, 2/1/20, ETM 1,553 1,553
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND / MARQUIS LOUSIANA TAX - FREE
INCOME FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- -------- --------- --------- --------------------------------------------------------- --------- ---------- ---------
<S><C>
390 390 Public Facilities Authority Revenue, Our Lady of Lake
Regional Center, 5.90%, 12/1/06, MBIA 416 416
500 500 Public Facilities Authority Revenue, Our Lady of Lake
Regional Center, Series C, Health Care Revenue, 5.70%,
12/1/04, Callable 12/1/01 @ 102, MBIA 532 532
7,500 7,500 Public Facilities Authority Revenue, Series B, 0.00%,
12/1/19, ETM 2,350 2,350
110 110 Public Facilities Authority Revenue, Sisters of Mercy,
7.38%, 6/1/09, Callable 6/1/99 @ 102 117 117
120 120 Public Facilities Authority Revenue, Special Insurance
Assessment, 4.40%, 10/1/00 121 121
2,145 2,145 Public Facilities Authority Revenue, Tulane University,
6.25%, 7/15/06, Callable 7/15/01 @ 102 2,316 2,316
735 735 Public Facilities Authority Revenue, Tulane University,
5.55%, 10/1/07, Callable 10/1/06 @ 102, AMBAC 800 800
1,605 1,605 Public Facilities Authority Revenue, Tulane University,
5.75%, 10/1/09, Callable 10/1/06 @ 102, AMBAC 1,767 1,767
300 300 Public Facilities Authority Revenue, Tulane University,
Series A, 7.50%, 5/15/00, Callable 5/15/98 @ 102 310 310
225 225 Public Facilities Authority Revenue, Tulane University,
Series A-1, 5.80%, 2/15/04, Callable 2/15/03 @ 102, FGIC 243 243
500 500 Public Facilities Authority Revenue, Womens Hospital
Foundation, Health Care Revenue, 6.00%, 10/01/10, FSA 567 567
2,000 2,000 Public Facilities Authority Revenue, Xavier University,
5.13%, 9/1/12, Callable 9/1/07 @ 102, MBIA 2,051 2,051
1,500 1,500 Public Facilities Authority, Series A-1, 5.00%, 12/1/15,
AMBAC 1,527 1,527
1,235 1,235 Public Facilities Authority, Womans Hospital Foundation,
Health Care Revenue, 6.85%, 10/1/05, Callable 10/1/02
@ 102 1,390 1,390
730 730 Public Facilities Authority, Womans Hospital Foundation,
Health Care Revenue, 5.40%, 10/1/05, Callable 10/1/04
@ 102, FGIC 776 776
1,715 1,715 Public Facilities Authority, Womans Hospital Foundation,
Health Care Revenue, 5.50%, 10/1/06, Callable 10/1/04
@ 102, FGIC 1,840 1,840
250 250 Public Facitilies Authority Revenue, Series A, 5.10%,
3/1/01, FSA 258 258
1,475 1,475 Rapides Parish School District #11, Rigolette-Series1990,
GO, 6.95%, 02/01/02, Callable 2/1/00 @ 100, FGIC 1,559 1,559
500 500 Rapides Parish, Consolidated School District #62, GO,
7.25%, 4/1/00, Callable 4/1/99 @ 100, MBIA 521 521
200 200 Shreveport, Public Improvements, Ad Valorem Property
Tax, 4.75%, 12/1/09 200 200
480 480 Shreveport, GO, 6.20%, 3/1/02, Callable 3/1/01 @ 100,
AMBAC 509 509
500 500 Shreveport, GO, 6.70%, 2/1/03, Callable 2/1/00 @ 100,
AMBAC 527 527
480 480 Shreveport, GO, 5.90%, 2/1/07, Callable 2/1/03 @ 100 511 511
265 265 Shreveport, GO, 5.15%, 2/1/09, AMBAC 273 273
930 930 Shreveport, Water & Sewer Revenue, Series A, 7.75%,
12/1/02, FGIC
FGIC 1,078 1,078
500 500 Shreveport, Water & Sewer Revenue, Series A, 6.25%,
12/1/03, FGIC 553 553
200 200 Slidell, GO, 4.90%, 3/1/09, MBIA 204 204
400 400 Slidell, GO, 5.00%, 3/1/13, MBIA 402 402
100 100 Slidell, Sales & Use Tax Revenue, Public Improvement,
Series B, 5.20%, 10/1/05 105 105
200 200 Slidell, Sales & Use Tax Revenue, Public Improvement,
Series B, 5.40%, 10/1/07 211 211
1,000 1,000 South Port Community, Port Revenue, Cargill, Inc. Project,
5.85%, 4/1/17, Callable 4/1/97 @ 102 1,056 1,056
200 200 St. Bernard Parish, School Board Refunding, GO, 4.55%,
5/1/06, Callable 5/1/05 @ 100, MBIA 202 202
200 200 St. Bernard Parish, School Board Refunding, GO, 4.60%,
5/1/07, Callable 5/1/05 @100, MBIA 202 202
200 200 St. Bernard Parish, School Board Refunding, GO, 4.70%,
5/1/08, Callable 5/1/05 @100, MBIA 202 202
200 200 St. Bernard Parish, School Board Refunding, GO, 4.80%,
5/1/09, Callable 5/1/05 @100, MBIA 202 202
200 200 St. Bernard Parish, School Board Refunding, 4.90%,
5/1/10, Callable 5/1/05 @100, MBIA 202 202
500 500 St. Charles Parish, Public Improvement Sales Tax,
Series St-96, 5.00%, 12/1/06, Callable 11/1/05 @101, MBIA 522 522
750 750 St. Charles Parish, Public Improvements Sales Tax, 6.60%,
11/1/07, Callable 11/1/99 @ 102 795 795
2,350 2,350 St. Charles Parish, School District #1, GO, 6.45%, 3/1/06,
Callable 3/1/02 @ 100, AMBAC 2,543 2,543
85 85 St. James Parish, GO, Ad Valorem Property Tax, 4.80%,
3/1/05 87 87
75 75 St. James Parish, GO, Ad Valorem Property Tax, 5.20%,
3/1/08 77 77
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND / MARQUIS LOUSIANA TAX - FREE
INCOME FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- -------- --------- --------- --------------------------------------------------------- --------- ---------- ---------
<S><C>
870 870 St. John Baptist Parish, School District #1, GO, 6.25%,
3/1/05, Callable 3/1/02 @ 100, 928 928
250 250 St. Tammany Parish, School Board Sales & Use Tax, 5.75%,
4/1/03, FGIC 268 268
200 200 St. Tammany Parish, School District #12, 6.50%, 3/1/05,
Callable 3/1/01 @100, FGIC 214 214
250 250 St. Tammany Parish, Sales & Use Tax Revenue, 5.75%,
4/1/06, FGIC 267 267
1,815 1,815 St. Tammany Parish, Hospital Service, District #1,
Hospital Revenue, 6.30%, 7/1/07, Callable 7/1/02 @ 102 1,958 1,958
1,000 1,000 St. Tammany Parish, Sales & Use Tax Revenue, District #3,
Series A, 6.50%, 12/1/02, Callable 12/1/99 @ 102, FGIC 1,064 1,064
750 750 St. Tammany Parish, Sales & Use Tax, District #3,
Series A, 6.50%, 12/1/05, Callable 12/1/99 @ 102, FGIC 798 798
400 400 St. Tammany Parish, School District #12, GO, 6.50%,
3/1/04, Callable 3/1/01 @ 100, FGIC 428 428
1,665 1,665 Stadium & Exposition District, Hotel Occupancy, Tax &
Stadium Revenue, 5.65%, 7/1/07, Callable 7/1/04 @ 102,
FGIC 1,805 1,805
500 500 State Energy & Power Authority Revenue, 6.00%, 1/1/13,
FGIC 517 517
2,600 2,600 State Energy & Power Authority, Power Project Revenue,
Rodemacher Unit #2, 6.75%, 1/1/08, Callable 1/1/01
@ 102, FGIC 2,836 2,836
1,500 1,500 State Gas & Fuels Tax Revenue, Series A,, 7.25%,
11/15/04, Callable 11/15/99 @ 102 1,607 1,607
950 950 State GO, Series A, 6.00%, 5/15/99, MBIA 977 977
55 55 State GO, 6.25%, 8/1/99, MBIA 56 56
195 195 State GO, 6.25%, 8/1/99, MBIA 202 202
250 250 State GO, Series A, 6.25%, 8/1/99, MBIA 258 258
1,750 1,750 State GO, Series A, 5.50%, 4/15/02, FGIC 1,841 1,841
2,750 2,750 State GO, 7.10%, 9/1/03, Callable 9/1/00 @ 102, FSA 3,007 3,007
1,000 4,000 5,000 State GO, 6.00%, 8/1/04, FGIC 1,096 4,388 5,484
250 250 State GO, Series A, 6.00%, 8/1/04, FGIC 264 264
500 500 State GO, Series A, 5.50%, 5/15/05, MBIA 535 535
400 400 State GO, 5.38%, 8/1/05, MBIA 425 425
1,000 1,000 State GO, Series A, 6.00%, 5/1/07, Callable 5/1/04 @ 102,
AMBAC 1,098 1,098
750 750 State GO, Series A, 5.60%, 5/15/07, MBIA 813 813
250 250 State GO, 5.60%, 8/1/07, MBIA 271 271
1,000 1,000 State GO, 5.13%, 4/15/08, FGIC 1,043 1,043
250 250 State GO, Series A, 5.70%, 5/15/08, Callable 5/15/05
@ 100, MBIA 271 271
250 250 State GO, 5.60%, 8/1/08, MBIA 274 274
3,000 3,000 State GO, Series A, 6.50%, 4/15/06, FGIC 3,432 3,432
430 430 State GO, Series A, 6.00%, 5/1/08, Callable 5/1/04
@ 102, AMBAC 473 473
2,875 2,875 State GO, Series A, 5.80%, 8/1/10, MBIA 3,203 3,203
500 500 State GO, Series A, 6.10%, 5/1/11, Callable 5/1/04
@ 102, AMBAC 551 551
3,000 3,000 State GO, Series B, 5.63%, 8/1/13, MBIA 3,262 3,262
500 500 State Miscellaneous Taxes Refunding Bond, Series A,
5.70%, 8/1/08 552 552
1,130 1,130 State Mississippi River Bridge Authority Revenue, 6.63%,
11/1/06,
Callable 11/1/02 @ 102 1,262 1,262
500 500 State Offshore Terminal Authority, Deepwater Port
Revenue, 1st Stage, Series B, 6.10%, 9/1/02 534 534
1,325 1,325 State Offshore Terminal Authority, Deepwater Port
Revenue, 1st Stage, Series B, 6.25%, 9/1/04 1,445 1,445
1,435 1,435 Tangipahoa Parish, Consolidated School District #1,
GO, 6.15%,
12/1/07, Callable 12/1/02 @ 100 1,544 1,544
1,250 1,250 Tangipahoa Parish, Hospital Service District #1,
Hospital Revenue, 6.13%, 2/1/14, Callable 2/1/04
@ 102 , AMBAC 1,362 1,362
1,285 1,285 Terrebonne Parish, Hospital Service District #1,
Hospital Revenue, Terrebonne General Medical Center
Project, 7.40%, 4/1/03, Callable 4/1/98 @ 102, BIG 1,322 1,322
690 690 Terrebonne Parish, Waterworks District #1, Water R
evenue, 5.70%, 11/1/06, Callable 11/1/03 @ 102, FGIC 746 746
500 500 Terrebonne Parish, Waterworks District #1, Water
Revenue, 5.75%, 11/1/08, Callable 11/1/03 @ 102, FGIC 539 539
555 555 Vermilion Parish, Hospital Service, District #2,
Health Care Revenue, Series A, 6.35%, 5/1/00, MBIA 584 584
-------- --------- ---------
Total Municipal Bonds 37,543 156,509 194,052
-------- --------- ---------
INVESTMENT COMPANIES (1.8%):
1,722 1,722 SEI Tax Exempt Trust Institutional Tax Free Portfolio 1,722 1,722
1,675 1,675 SEI Tax Exempt Trust Tax Free Portfolio 1,675 1,675
224 224 The One Group Municipal Money Market Fund, Fiduciary
Class 224 224
-------- --------- ---------
Total Investment Companies 3,397 224 3,621
-------- --------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP LOUISIANA MUNICIPAL BOND FUND / MARQUIS LOUSIANA TAX - FREE
INCOME FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- -------- --------- --------- --------------------------------------------------------- --------- ---------- ---------
<S><C>
REPURCHASE AGREEMENTS (0.5%):
1,000 1,000 UBS Securities, 6.50%, 1/2/98 (Collateralized by $1,020
U.S. Government Agency Securities, 0.00%, 3/22/01,
market value $1,023) 1,000 1,000
-------- ---------
Total Repurchase Agreements 1,000 1,000
-------- ---------
Total (Cost $188,048) (a) 41,940 156,733 198,673
-------- --------- ---------
-------- --------- ---------
</TABLE>
- ----------------------
Percentages indicated are based on net assets of $198,229.
(a) Represents cost for financial reporting purposes and
differs from value by net unrealized appreciation of securities
as follows (amounts in thousands) :
<TABLE>
<S> <C>
Unrealized appreciation. . . . . . . . . . . $10,628
Unrealized depreciation. . . . . . . . . . . (3)
Net unrealized appreciation . . . . . . . . $10,625
</TABLE>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP DISCIPLINED VALUE FUND / MARQUIS VALUE EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Proforma
Marquis One Group Combined Proforma
Shares or Shares or Shares or Marquis One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ ----------------------------------------------- ----- ----- -----
<S><C>
COMMON STOCKS (97.3%):
Banking (18.3%):
105 105 Charter One Financial, Inc. 6,631 6,631
139 139 Crestar Financial Corp. 7,923 7,923
77 77 First American Bank Corp. 5,950 5,950
180 180 First Security Corp. 7,538 7,538
111 111 First Tennessee National Corp. (c) 7,376 7,376
79 79 First Virginia Banks, Inc. 4,078 4,078
205 205 Firstar Corp. 8,700 8,700
180 180 Hibernia Corp., Class A 3,386 3,386
12 12 ING Groep N.V. - ADR (c) 520 520
169 169 Marshall & Ilsley Corp. 10,499 10,499
45 45 MBNA Corp. 1,229 1,229
195 195 Mercantile Bancorporation 11,992 11,992
138 138 Mercantile Bankshares Corp. 5,380 5,380
196 196 Old Kent Financial Corp. 7,767 7,767
34 34 PNC Bank Corp. 1,940 1,940
278 278 Provident Co., Inc. 10,738 10,738
168 168 Regions Financial Corp. 7,088 7,088
13 13 SLM Holding Corp. 1,743 1,743
183 183 Southtrust Corp. 11,603 11,603
34 34 State Street Corp. 1,978 1,978
269 269 Summit Bancorp 14,298 14,298
59 59 Union Planters Corp. (c) 4,008 4,008
25 25 Washington Mutual, Inc. 1,595 1,595
-------- -------- --------
1,743 142,217 143,960
-------- -------- --------
Business Equipment & Services (1.7%):
70 70 Enova Corp. 1,897 1,897
60 60 Jacobs Engineering Group, Inc. (b) 1,523 1,523
90 126 216 Office Depot, Inc. (b) 2,145 3,016 5,161
192 192 Olsten Corp. 2,880 2,880
63 63 Stewart Enterprises Corp. 2,937 2,937
-------- -------- --------
4,042 10,356 14,398
-------- -------- --------
Capital Goods (5.5%):
35 35 Aeroquip-Vickers, Inc. 1,712 1,712
38 38 Caterpillar, Inc. 1,855 1,855
22 22 Cummins Engine, Inc. 1,299 1,299
31 31 Deere & Co. 1,808 1,808
55 55 Flowserve Corp. 1,527 1,527
128 128 Harsco Corp. 5,511 5,511
35 35 Hubbell, Inc., Series B 1,726 1,726
36 36 Ingersoll Rand Co. 1,458 1,458
153 153 Mark IV Industries, Inc. 3,336 3,336
143 143 Molex, Inc. 4,588 4,588
42 42 Parker-Hannifin Corp. 1,942 1,942
87 87 Southdown, Inc. 5,133 5,133
84 84 Teleflex, Inc. 3,179 3,179
116 116 Trinity Industries 5,177 5,177
111 111 United State Filter Corp. (b)(c) 3,323 3,323
-------- -------- --------
10,074 33,500 43,574
-------- -------- --------
Consumer Durable (1.3%):
49 67 116 Arvin Industries, Inc. 1,637 2,242 3,879
40 40 Chrysler Corp. 1,400 1,400
41 41 Ford Motor Co. 1,996 1,996
55 55 Lear Corp.(b) 2,613 2,613
-------- -------- --------
5,033 4,854 9,888
-------- -------- --------
Consumer Non-Durable (6.0%):
52 52 Dean Foods Co. 3,094 3,094
49 49 Dexter Corp. 2,108 2,108
125 125 First Brands Corp. 3,367 3,367
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP DISCIPLINED VALUE FUND / MARQUIS VALUE EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Proforma
Marquis One Group Combined Proforma
Shares or Shares or Shares or Marquis One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ ----------------------------------------------- ----- ----- -----
<S><C>
82 82 Hormel Foods Corp. 2,686 2,686
102 102 IBP, Inc. 2,136 2,136
95 95 Intimate Brands, Inc. (c) 2,286 2,286
63 63 Lafarge Corp. 1,862 1,862
98 98 McCormick & Co., Inc. 2,744 2,744
73 73 Newell Co. 3,103 3,103
67 67 Payless Shoesource, Inc. (b) 4,497 4,497
60 60 Premark International, Inc. 1,730 1,730
38 38 Quaker Oats Co. 1,989 1,989
42 42 Russell Corp. 1,116 1,116
44 44 Supervalu, Inc. 1,859 1,859
345 345 Tyson Foods, Inc., Class A (c) 7,072 7,072
44 46 90 Universal Corp. 1,793 1,892 3,685
40 40 V.F. Corp. 1,838 1,838
-------- -------- --------
14,294 32,876 47,171
-------- -------- --------
Consumer Services (4.1%):
130 130 Belo (A.H.) Corp., Series A 7,302 7,302
100 100 Cendant Corp. (b) (c) 3,438 3,438
70 70 Circus Circus Entertainment (b)(c) 1,435 1,435
65 65 Hasbro, Inc. 2,048 2,048
107 107 International Game Technologies 2,702 2,702
46 46 King World Productions, Inc.(b) 2,657 2,657
143 143 MGM Grand, Inc. (b)(c) 5,157 5,157
15 15 Washington Post Co. 7,298 7,298
-------- -------- --------
2,657 29,378 32,035
-------- -------- --------
Energy (5.5%):
36 36 Ashland, Inc. 1,933 1,933
29 29 BJ Services Co. (b)(c) 2,086 2,086
22 22 British Petroleum Co. 1,732 1,732
22 22 Chevron Corp. 1,694 1,694
113 113 Mapco, Inc. 5,236 5,236
21 Mobil Corp. 1,502 1,502
43 43 Murphy Oil Corp. 2,330 2,330
70 Noble Drilling Corp. 2,153 2,153
42 42 Pioneer Natural Resources Co. 1,214 1,214
33 Texaco, Inc. 1,774 1,774
53 53 Tosco Corp. 2,004 2,004
84 129 Transocean Offshore, Inc. (c) 2,187 4,048 6,234
172 172 Ultramar Diamond Shamrock Corp. 5,482 5,482
50 USX-Marathon Group 1,688 1,688
73 Valero Energy Corp. 2,305 2,305
98 Weatherford Enterra, Inc.(b) 4,288 4,288
-------- -------- --------
12,729 30,926 43,655
-------- -------- --------
Financial Services (8.7%):
45 177 222 A.G. Edwards, Inc. 1,789 7,036 8,825
41 41 Ambac Financial Group Inc. 1,886 1,886
29 155 184 BankAmerica Corp. 2,088 7,363 9,450
49 49 Bear Stearns Co., Inc. (c) 2,308 2,308
16 16 Chase Manhattan Corp. 1,733 1,733
15 15 Citicorp 1,833 1,833
36 36 Conseco, Inc. 1,649 1,649
50 50 Equitable, Companies Inc. 2,478 2,478
37 37 Federal National Mortgage Assoc. 2,106 2,106
25 25 First Union Corp. 1,281 1,281
60 60 Gatx Corp. 4,354 4,354
14 14 J.P. Morgan & Co., Inc. 1,524 1,524
80 227 306 Paine Webber Group, Inc. 2,763 7,828 10,592
117 117 PMI Group, Inc. (c) 8,461 8,461
84 84 Reliance Group Holdings, Inc. 1,187 1,187
33 33 Reliastar Financial Corp. 1,359 1,359
65 65 The Money Store, Inc. (c) 1,365 1,365
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP DISCIPLINED VALUE FUND / MARQUIS VALUE EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Proforma
Marquis One Group Combined Proforma
Shares or Shares or Shares or Marquis One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ ----------------------------------------------- ----- ----- -----
<S><C>
50 50 Transatlantic Holdings, Inc. 3,604 3,604
50 50 Travelers Group, Inc. 2,667 2,667
-------- -------- --------
26,105 42,555 68,660
-------- -------- --------
Health Care (4.8%):
87 87 Allegiance Corp. 3,065 3,065
82 82 Apria Healthcare Group, Inc. (b) 1,102 1,102
21 21 ATLI Ultrasound, Inc. (b) 966 966
47 47 Bergen Brunswig Corp. 1,980 1,980
22 22 Cardinal Health, Inc. (c) 1,653 1,653
25 25 Eli Lilly & Co. 1,741 1,741
5 5 Genzyme Corp. (b) 33 33
160 160 Genzyme Corp. (b) (c) 4,440 4,440
40 40 HBO & Co. 1,920 1,920
79 79 McKesson Corp. 8,550 8,550
80 80 Medpartners, Inc. (b)(c) 1,790 1,790
233 233 Mylan Laboratories (c) 4,872 4,872
66 66 St. Jude Medical Center, Inc. (b) 2,013 2,013
62 62 Tenet Healthcare Corp.(b) 2,042 2,042
46 46 Watson Pharmaceuticals, Inc. (b) 1,492 1,492
-------- -------- --------
3,783 33,876 37,659
-------- -------- --------
Raw Materials (5.4%):
91 91 Alumax, Inc.(b) 3,094 3,094
43 43 B. F. Goodrich Co. (c) 1,782 1,782
109 109 Cabot Corp. 3,011 3,011
96 96 Crompton & Knowles Corp. (c) 2,544 2,544
17 17 Dow Chemical Co. 1,756 1,756
174 174 Ferro Corp. 4,219 4,219
23 23 Fuller (H. B.) Co. 1,114 1,114
98 98 Hanna (M.A.) Co. 2,481 2,481
76 76 Ispat International NV (c) 1,644 1,644
42 42 Lubrizol Corp. 1,543 1,543
102 102 Olin Corp. (c) 4,781 4,781
75 75 Schulman, Inc. 1,872 1,872
54 54 Sigma-Aldrich Corp. 2,147 2,147
46 46 USX - U.S. Steel Group, Inc. 1,428 1,428
22 19 41 Vulcan Materials Co. 2,222 1,981 4,203
99 99 Wellman, Inc. 1,931 1,931
72 72 Witco Corp. 2,939 2,939
-------- -------- --------
6,950 35,538 42,488
-------- -------- --------
Retail (4.6%):
62 62 Best Buy, Inc. (b) 2,286 2,286
60 60 CompUSA, Inc. (b) 1,860 1,860
132 132 Cracker Barrel 4,406 4,406
87 73 160 Fingerhut Companies, Inc. 1,865 1,560 3,425
81 81 Fred Meyer, Inc. (b)(c) 2,961 2,961
66 66 Hannaford Brothers Co. 2,863 2,863
70 70 Just For Feet, Inc. (b) 919 919
320 320 Officemax, Inc.(b) 4,560 4,560
96 96 Outback Steakhouse, Inc. (b)(c) 2,760 2,760
72 72 Ross Stores, Inc. 2,619 2,619
33 33 Sbarro, Inc. 863 863
66 66 TJX Co., Inc. 2,270 2,270
50 50 Toys R Us, Inc.(b) 1,572 1,572
138 138 U S Office Products Co. (b)(c) 2,708 2,708
-------- -------- --------
6,754 29,318 36,072
-------- -------- --------
Shelter (2.6%):
59 59 Bowater, Inc. 2,622 2,622
35 35 Centex Corp. 2,207 2,207
207 207 Clayton Homes, Inc. 3,726 3,726
36 36 Fleetwood Enterprises, Inc. 1,528 1,528
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP DISCIPLINED VALUE FUND / MARQUIS VALUE EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Proforma
Marquis One Group Combined Proforma
Shares or Shares or Shares or Marquis One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ ----------------------------------------------- ----- ----- -----
<S><C>
85 85 Kaufman & Broad Home Corp. 1,907 1,907
45 45 Leggett & Platt, Inc. 1,884 1,884
105 105 Pentair, Inc. 3,773 3,773
69 69 Rayonier, Inc. 2,928 2,928
-------- -------- --------
3,734 16,841 20,575
-------- -------- --------
Technology (6.5%):
68 68 American Power Conversion (b) 1,607 1,607
54 54 Applied Materials, Inc.(b) 1,621 1,621
163 163 Arrow Electronics, Inc.(b) 5,294 5,294
87 87 ATMEL Corp. (b) 1,615 1,615
36 36 Avnet, Inc. 2,343 2,343
46 46 Compaq Computer Corp. (b) 2,596 2,596
44 44 Computer Associates International, Inc. 2,309 2,309
310 310 Cypress Semiconductor Corp. (b) 2,635 2,635
19 19 Dell Computer Corp.(b) 1,596 1,596
60 60 EMC Corp.(b) 1,646 1,646
71 71 NCR Corp. (b)(c) 1,975 1,975
41 41 Novellus Systems, Inc. 1,328 1,328
100 100 Orbital Sciences Corp.(b) 2,989 2,989
50 50 Quantum Corp. (b) 998 998
62 62 Sci Systems, Inc. 2,683 2,683
117 117 Storage Technology Corp. (b)(c) 7,247 7,247
17 17 Stratus Computer, Inc.(b) 624 624
50 50 Tech Data Corp. 1,931 1,931
67 67 Teradyne, Inc.(b) 2,144 2,144
21 54 75 Thiokol Corp. 1,739 4,388 6,126
-------- -------- --------
15,204 36,101 51,305
-------- -------- --------
Transportation (2.4%):
44 44 Airborne Freight Corp. 2,704 2,704
17 17 ASA Holdings, Inc. 483 483
24 24 Burlington Northern Santa Fe Corp. 2,231 2,231
137 137 CNF Transportation, Inc. 5,257 5,257
26 26 Federal Express Corp. (b) 1,613 1,613
93 93 Kansas City Southern Industries 2,953 2,953
88 88 Southwest Airlines Co. 2,166 2,166
57 57 Yellow Corp. (b)(c) 1,432 1,432
-------- -------- --------
6,483 12,356 18,839
-------- -------- --------
Utilities (19.9%):
102 102 AES Corp.(b) 4,756 4,756
73 73 AGL Resources 1,500 1,500
307 307 Allegheny Energy, Inc. 9,977 9,977
70 70 American Water Works, Inc. (c) 1,912 1,912
52 52 Baltimore Gas & Electric Co. 1,754 1,754
170 170 Century Telephone Enterprises 8,468 8,468
102 102 Cinergy Corp. 3,908 3,908
253 253 CMS Energy Corp. 11,148 11,148
41 41 Consolidated Edison Co. of New York, Inc. 1,681 1,681
58 58 Duke Power Co., Inc. 3,217 3,217
60 60 Edison International 1,642 1,642
113 113 El Paso Natural Gas Co. 7,515 7,515
23 23 Florida Power & Light Group, Inc. 1,361 1,361
53 53 Florida Progress Corp. 2,080 2,080
40 85 125 General Public Utilities Corp. 1,685 3,581 5,266
207 207 L G & E Energy Corp. (c) 5,118 5,118
148 148 LCI International, Inc. (b)(c) 4,551 4,551
139 139 MCN Energy Group, Inc. (c) 5,612 5,612
200 200 Montana Power Co. 6,356 6,356
37 101 138 National Fuel Gas Co. 1,801 4,917 6,719
236 236 New Century Energies, Inc. 11,291 11,291
24 55 79 New England Electric Systems 1,039 2,351 3,390
201 201 New York State Electric & Gas Corp. 7,136 7,136
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP DISCIPLINED VALUE FUND / MARQUIS VALUE EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Proforma
Marquis One Group Combined Proforma
Shares or Shares or Shares or Marquis One Group Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Security Description Value Value Value
------ ------ ------ ----------------------------------------------- ----- ----- -----
<S><C>
176 176 Nextel Communications, Inc., Class A (b) 4,563 4,563
49 NICOR, Inc. 2,071 2,071
103 103 Nipsco Industries, Inc. 5,092 5,092
27 Peoples Energy Corp. 1,043 1,043
199 199 Pinnacle West Capital Corp. 8,416 8,416
66 66 Potomiac Electric Power Co. 1,704 1,704
57 PP&L Resources, Inc. 1,364 1,364
74 74 Questar Corp. 3,302 3,302
84 84 Scana Corp. 2,515 2,515
75 Southern Co. 1,928 1,928
296 296 Teco Energy, Inc. 8,325 8,325
-------- -------- --------
17,583 139,097 156,681
-------- -------- --------
Total Common Stocks 137,168 629,791 766,959
-------- -------- --------
INVESTMENT COMPANIES (0.5%)
3,730 3,730 SEI Liquid Asset Trust Government Portfolio 3,730 3,730
-------- --------
Total Investment Companies 3,730 3,730
-------- --------
REPURCHASE AGREEMENT (3.4%):
15,355 15,355 Prudential Securities, 6.80%, 1/2/98 (Collateralized
U.S. Treasury Notes , 6.25%, 1/31/02, market value -
$15,663) 15,355 15,355
1,380 1,380 UBS Securities, 6.50%, 1/2/98 (Collaretalized
by $7,080 U.S. Treasury Strips, 0.00%, 11/15/24,
market value - $1,408) 1,380 1,380
-------- -------- --------
Total Repurchase Agreements 1,380 15,355 16,735
-------- -------- --------
Total (Cost $608,093) (a) 142,279 645,146 787,426
-------- -------- --------
-------- -------- --------
</TABLE>
- ------------------
Percentages indicated are based on net assets of $788,124.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . . . . . . $188,810
Unrealized depreciation . . . . . . . . (9,478)
Net unrealized appreciation . . . . . . $179,332
</TABLE>
(b) Non-income producing securities.
(c) With respect to the One Group fund only, a portion of this security was
loaned as of December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GROWTH OPPORTUNITIES FUND / MARQUIS GROWTH EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- --------- -------- ---------- --------------------------------------------------- --------- --------- ---------
<S><C>
COMMON STOCKS (94.7%):
Business Equipment & Services (13.1%):
166 166 America Online, Inc. (b) (c) 14,796 14,796
170 170 Cintas Corp. 6,646 6,646
62 62 Corrections Corporation of America (b) (c) 2,298 2,298
7 7 Equifax, Inc. 241 241
101 101 Fiserv, Inc. (b) (c) 4,971 4,971
9 96 105 Herman Miller, Inc. 507 5,211 5,718
143 143 Manpower, Inc. 5,055 5,055
7 283 290 Omnicom Group, Inc. 314 11,984 12,298
255 255 Paychex, Inc. (c) 12,918 12,918
4 4 Pitney Bowes, Inc. 333 333
67 67 Pittston Co. 2,681 2,681
214 214 Reynolds & Reynolds Co. 3,940 3,940
4 392 396 Staples, Inc. (b) (c) 101 10,874 10,975
147 147 Sterling Commerce, Inc. (b) 5,667 5,667
19 19 Stewart Enterprises, Inc. 891 891
255 255 Sungard Data Systems, Inc. (b) (c) 7,896 7,896
402 402 U.S.A. Waste Services, Inc. (b) (c) 15,790 15,790
76 76 Viad Corp. 1,475 1,475
19 19 Viking Office Products (b) 412 412
81 81 Wallace Computer Services 3,153 3,153
---------- --------- ---------
1,496 116,658 118,154
---------- --------- ---------
Capital Goods (3.4%):
4 4 Aeroquip-Vickers, Inc. 217 217
70 70 Catellus Development Corp. (b) 1,400 1,400
4 108 112 Diebold, Inc. 217 5,446 5,663
4 6 10 Dover Corp. 154 223 377
95 95 Fastenal Co. (c) 3,618 3,618
76 76 Federal Signal Corp. 1,648 1,648
6 6 General Electric Co. 455 455
5 97 102 Hubbell, Inc., Class B 223 4,803 5,026
4 4 Illinois Tool Works, Inc. 252 252
7 7 Iomega Corp. 83 83
4 4 Kemet Corp. 84 84
7 7 Molex, Inc. 227 227
57 57 Precision Castparts Co. 3,450 3,450
3 3 Stanley Works 164 164
5 129 134 Sundstrand Corp. 265 6,478 6,743
4 4 Tyco International Ltd. 194 194
41 41 United States Filter Corp. (b) (c) 1,230 1,230
3 3 United Technologies Corp. 206 206
---------- --------- ---------
2,741 28,296 31,037
---------- --------- ---------
Consumer Durable (2.0%):
111 111 Danaher Corp. (c) 6,998 6,998
8 58 66 Federal Mogul Corp. (c) 327 2,341 2,668
3 283 286 Harley-Davidson, Inc. (c) 95 7,758 7,853
22 22 OEA, Inc. 624 624
---------- --------- ---------
422 17,721 18,143
---------- --------- ---------
Consumer Non-Durable (8.6%):
52 52 Beringer Wine Estates, Series B (b) (c) 1,957 1,957
2 2 Brown-Forman Corp., Class B 105 105
8 8 Campbell Soup Co. 491 491
2 2 Clorox Co. 158 158
4 690 694 Coca-Cola Enterprises (c) 126 24,524 24,650
5 5 Colgate Palmolive Co. 337 337
8 8 ConAgra Inc. 251 251
143 143 Dial Corp. 2,966 2,966
94 94 Dole Food, Inc. (c) 4,310 4,310
5 194 199 Flowers Industries, Inc. 105 3,993 4,098
10 129 139 General Nutrition Cos. (b) 356 4,389 4,745
6 6 H. J. Heinz Co. 299 299
5 5 Hershey Foods Corp. 290 290
3 3 Interpublic Group of Cos. Inc. 142 142
7 449 456 Interstate Bakeries Co. (c) 260 16,763 17,023
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GROWTH OPPORTUNITIES FUND / MARQUIS GROWTH EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- --------- -------- ---------- --------------------------------------------------- --------- --------- ---------
<S><C>
8 133 141 Jones Apparel Group, Inc. (b) 344 5,708 6,052
3 3 Kellogg Co. 169 169
41 41 Lancaster Colony Corp. 2,328 2,328
28 28 Nautica Enterprises, Inc. (b) 651 651
2 2 Newell Co. 85 85
3 3 Panamerican Beverage, Inc., Class A 112 112
4 4 PepsiCo., Inc. 151 151
3 3 Pioneer Hi-Bred International, Inc. 323 323
5 5 Quaker Oats Co. 274 274
2 2 Sysco Corp. 105 105
14 14 Tommy Hilfiger Corp. (b) 492 492
95 95 Unifi, Inc. 3,877 3,877
3 3 Wrigley (WM.) Junior Co. 265 265
---------- --------- ---------
4,748 71,958 76,706
---------- --------- ---------
Consumer Services (1.9%):
8 165 173 Callaway Golf Co. (c) 214 4,711 4,925
5 5 Carnival Corp., Class A 277 277
4 4 Gannett, Inc. 225 225
4 255 259 International Game Technologies 105 6,446 6,551
5 5 Marriott International, Inc. 346 346
3 3 McGraw Hill, Inc. 253 253
13 13 Meredith Corp. 471 471
5 45 50 Promus Hotel Corp. (b) 223 1,873 2,096
38 38 TCA Cable TV, Inc. 1,748 1,748
4 4 Time Warner, Inc. 221 221
3 3 Tribune Co. 156 156
1 1 Walt Disney Co. 142 142
---------- --------- ---------
2,633 14,778 17,411
---------- --------- ---------
Energy (7.2%):
2 2 BJ Services Co.(b) 163 163
9 252 261 Ensco International, Inc. (c) 293 8,435 8,728
5 5 Falcon Drilling Company, Inc. 187 187
317 317 Global Marine, Inc. (b) 7,774 7,774
9 9 Halliburton Co. 442 442
1 1 Houston Exploration Co. (b) 11 11
385 385 Intelect Communications, Inc. (b) (c) 1,971 1,971
12 12 Marine Drilling Company, Inc. 252 252
5 292 297 Nabors Industries, Inc. (b) (c) 152 9,188 9,340
11 11 Newfield Exploration Co. 261 261
232 232 Noble Drilling Corp. (b) (c) 7,102 7,102
8 8 Phillips Petroleum Co. 389 389
5 5 Schlumberger Ltd. 419 419
2 121 123 Smith International, Inc. (b) (c) 125 7,445 7,570
104 104 Tidewater, Inc. 5,739 5,739
278 278 Tosco Corp. (c) 10,527 10,527
6 6 Transocean Offshore, Inc. 291 291
116 116 Varco International, Inc. (b) 2,491 2,491
15 15 Weatherford Enterra, Inc. (b) 670 670
---------- --------- ---------
2,585 61,742 64,327
---------- --------- ---------
Financial Services (13.4%):
274 274 AFLAC, Inc. 13,990 13,990
3 3 Alliance Capital Management L.P. 105 105
3 3 American Express Co. 227 227
2 2 American International Group, Inc. 246 246
20 20 Associated Bancorp 1,102 1,102
152 152 Capital One Financial Corp. 8,247 8,247
2 2 Charles Schwab Corp. 97 97
86 86 Charter One Financial, Inc. 5,415 5,415
82 82 City National Corp. 3,029 3,029
73 73 ESG Re Ltd. 1,704 1,704
2 2 Federal National Mortgage Assoc. 105 105
1 1 Fifth Third Bancorp 103 103
39 39 First America Bank Corp. 2,985 2,985
97 97 First Security Corp. 4,058 4,058
1 10 11 First Tennessee National Corp. 99 667 766
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GROWTH OPPORTUNITIES FUND / MARQUIS GROWTH EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- --------- -------- ---------- --------------------------------------------------- --------- --------- ---------
<S><C>
24 24 Firstar Corp. 1,023 1,023
7 258 265 Franklin Resources, Inc. 587 22,447 23,034
16 16 Green Tree Financial Corp. (c) 406 406
20 20 Marshall & Ilsley Corp. 1,242 1,242
38 38 Mercantile Bancorporation 2,306 2,306
5 27 32 MGIC Investment Corp. 306 1,765 2,071
1 262 263 Northern Trust Corp. 102 18,254 18,356
47 47 Old Republic International Corp. 1,759 1,759
6 120 126 Price (T. Rowe) Associates 351 7,529 7,880
9 119 128 Robert Half International, Inc. (b) 358 4,768 5,126
3 3 SLM Holding Corp. 356 356
4 4 Star Banc Corp. 250 250
2 2 State Street Corp. 121 121
5 5 Summit Bancorp 266 266
4 42 46 SunAmerica, Inc. 163 1,779 1,942
8 8 Synovus Financial Corp. 259 259
176 176 TCF Financial Corp. 5,987 5,987
29 29 Union Planters Corp. 1,957 1,957
52 52 Wilmington Trust Corp. 3,243 3,243
---------- --------- ---------
3,835 115,928 119,763
---------- --------- ---------
Health Care (8.9%):
15 15 Biogen, Inc. (b) 5,595 5,595
4 18 22 Biomet, Inc. 103 461 564
4 4 Bristol Myers Squibb Co. 416 416
1 1 Cardinal Health, Inc. (c) 91 91
8 151 159 Centocor, Inc. (b) 256 5,027 5,283
311 311 Chiron Corp. (b) (c) 5,287 5,287
116 116 Dentsply International, Inc. 3,544 3,544
143 143 Foundation Health Systems, Series A (b) (c) 3,188 3,188
4 4 Guidant Corp. 269 269
6 6 HBO & Co. 288 288
88 88 Health Care & Retirement Corp. (b) 3,538 3,538
5 293 298 Health Management Associates, Inc. (b) 115 7,405 7,520
80 80 Healthcare Compare Corp. (b) 4,112 4,112
3 26 29 Healthsouth Corp. (b) (c) 97 717 814
105 105 Hillenbrand Industries, Inc. 5,349 5,349
14 14 Integrated Health Services 430 430
5 5 Johnson & Johnson 329 329
8 8 Lilly Eli And Co. 522 522
17 17 Medtronic, Inc. 868 868
4 4 Merck & Co., Inc. 461 461
175 175 Omnicare, Inc. (c) 5,422 5,422
97 97 Oxford Health Plans, Inc. (b) 1,515 1,515
4 4 Pharmacia & Upjohn, Inc. 139 139
95 95 Quorum Health Group, Inc. (b) 2,482 2,482
40 40 R. P. Scherer Corp. (b) 2,440 2,440
8 8 Schering Plough Corp. 510 510
2 2 Shared Medical Systems Corp. 129 129
183 183 Stryker Corp. (c) 6,832 6,832
4 98 102 Sybron International Corp. - Wisconsin (b) (c) 170 4,576 4,746
12 12 United Healthcare Corp. 593 593
50 50 Vencor, Inc. (b) 1,222 1,222
3 3 Warner Lambert Co. 335 335
141 141 Watson Pharmaceutical, Inc. (b) 4,580 4,580
---------- --------- ---------
4,230 75,183 79,413
---------- --------- ---------
Multi-Industry (0.6%):
40 40 Trammell Crow Co. 1,030 1,030
226 226 United Rentals, Inc. (b) (c) 4,365 4,365
--------- ---------
5,395 5,395
--------- ---------
Raw Materials (2.4%):
52 52 Betzdearborn, Inc. 3,187 3,187
76 76 Crompton & Knowles Corp. 2,025 2,025
57 57 Cytec Industries, Inc. (b) 2,694 2,694
6 6 Dupont (EI) de Nemours & Co. 360 360
85 85 IMC Global, Inc. (c) 2,784 2,784
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GROWTH OPPORTUNITIES FUND / MARQUIS GROWTH EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- --------- -------- ---------- --------------------------------------------------- --------- --------- ---------
<S><C>
103 103 Ispat International N.V.-New York (c) 2,232 2,232
126 126 Lyondell Petrochemical 3,347 3,347
3 3 Praxair, Inc. 124 124
95 95 Solutia, Inc. 2,535 2,535
58 58 Witco Corp. 2,359 2,359
---------- --------- ---------
484 21,163 21,647
---------- --------- ---------
Retail (10.7%):
3 58 61 Barnes & Noble, Inc. (b) 102 1,929 2,031
4 94 98 Bed Bath & Beyond, Inc. (b) (c) 171 3,634 3,805
180 180 Claire's Stores, Inc. 3,507 3,507
7 234 241 CompUSA, Inc. (b) 229 7,246 7,475
164 164 Consolidated Stores Co. (b) 7,194 7,194
2 2 Dayton Hudson Corp. 166 166
4 295 299 Dollar General Corp. 157 10,697 10,854
4 4 Dollar Tree Stores, Inc. 154 154
3 278 281 Family Dollar Stores, Inc. 99 8,159 8,258
7 7 Gap, Inc. 264 264
2 2 Hollywood Entertainment Corp. (b) (c) 170 170
3 17 20 Home Depot, Inc. 176 971 1,147
1,447 1,447 Just For Feet, Inc. (b) (c) 18,992 18,992
4 15 19 Kohl's Corp. (b) (c) 275 10,478 10,753
7 7 Kroger Co. 266 266
60 60 Lands End, Inc. (b) 2,104 2,104
87 87 Mac Frugal's Bargains (b) 3,574 3,574
57 57 Outback Steakhouse, Inc. (b) 1,647 1,647
4 4 Quality Centers 245 245
5 5 Ross Stores, Inc. 171 171
10 10 Servicemaster Co. 296 296
301 301 Starbucks Corp. (b) 11,543 11,543
2 2 Tandy Corp. 87 87
25 25 Tiffany & Co. (c) 902 902
10 10 TJX Co., Inc. 344 344
2 2 Wal-Mart Stores, Inc. 98 98
8 8 Walgreen Co. 259 259
---------- --------- ---------
3,559 92,747 96,306
---------- --------- ---------
Shelter (2.1%):
3 55 58 Hon Industries, Inc. 166 3,216 3,382
170 170 Leggett & Platt, Inc. 7,136 7,136
3 81 84 Sealed Air Corp. (b) (c) 191 4,977 5,168
168 168 Sunstone Hotel Investors, Inc. 2,901 2,901
---------- --------- ---------
357 18,230 18,587
---------- --------- ---------
Technology (16.2%):
7 7 3Com Corp. (b) 252 252
5 18 23 Adaptec, Inc. (b) 197 668 865
7 235 242 ADC Telecommunications, Inc. (b) 276 9,824 10,100
5 5 Adobe Systems, Inc. 209 209
151 151 Altera Corp. (b) (c) 5,005 5,005
3 220 223 American Power Conversion (b) 73 5,205 5,278
4 4 Amphenol Corp. Class A 224 224
301 301 Analog Devices, Inc. (b) (c) 8,329 8,329
5 5 Applied Materials, Inc. (b) 159 159
11 11 Ascend Communications, Inc. (b) 270 270
34 34 ATMEL Corp. (b) 633 633
5 5 Auto Desk, Inc. 200 200
3 3 Bay Networks, Inc. (b) 85 85
7 219 226 BMC Software, Inc. (b) 471 14,385 14,856
379 379 Cadence Design Systems, Inc. (b) 9,278 9,278
2 8 10 Cisco Systems, Inc. (b) 93 418 511
7 7 Cognex Corp. 178 178
8 8 Compaq Computer Corp. 452 452
5 5 Computer Associates International, Inc. 268 268
381 381 Compuware Corp. (b) 12,192 12,192
6 6 Cooper Cameron Corp. 357 357
6 6 Creative Technology Limited 126 126
4 154 158 Dell Computer Corp. (b) 345 12,902 13,247
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GROWTH OPPORTUNITIES FUND / MARQUIS GROWTH EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- --------- -------- ---------- --------------------------------------------------- --------- --------- ---------
<S><C>
7 7 Dresser Industries, Inc. 305 305
1 1 Electronic Arts, Inc. (b) (c) 53 53
8 8 Flowserve Corp. 218 218
2 2 Hewlett Packard Co. 129 129
5 5 Intel Corp. 323 323
91 91 Lexmark International Group, Inc. (b) 3,458 3,458
2 122 124 Linear Technology Corp. (c) 128 7,025 7,153
4 4 Lucent Technologies, Inc. 302 302
265 265 Maxim Integrated Products, Inc. (b) (c) 9,143 9,143
3 6 9 Microsoft Corp. (b) 377 724 1,101
95 95 Network Associates, Inc. 5,023 5,023
18 18 Newbridge Networks Corp. 633 633
22 22 Oracle Corp. (b) 485 485
13 13 Parametric Technology Corp. (b) 616 616
11 11 Peoplesoft Inc. 411 411
3 3 Perkin Elmer Corp. 220 220
1 1 Qualcomm, Inc. 74 74
88 88 Quantum Corp. (b) (c) 1,772 1,772
2 85 87 SCI Systems, Inc. (b) (c) 93 3,707 3,800
158 158 Solectron Corp. (b) 6,575 6,575
2 2 SPX Corp. 108 108
63 63 Structural Dynamics (b) 1,413 1,413
10 10 Sun Microsystems, Inc. (b) 383 383
85 85 Synopsys, Inc. (b) 3,396 3,396
6 13 19 Tellabs, Inc. (b) 307 703 1,010
190 190 Teradyne, Inc. (b) (c) 6,086 6,086
4 18 22 Thermo Instrument Systems, Inc. (b) 141 635 776
43 43 Varian Associates, Inc. 2,179 2,179
3 3 Vitesse Semiconductor 113 113
2 2 Xerox Corp. 149 149
136 136 Xilinx, Inc. (b) 4,783 4,783
---------- --------- ---------
6,788 138,476 145,264
---------- --------- ---------
Transportation (0.4%):
117 117 Illinois Central Corp. 3,975 3,975
--------- ---------
Utilities (3.8%):
191 191 360 Communications Co. (b) 3,846 3,846
329 329 AES Corp. (b) 15,330 15,330
2 2 Airtouch Communications, Inc. (b) 103 103
1 1 Ameritech Corp. 118 118
2 2 AT&T Corp. 106 106
3 3 Bell Atlantic Corp. 273 273
5 5 BellSouth Corp. 299 299
6 6 Cincinnati Bell, Inc. 192 192
1 1 Clear Channel Communications, Inc. 108 108
3 3 Ericsson L M Telephone Co. 113 113
192 192 LCI International, Inc. (b) 5,904 5,904
2 2 Northern Telecom Ltd. 208 208
115 115 Seagull Energy Corp. (b) 2,374 2,374
93 93 Southern New England Telecommunications, Inc. (c) 4,679 4,679
3 3 US West Communications Group 118 118
---------- --------- ---------
1,638 32,133 33,771
---------- --------- ---------
Total Common Stocks 35,516 814,383 849,899
---------- --------- ---------
INVESTMENT COMPANIES (0.2%):
750 750 SEI Liquid Asset Trust Government Portfolio 749 749
774 774 SEI Liquid Asset Trust Treasury Portfolio 774 774
---------- --------- ---------
Total Investment Companies 1,523 1,523
---------- --------- ---------
REPURCHASE AGREEMENTS (4.1%):
35 35 Prudential Securities, 6.80%, 1/2/98 (Collateralized
by $43,741 U.S. Government Agency Securities, 7.03%,
11/1/32, market value ($36,492) 35,429 35,429
2 2 UBS Securities, 6.50%, 1/2/98 (Collateralized by $1,595
U.S. Government Agency Securities, 0.00%, 3/22/01,
market value $1,600) 1,564 1,564
---------- --------- ---------
Total Repurchase Agreements 1,564 35,429 36,993
---------- --------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP GROWTH OPPORTUNITIES FUND / MARQUIS GROWTH EQUITY FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
- --------- -------- ---------- --------------------------------------------------- --------- --------- ---------
<S><C>
Total (Cost $731,936) (a) 38,603 849,812 888,415
---------- --------- ---------
---------- --------- ---------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $897,122.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation . . . . . . . . . $190,293
Unrealized depreciation. . . . . . . . . (33,814)
Net unrealized appreciation. . . . . . . . $156,479
</TABLE>
(b) Non-income producing securities.
(c) With respect to the One Group fund only, a portion of this security was
loaned as of December 31, 1997.
<PAGE>
THE ONE GROUP ASSET ALLOCATION FUND / MARQUIS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
--------- --------- --------- --------------------------------------------------- --------- ------------- -----------
<S><C>
ASSET BACKED SECURITIES (1.5%):
20 20 Advanta Credit Card Master Trust, 5.95%, 8/31/99 20 20
298 298 Advanta Mortgage Loan Trust, Series 1994-3, Class
A2, 7.60%, 7/25/10 302 302
600 600 Case Equipment Loan Trust, Series 1996-B, Class A3,
6.65%, 9/15/03 609 609
480 480 Greentree Financial Corp., Series 1996-3, Class A3,
6.70%, 5/15/27 486 486
800 800 Greentree Financial Corp., Series 1996-7, Class A4,
6.80%, 10/15/27 822 822
67 67 KeyCorp Auto Grantor Trust, Series 1995-A A, 5.80%,
7/15/00 67 67
500 500 Nationsbank Auto Owner Trust 1996-A A3,
6.38%, 7/15/00 502 502
525 525 Olympic Automobile Receivables Trust, 6.05%,
8/15/02 524 524
1,025 1,025 Olympic Automobile Receivables Trust, Series
1996-B, Class A4, 6.70%, 3/15/02 1,034 1,034
630 630 The Money Store Home Equity Trust, Series 1993-C,
5.18%, 7/15/06 624 624
181 181 The Money Store Home Equity Trust, Series 1994-B,
Class A2, 6.80%, 2/15/13 184 184
67 67 Union Federal Savings Bank Trust, Series 1994 A A,
5.08%, 5/15/00 67 67
--------- ----------
Total Asset Backed Securities 5,241 5,241
--------- ----------
COMMERCIAL PAPER (2.3%):
Financial Services (2.3%):
7,905 7,905 Merrill Lynch, 5.81%, 3/19/98 7,810 7,810
--------- ----------
Total Commercial Paper 7,810 7,810
--------- ----------
COMMON STOCKS (53.1%):
Business Equipment & Service (0.3%):
7 7 Jacobs Engineering Group, Inc. 178 178
20 20 Service Corp. International 720 720
--------- ----------
898 898
--------- ----------
Capital Goods (4.4%):
20 20 Caterpillar, Inc. 990 990
11 11 Cooper Industries, Inc. 544 544
14 14 Deere & Co. 805 805
14 14 Emerson Electric Co. 790 790
38 38 General Electric Co. 2,803 2,803
23 10 33 Harsco Corp. 984 431 1,415
6 6 Hubbell, Inc., Class B 306 306
12 12 Mark IV Industries, Inc. 271 271
25 25 Parker-Hannifin Corp. 1,159 1,159
6 6 Precision Castparts 338 338
32 32 SCI Systems, Inc. 1,411 1,411
19 19 Teleflex, Inc. 725 725
12 12 Thiokol Corp. 957 957
14 14 TRW, Inc. 726 726
26 26 Tyco International 1,167 1,167
21 21 Wolverine Tube, Inc. 645 645
---------- ---------- ----------
7,677 7,375 15,052
---------- ---------- ----------
Consumer Durable (2.0%):
19 19 Autozone, Inc. (c) 554 554
26 25 51 Chrysler Corp. 933 862 1,795
14 14 Cummins Engine, Inc. 827 827
26 26 Ford Motor Co. 1,283 1,283
11 11 Lear Corp. (b) 508 508
30 30 Maytag Corp. 1,119 1,119
42 42 Moore Corp., Ltd. 629 629
---------- ---------- ----------
4,791 1,924 6,715
---------- ---------- ----------
Consumer Non-Durable (4.5%):
31 31 Archer-Daniels-Midland Co. 670 670
21 21 Coca Cola Co. 1,419 1,419
19 19 ConAgra, Inc. 637 637
20 20 Crane Co. 846 846
6 6 Estee Lauder Companies, Class A 314 314
19 19 Intimate Brands, Inc. (c) 457 457
26 26 Lennar Corp. 552 552
14 14 McCormick & Co., Inc. 398 398
18 18 Newell Companies, Inc. 773 773
35 35 PepsiCo, Inc. 1,279 1,279
20 47 67 Philip Morris Co., Inc. 911 2,116 3,027
8 8 Proctor & Gamble Co. 615 615
21 13 34 Quaker Oats Co. 1,090 686 1,776
11 11 Revlon, Inc. (b) 395 395
22 22 RJR Nabisco Holdings Corp. 821 821
14 14 Vulcan Materials 1,424 1,424
---------- ---------- ----------
4,823 10,580 15,403
---------- ---------- ----------
Consumer Services (2.5%):
10 10 Belo (A.H.) Corp., Series A 561 561
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP ASSET ALLOCATION FUND / MARQUIS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
--------- --------- --------- --------------------------------------------------- --------- ------------- -----------
<S><C>
16 16 Callaway Golf Co. 457 457
21 21 Cendant Corp. (c) 729 729
18 18 Hasbro, Inc. 575 575
23 23 Hilton Hotels Corp. 687 687
28 28 IBP, Inc. 595 595
21 21 International Game Technology 530 530
20 20 Lone Star Steakhouse & Saloon 350 350
10 10 MGM Grand, Inc. (b) (c) 375 375
17 17 Tele-Communications, Inc. 479 479
9 9 Telecom-TCI Ventures Group, Series A 265 265
15 15 Time Warner, Inc. 923 923
3 3 Tricon Global Restaurants 97 97
16 16 V. F. Corp. 726 726
16 16 Viacom, Inc. 651 651
7 7 Walt Disney Co. 644 644
---------- ---------- ----------
2,658 5,986 8,644
---------- ---------- ----------
Energy (4.9%):
9 9 Ashland, Inc. 489 489
11 11 Atlantic Richfield Co. 857 857
12 12 British Petroleum, Public Limited Co. 953 953
8 8 Devon Energy Corp. 312 312
8 8 Dresser Industries, Inc. 319 319
31 31 Ensco International, Inc. 1,055 1,055
38 38 Exxon Corp. 2,323 2,323
12 16 28 Mobil Corp. 866 1,155 2,021
36 36 Noble Drilling Corp. 1,103 1,103
15 15 OGE Energy Corp. 842 842
18 18 Phillips Petroleum Co. 885 885
25 25 Royal Dutch Petroleum, NY Shares 1,349 1,349
20 20 Tosco Corp. (c) 764 764
50 50 Union Texas Petroleum Holdings 1,041 1,041
33 20 53 USX-Marathon Group 1,114 682 1,796
10 10 Weatherford Enterra, Inc. 455 455
---------- ---------- ----------
7,858 8,706 16,564
---------- ---------- ----------
Financial Services (9.4%):
5 5 Allstate Corp. 473 473
35 35 AMBAC Financial Group, Inc. 1,592 1,592
6 6 American Express Co. 500 500
9 9 American International Group, Inc. 941 941
38 38 Bear Stearns Co., Inc. 1,817 1,817
9 9 Charter One Financial, Inc. 587 587
9 9 Chase Manhattan Corp. 1,007 1,007
4 4 Cigna Corp. 675 675
6 6 Citicorp 809 809
22 22 Conseco, Inc. 992 992
32 11 43 Equitable Co., Inc. 1,609 537 2,146
22 22 Federal National Mortgage Assoc. 1,267 1,267
7 7 First American Bank Corp. 509 509
21 24 45 First Union Corp. (c) 1,097 1,189 2,286
15 15 Fleet Financial Group, Inc. 1,147 1,147
17 17 Greenpoint Financial Corp. 1,263 1,263
8 8 Hartford Financial Services Group 777 777
10 10 J.P. Morgan & Co., Inc. 1,118 1,118
16 16 Morgan Stanley Dean Witter Discover 952 952
21 21 Nationsbank 1,265 1,265
18 16 34 PNC Bank Corp. 1,015 902 1,917
10 10 Provident Co., Inc. 390 390
18 18 Providian Financial Corp. 831 831
13 13 Regions Financial Corp. 527 527
11 11 SLM Holding Corp. 1,475 1,475
14 14 Southtrust Corp. 856 856
10 10 State Street Corp. 570 570
7 7 TransAmerica Corp. 692 692
24 24 Travelers Group, Inc. 1,293 1,293
8 8 Washington Mutual, Inc. 491 491
3 3 Wells Fargo & Co. 916 916
---------- ---------- ----------
13,618 18,463 32,081
---------- ---------- ----------
Health Care (4.6%):
17 17 Abbott Labs 1,141 1,141
13 13 American Home Products Corp. 979 979
9 9 Amgen, Inc. (b) 498 498
12 12 Baxter International, Inc. 625 625
18 18 Bristol Myers Squibb Co. 1,722 1,722
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP ASSET ALLOCATION FUND / MARQUIS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
--------- --------- --------- --------------------------------------------------- --------- ------------- -----------
<S><C>
6 6 Cardinal Health, Inc. (c) 436 436
23 23 Eli Lilly & Co. 1,581 1,581
10 10 Guidant Corp. 647 647
25 25 HBO & Co. 1,201 1,201
15 15 Healthsouth Corp. 427 427
7 7 Johnson & Johnson 435 435
16 16 Lincare Holdings 895 895
13 13 Medpartners, Inc. 291 291
10 9 19 Merck & Co., Inc. 1,044 967 2,011
6 6 Pfizer, Inc. 447 447
16 16 Schering Plough Corp. 1,019 1,019
14 14 Tenet Healthcare Corp. 474 474
7 7 Warner-Lambert Co. 856 856
---------- ---------- ----------
4,159 11,526 15,685
---------- ---------- ----------
Raw Materials (2.4%):
9 9 Betzdearborn, Inc. 556 556
14 14 Crompton & Knowles Corp. 371 371
7 7 Dow Chemical Co. 711 711
18 14 32 Du Pont (EI) de Nemours & Co. 1,088 841 1,929
17 17 Ferro Corp. 417 417
23 23 Lubrizol Corp. 841 841
20 20 Morton International, Inc. 674 674
13 13 Nalco Chemical Co. 506 506
12 12 Olin Corp. 572 572
14 14 Praxair, Inc. 630 630
29 29 USX-U.S. Steel Group, Inc. 892 892
---------- ---------- ----------
3,532 4,567 8,099
---------- ---------- ----------
Retail (3.5%):
35 35 American Stores Co. 712 712
26 26 CompUSA, Inc. 800 800
16 14 30 Dayton Hudson Corp. 1,081 911 1,992
16 16 Gymboree 441 441
28 28 Just For Feet, Inc. (b) 364 364
23 23 Kroger Co. (b) 850 850
26 26 Limited Inc. 663 663
11 11 Nine West Group, Inc. 285 285
35 35 Officemax, Inc. (b) 504 504
9 9 Outback Steakhouse, Inc. (c) 270 270
34 34 Ross Stores, Inc. 1,246 1,246
40 40 TJX Co., Inc. (c) 1,389 1,389
10 10 Tommy Hilfiger Corp. 351 351
18 18 Toys R Us, Inc. (b) 556 556
40 40 Wal-Mart Stores, Inc. 1,558 1,558
---------- ---------- ----------
5,727 6,254 11,981
---------- ---------- ----------
Shelter (1.4%):
12 12 Armstrong World Industries, Inc 932 932
25 25 Kaufman & Broad Home Corp. 570 570
16 16 Kimberly Clark Corp. 764 764
11 11 Leggett & Platt, Inc. 457 457
9 9 Masco Corp. 468 468
12 12 Pentair, Inc. 435 435
32 32 Plum Creek Timber Co. 966 966
---------- ---------- ----------
1,898 2,694 4,592
---------- ---------- ----------
Technology (6.2%):
6 6 Altera Corp. (b) 186 186
18 18 Analog Devices, Inc. (b) (c) 485 485
17 17 Applied Materials, Inc. (b) 512 512
10 10 BMC Software, Inc. (b) 623 623
12 12 Boeing Co. 573 573
22 22 Cadence Design Systems, Inc. (c) 534 534
23 23 Cisco Systems, Inc. (b) 1,257 1,257
18 20 38 Compaq Computer Corp. (b) 988 1,134 2,122
21 21 Computer Associates International, Inc. 1,095 1,095
14 14 Dell Computer Corp. (b) 1,168 1,168
5 5 General Motors, Class H 166 166
12 12 Hewlett Packard Co. 750 750
28 28 Intel Corp. 1,946 1,946
17 17 International Business Machines 1,809 1,809
6 6 Lockheed Martin Corp. 591 591
8 8 Lucent Technologies, Inc. 623 623
20 20 Microsoft Corp. (b) 2,597 2,597
22 22 Novellus Systems, Inc. 707 707
16 16 Orbital Sciences Corp. (b) 467 467
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP ASSET ALLOCATION FUND / MARQUIS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
--------- --------- --------- --------------------------------------------------- --------- ------------- -----------
<S><C>
27 27 Quantum Corp. 549 549
3 3 Raytheon Co., Class A 125 125
23 23 Tech Data Corp. 894 894
21 21 Tektronix, Inc. 833 833
17 17 Teradyne, Inc. (b) 547 547
---------- ---------- ----------
5,578 15,581 21,159
---------- ---------- ----------
Transportation (0.8%):
9 9 British Airways, Public Limited Co. 862 862
27 27 Illinois Central Corp. 909 909
42 42 Werner Enterprises, Inc. 852 852
---------- ----------
2,623 2,623
---------- ----------
Utilities (6.2%):
14 14 AES Corp. (b) 653 653
13 13 Ameritech Corp. 1,022 1,022
18 18 Baltimore Gas & Electric 613 613
26 10 36 Century Telephone Enterprises 1,283 498 1,781
29 29 Consolidated Edison Co. Of New York, Inc. 1,193 1,193
14 14 Duke Energy Corp. 753 753
11 11 Florida Power & Light, Inc. 657 657
27 19 46 General Public Utilities Corp. 1,159 779 1,938
23 23 GTE Corp. 1,212 1,212
26 26 LCI International, Inc. (c) 803 803
10 10 MCN Corp. 392 392
6 6 National Fuel Gas Co. 278 278
19 19 New England Electric System 825 825
26 26 New York State Electric & Gas 919 919
26 26 NICOR, Inc. 1,103 1,103
18 18 Nipsco Industries, Inc. 905 905
20 20 Pacific Enterprises 737 737
11 19 30 SBC Communications, Inc. 791 1,428 2,219
27 27 Southern Co. 701 701
19 19 Sprint Corp. 1,102 1,102
16 16 Texas Utilities 677 677
26 26 Worldcom, Inc. (c) 793 793
---------- ---------- ----------
11,085 10,191 21,276
---------- ---------- ----------
Total Common Stocks 76,027 104,745 180,772
---------- ---------- ----------
CORPORATE BONDS (6.8%):
Banking, Finance & Insurance (4.3%):
1,000 1,000 Association Corp., 8.27%, 11/8/01 1,069 1,069
1,000 1,000 Bankamerica Corp., 8.13%, 2/1/02 1,063 1,063
500 500 Chrysler Financial Corp., 5.88%, 2/7/01 497 497
1,070 1,070 Circuit City Credit Card Master Trust, 6.38%,
8/15/05 1,077 1,077
1,000 1,000 First Hawaiian, Inc., 6.25%, 8/15/00 998 998
610 610 Ford Credit Auto Loan Master Trust, 5.50%,
2/15/03 603 603
500 500 Ford Motor Credit Corp., 8.38%, 1/15/00 522 522
250 250 General Motors Acceptance Corp., 7.00%, 3/1/00 254 254
1,250 1,250 General Motors Acceptance Corp., 8.25%, 2/24/04 1,361 1,361
1,000 1,000 Goldman Sachs Group, 7.20%, 3/1/07, 144 A 1,053 1,053
750 750 Huntington National Bank, 6.75%, 6/15/03 764 764
250 250 Lehman Brothers Holdings, Inc., 6.38%, 6/1/98 250 250
300 300 Lehman Brothers Holdings, Inc., 8.88%, 11/1/98 307 307
500 500 Lehman Brothers, Inc., 9.88%, 10/15/00 544 544
550 550 MBNA Master Credit Card, 5.40%, 3/15/99 546 546
800 800 McDonnell Douglas Corp., 9.30%, 9/11/02 834 834
307 307 McDonnell Douglas Corp., 6.45%, 12/5/02 309 309
750 750 Midland Bank PLC, 6.95%, 3/15/11 770 770
250 250 Nationsbank Texas, 6.75%, 8/15/00 254 254
1,000 1,000 Society National Bank, 6.75%, 6/15/03 1,019 1,019
500 500 Suntrust Banks, 7.38%, 7/1/02 519 519
---------- ----------
14,613 14,613
---------- ----------
Industrials (1.5%):
250 250 Anheuser Busch Co., 8.75%, 12/1/99 262 262
500 500 Campbell Soup Co., 5.63%, 9/15/03 487 487
250 250 Coca-Cola Co., 7.88%, 9/15/98 253 253
500 500 Dayton Hudson Corp., 7.25%, 9/1/04 520 520
200 200 Du Pont (EI) de Nemours & Co., 8.70%, 2/7/01 215 215
250 250 Ford Motor Co., 9.00%, 9/15/01 271 271
200 200 Illinois Tool Works, 7.50%, 12/1/98 202 202
500 500 J C Penney & Co., 5.38%, 11/15/98 496 496
250 250 Johnson & Johnson, 7.38%, 6/29/02 262 262
1,000 1,000 Occidental Petroleum, 9.25%, 8/1/19 1,249 1,249
750 750 Sears Roebuck Acceptance, 7.13%, 5/2/03 776 776
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP ASSET ALLOCATION FUND / MARQUIS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
--------- --------- --------- --------------------------------------------------- --------- ------------- -----------
<S><C>
4,993 4,993
---------- ----------
Transportation (0.1%):
500 500 Union Pacific Co., 7.60%, 5/1/05 533 533
Utilities (0.9%):
500 500 AT&T Corp., 6.00%, 8/1/00 (c) 497 497
750 750 AT&T Corp., 7.50%, 6/1/06 806 806
250 250 Duke Power Co., 7.00%, 7/1/00 255 255
250 250 Southern California Edison, 7.50%, 4/15/99 254 254
675 675 Virginia Electric & Power, 9.15%, 6/10/99 705 705
500 500 Virginia Electric & Power, 6.63%, 4/1/03 509 509
---------- ----------
3,026 3,026
---------- ----------
Total Corporate Bonds 23,165 23,165
---------- ----------
FEDERAL AGENCY DEBENTURES (0.6%):
Federal National Mortgage Assoc. (0.6%):
1,000 1,000 5.55%, 9/8/98 997 997
1,000 1,000 5.53%, 2/10/99 996 996
---------- ----------
Total Federal Agency Debentures 1,993 1,993
---------- ----------
U.S. GOVERNMENT AGENCY MORTGAGES (15.3%):
Federal Home Loan Mortgage Corp. (4.5%):
3 3 7.00%, 4/1/00, Pool #253036 3 3
1,815 1,815 7.00%, 1/25/03, Pool #G92-39-L 1,814 1,814
135 135 10.00%, 9/1/03, Pool #E30407 143 143
75 75 9.00%, 5/1/06, Pool #B0-0282 79 79
295 295 8.00%, 3/1/08, Pool #E45796 305 305
354 354 9.00%, 8/1/09, Pool #279063 368 368
943 943 7.00%, 1/1/12, Pool #E66116 957 957
313 313 10.50%, 10/1/20, Pool #D24679 347 347
1,486 1,486 6.50%, 11/15/22, Pool #1152 1,466 1,466
2,000 2,000 7.15%, 1/15/23, Pool #1517-I 2,030 2,030
765 765 8.00%, 4/1/25, Pool #C00401 795 795
837 837 8.00%, 5/1/25, Pool #D60455 870 870
457 457 7.00%, 2/1/26, Pool #D69343 463 463
680 680 6.50%, 2/1/26, Pool #D68616 673 673
947 947 6.50%, 2/1/26, Pool #D68124 938 938
487 487 7.00%, 3/1/26, Pool #D69430 492 492
913 913 7.50%, 5/1/26, Pool #C00460 937 937
806 806 8.50%, 7/1/26, Pool #C00472 842 842
957 957 7.00%, 10/1/26, Pool #D75494 967 967
1,000 1,000 7.50%, 12/1/27, Pool #C00542 1,024 1,024
---------- ---------- ----------
5,760 9,753 15,513
---------- ---------- ----------
Federal National Conventional Loan (0.3%):
380 380 8.00%, 6/1/24, Pool #250085 395 395
650 650 8.00%, 6/1/24, Pool #270402 674 674
1,069 1,069
Federal National Mortgage Assoc. (3.5%):
275 275 6.40%, 3/25/03 275 275
250 250 6.40%, 1/13/04 250 250
5,000 5,000 5.88%, 2/2/06 4,944 4,944
1,120 1,120 7.00%, 9/1/07, Pool# 185265 1,137 1,137
864 864 6.50%, 5/1/11, Pool #337195 865 865
892 892 7.00%, 7/1/25, Pool #317252 901 901
854 854 6.50%, 2/1/26, Pool #337115 846 846
844 844 7.50%, 5/1/26, Pool #344916 865 865
917 917 7.00%, 5/1/26, Pool #346269 926 926
866 866 7.50%, 11/1/26, Pool #363626 886 886
---------- ---------- ----------
6,081 5,814 11,895
---------- ---------- ----------
Government National Mortgage Assoc. (7.0%):
388 388 7.50%, 8/15/07, Pool #329613 399 399
419 419 7.00%, 7/15/08, Pool #326444 427 427
560 560 6.50%, 7/15/08, Pool #349693 563 563
54 54 6.50%, 3/15/09, Pool #367398 55 55
1,348 1,348 6.50%, 5/15/09, Pool #366779 1,355 1,355
709 709 5.50%, 4/20/11, Pool #2222 677 677
16 16 13.50%, 5/15/11, Pool #047241 19 19
3 3 12.50%, 10/15/13, Pool #070066 4 4
18 18 12.00%, 3/15/14, Pool #109220 21 21
13 13 13.50%, 9/15/14, Pool #119582 15 15
65 65 9.00%, 12/15/16, Pool # 203620 70 70
113 113 8.00%, 4/15/17, Pool #192100 118 118
105 105 10.00%, 7/15/18, Pool #248404 114 114
82 82 10.00%, 3/15/19, Pool #265770 89 89
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP ASSET ALLOCATION FUND / MARQUIS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
--------- --------- --------- --------------------------------------------------- --------- ------------- -----------
<S><C>
72 72 8.00%, 5/15/22, Pool #329176 75 75
88 88 6.50%, 1/15/24, Pool #376656 88 88
229 229 8.00%, 4/15/24, Pool #376038 239 239
1,132 1,132 7.00%, 4/15/24, Pool #355120 1,141 1,141
1,114 1,114 8.00%, 8/15/24, Pool #394024 1,161 1,161
1,698 1,698 7.50%, 6/15/25, Pool #401860 1,740 1,740
1,333 1,333 7.00%, 8/15/25, Pool #413007 1,349 1,349
6,889 6,889 7.00%, 2/15/26, Pool #426280 6,945 6,945
977 977 6.50%, 4/15/26, Pool #416192 967 967
962 962 6.50%, 4/15/26, Pool #424185 952 952
626 626 8.00%, 5/15/26, Pool #426783 649 649
702 702 7.50%, 5/15/26, Pool #408313 719 719
842 842 7.50%, 5/15/26, Pool #375345 864 864
985 985 7.00%, 5/15/26, Pool #375344 995 995
858 858 8.50%, 1/15/27, Pool #432266 901 901
1,000 1,000 7.50%, 12/15/27, Pool #455358 1,025 1,025
---------- ---------- ----------
14,325 9,411 23,736
---------- ---------- ----------
Total U.S. Government Agency Mortgages 26,166 26,047 52,213
---------- ---------- ----------
U.S. TREASURY OBLIGATIONS (17.5%):
U.S. Treasury Bills (0.1%):
55 55 1/22/98 (d) 55 55
95 95 2/5/98 (d) 95 95
40 40 2/19/98 (d) 40 40
115 115 2/26/98 (d) 114 114
55 55 3/12/98 (d) 54 54
---------- ----------
358 358
---------- ----------
U.S. Treasury Bonds (3.4%):
750 750 11.25%, 2/15/15 (c) 1,176 1,176
1,900 1,900 7.50%, 11/15/16 2,218 2,218
4,700 4,700 8.13%, 8/15/19 (c) 5,877 5,877
1,000 1,000 7.88%, 2/15/21 (c) 1,228 1,228
1,000 1,000 7.13%, 2/15/23 1,141 1,141
---------- ---------- ----------
1,141 10,499 11,640
---------- ---------- ----------
U.S. Treasury Notes (14.0%):
500 500 7.25%, 2/15/98 (c) 501 501
2,000 600 2,600 9.00%, 5/15/98 2,025 608 2,633
2,000 2,000 9.25%, 8/15/98 2,044 2,044
1,000 1,000 6.38%, 1/15/99 1,008 1,008
200 200 8.88%, 2/15/99 207 207
300 300 5.88%, 3/31/99 301 301
3,000 3,250 6,250 7.00%, 4/15/99 (c) 3,050 3,304 6,354
1,500 1,500 6.38%, 7/15/99 1,517 1,517
2,000 2,000 8.00%, 8/15/99 2,071 2,071
300 300 6.00%, 10/15/99 302 302
250 250 7.75%, 11/30/99 (c) 259 259
1,000 1,000 7.75%, 1/31/00 (c) 1,040 1,040
500 500 8.50%, 2/15/00 528 528
1,000 1,000 6.50%, 5/31/01 (c) 1,024 1,024
6,500 6,500 6.50%, 8/31/01 (c) 6,660 6,660
2,000 2,000 6.25%, 10/31/01 2,033 2,033
2,000 2,000 6.63%, 3/31/02 (c) 2,064 2,064
2,000 2,000 6.25%, 8/31/02 2,040 2,040
4,000 150 4,150 6.25%, 2/15/03 (c) 4,090 153 4,243
1,500 1,500 5.75%, 8/15/03 1,500 1,500
1,500 1,500 6.50%, 5/15/05 (c) 1,563 1,563
1,500 1,500 6.50%, 8/15/05 1,565 1,565
3,000 3,000 5.63%, 2/15/06 2,966 2,966
3,000 3,000 6.13%, 8/15/07 3,082 3,082
---------- ---------- ----------
29,519 17,986 47,505
---------- ---------- ----------
Total U.S. Treasury Obligations 30,660 28,843 59,503
---------- ---------- ----------
INVESTMENT COMPANIES (1.2%):
1,959 1,959 SEI Liquid Asset Trust, Treasury Portfolio 1,959 1,959
2,150 2,150 SEI Liquid Asset Trust, Government Portfolio 2,150 2,150
---------- ----------
Total Investment Companies 4,109 4,109
---------- ----------
REPURCHASE AGREEMENTS (1.4%):
4,876 4,876 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $5,105 4,876 4,876
U.S. Treasury Bills, 6/25/98, market value $4,974) ---------- ----------
Total Repurchase Agreements 4,876 4,876
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP ASSET ALLOCATION FUND / MARQUIS BALANCED FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
PROFORMA
MARQUIS ONE GROUP COMBINED PROFORMA
SHARES OR SHARES OR SHARES OR MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION VALUE VALUE VALUE
--------- --------- --------- --------------------------------------------------- --------- ------------- -----------
<S><C>
Total (Cost $295,743) (a) 136,962 202,720 339,682
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- --------------------
Percentages indicated are based on net assets of $340,430.
(a) Represents cost for federal income tax purposes and differs from
value by net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation. . . . . . . . . . . . $47,159
Unrealized depreciation . . . . . . . . . . . (3,220)
Net unrealized appreciation. . . . . . . . . . . $43,939
</TABLE>
(b) Non-income producing securities.
(c) With respect to the One Group Fund only, a portion of this security
was loaned as of December 31, 1997.
(d) Serves as collateral for futures contracts.
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
OPENING MARKET
NUMBER POSITION VALUE
OF CONTRACTS CONTRACT TYPE (000) (000)
<S> <C> <C> <C>
34 S&P 500 March 1998 Futures $8,270 $8,322
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP TREASURY ONLY MONEY MARKET FUND / MARQUIS INSTITUTIONAL MONEY
MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
- ------------ ------------- ------------- ------------------------------------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS (94.1%):
U.S. Treasury Bills (26.0%):
125,412.00 125,412 1/22/98 (b) 125,033 125,033
15,000 15,000 1/22/98 14,955 14,955
4,490 4,490 2/5/98 4,467 4,467
2,489 2,489 2/12/98 2,473 2,473
5,000 5,000 3/5/98 4,953 4,953
1,800 1,800 3/5/98 1,783 1,783
52,500 52,500 3/26/98 51,861 51,861
8,940 8,940 11/12/98 8,528 8,528
-------- -------- --------
16,738 197,315 214,053
-------- -------- --------
U.S. Treasury Notes (68.1%):
100,000 100,000 7.88%, 1/15/98 100,090 100,090
125,000 125,000 5.63%, 1/31/98 124,993 124,993
189,177 189,177 7.25%, 2/17/98 189,546 189,546
75,000 75,000 5.13%, 2/28/98 74,950 74,950
1,065 1,065 7.88%, 4/15/98 1,072 1,072
50,000 50,000 7.88%, 4/30/98 (b) 50,060 50,060
5,000 5,000 5.25%, 7/31/98 4,990 4,990
15,000 15,000 6.13%, 8/31/98 15,039 15,039
-------- -------- --------
- 560,740 560,740
-------- -------- --------
Total U.S. Treasury Obligations 16,738 758,055 774,793
REPURCHASE AGREEMENTS (4.6%):
2,200 2,200 Aubrey G. Lanston & Co., 6.50%, 1/2/98
(collateralized by $2,100 U.S. Treasury
Notes, 7.50%, 11/15/01, market value -
$2,246) 2,200 2,200
1,575 1,575 Deutsche Morgan Grenfell, 6.70%, 1/2/98
(collateralized by $1,573 U.S. Treasury
Notes, 5.88%, 2/28/99, market value -
$1,608) 1,575 1,575
2,200 2,200 HSBC Securities, 6.60%, 1/2/98
(collateralized by $8,600 U.S. Treasury
Strips, 0.00%, 5/15/20, market value -
$8,316) 2,200 2,200
10,000 10,000 J.P. Morgan Securities, 6.60%, 1/2/98
(collateralized by $10,598 U.S. Treasury
Strips, 0.00%, 8/15/98, market value -
$10,238) 10,000 10,000
1,581 1,581 J.P. Morgan Securities, 6.40%, 1/2/98
(collateralized by $1,129 U.S. Treasury
Bonds, 9.88%, 11/15/15, market value -
$1,613) 1,581 1,581
10,000 10,000 Lehman Brothers Holding, Inc., 6.57%,
1/2/98 (collateralized by $13,675 U.S.
Treasury Strips, 0.00%, 2/15/03, market
value - $10,212) 10,000 10,000
1,575 1,575 Merrill Lynch, 6.45%, 1/2/98
(collateralized by $1,190 U.S. Treasury
Bonds, 8.88%, 6/15/17, market value -
$1,612) 1,575 1,575
1,576 1,576 Nomura Securities, 6.58%, 1/2/98
(collateralized by $1,612 U.S. Treasury
Bills, 0.00%, 1/22/98, market value -
$1,607) 1,576 1,576
1,575 1,575 Morgan Stanley, 5.18%, 1/2/98
(collateralized by $1,226 U.S. Treasury
Bonds, 8.75%, 5/15/17, market value -
$1,613) 1,575 1,575
2,200 2,200 Prudential Securities, Inc., 6.60%,
1/2/98 (collateralized by $1,965 U.S.
Treasury Notes, 6.88%, 8/15/25, market
value - $2,244) 2,200 2,200
1,575 1,575 UBS Securities, 6.50%, 1/2/98
(collateralized by $7,229 various U. S.
Treasury Securities, 0.00%, 8/15/22 -
11/15/22, market - value $1,607) 1,575 1,575
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE ONE GROUP TREASURY ONLY MONEY MARKET FUND / MARQUIS INSTITUTIONAL MONEY
MARKET FUND
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PROFORMA PROFORMA
MARQUIS ONE GROUP COMBINED MARQUIS ONE GROUP COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL AMORTIZED AMORTIZED AMORTIZED
AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION COST COST COST
- ------------ ------------- ------------- ------------------------------------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
2,200 2,200 Wachovia, 6.00%, 1/2/98 (collateralized
by $2,230 U.S. Treasury Notes, 5.75%,
11/15/00, market value - $2,248) 2,200 2,200
------- ------- -------
38,257 - 38,257
------- ------- -------
Total (Amortized Cost $813,050) (a) 54,995 758,055 813,050
------- ------- -------
------- ------- -------
</TABLE>
- -------------------
Percentages indicated are based on net assets of $823,330.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) With respect to The One Group Fund only, a portion of this security was
loaned as of December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
U.S. Treasury Marquis Treasury
Securities Securities
Money Market Money Market Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS:
Investments, at amortized cost $ 587,536 $ 233,899 $ $ 821,435
Repurchase agreements, at cost 2,944,317 1,188,751 4,133,068
------------- ------------- -------------
Total 3,531,853 1,422,650 4,954,503
Cash - - -
Interest receivable 5,657 6,133 11,790
Deferred organizational costs - 10 (10) -
Prepaid expenses and other assets 39 262 301
------------- ------------- ------------- -------------
TOTAL ASSETS 3,537,549 1,429,055 (10) 4,966,594
------------- ------------- ------------- -------------
LIABILITIES:
Cash overdraft 3 2,145 2,148
Income payable 14,322 5,635 19,957
Payable to brokers for investments purchased - - -
Accrued expenses and other payables:
Investment advisory fees 762 471 1,233
Administration fees 419 88 507
12b-1 fees 173 174 347
Other 120 33 153
------------- ------------- -------------
TOTAL LIABILITIES 15,799 8,546 24,345
------------- ------------- -------------
NET ASSETS:
Capital 3,521,483 1,420,484 (10) 4,941,957
Undistributed (distributions in excess of)
net investment income 43 - 43
Accumulated undistributed net realized
gains (losses) from investment transactions 224 25 249
------------- ------------- ------------- -------------
NET ASSETS $ 3,521,750 $ 1,420,509 $ (10) $ 4,942,249
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
NET ASSETS
Fiduciary/Trust $ 2,680,843 $ 599,420 $ 14,469 $ 3,294,732 (b)(c)
Class A/Retail 840,788 635,301 171,309 1,647,398 (b)(c)(d)
Class B/Sweep Class 119 185,788 (185,788) 119 (d)
------------- ------------- ------------- -------------
Total $ 3,521,750 $ 1,420,509 $ (10) $ 4,942,249
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary/Trust 2,680,619 599,403 14,469 3,294,491
Class A 840,743 635,293 171,309 1,647,345
Class B 119 185,788 (185,788) 119
------------- ------------- ------------- -------------
Total 3,521,481 1,420,484 (10) 4,941,955
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Offering and redemption price per share, all classes $ 1.00 $ 1.00 $ 1.00
------------- ------------- -------------
------------- ------------- -------------
<CAPTION>
Municipal Marquis
Money Tax-Exempt
Market Money Market Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS:
Investments, at amortized cost $ 594,524 $ 130,114 $ 724,638
Repurchase agreements, at cost - - -
------------- ------------- -------------
Total 594,524 130,114 724,638
Cash - 27 - (a)
Interest receivable 4,122 925 5,047
Deferred organizational costs
Prepaid expenses and other assets 33 20 53
------------- ------------- ------------- -------------
TOTAL ASSETS 598,679 131,086 729,738
------------- ------------- ------------- -------------
LIABILITIES:
Cash overdraft 234 - 207 (a)
Income payable 1,728 348 2,076
Payable to brokers for investments purchased - 4,387 4,387
Accrued expenses and other payables:
Investment advisory fees 129 72 201
Administration fees 79 12 91
12b-1 fees 21 - 21
Other - 24 24
------------- ------------- -------------
TOTAL LIABILITIES 2,191 4,843 7,007
------------- ------------- -------------
NET ASSETS:
Capital 596,622 126,243 722,865
Undistributed (distributions in excess of)
net investment income (130) - (130)
Accumulated undistributed net realized
gains (losses) from investment transactions (4) - (4)
------------- ------------- ------------- -------------
NET ASSETS $ 596,488 $ 126,243 $ 722,731
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
NET ASSETS
Fiduciary/Trust 500,105 $ - $ 62,993 $ 563,098 (b)
Class A/Retail 96,383 126,243 (62,993) 159,633 (b)
Class B/Sweep Class - - -
------------- ------------- ------------- -------------
Total 596,488 $ 126,243 $ - $ 722,731
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary/Trust 500,226 - 62,993 563,219
Class A 96,396 126,243 (62,993) 159,646
Class B - - -
------------- ------------- ------------- -------------
Total 596,622 126,243 - 722,865
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Offering and redemption price per share, all classes $ 1.00 $ 1.00 $ 1.00
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
(a) Cash balances are combined.
(b) These figures reflect the conversion of approximately 63% and 50% of
Marquis Retail Class shares to One Group Fiduciary shares respectively for
each fund.
(c) These figures reflect the conversion of approximately 65% of Marquis Trust
Class shares to One Group Class A shares.
(d) These figures reflect the conversion of all Marquis Sweep Class shares to
One Group Class A shares.
- --------------------------------------------------------------------------------
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Marquis
Government Government
Bond Securities Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 848,412 $ 142,850 $ $ 991,262
Repurchase agreements, at cost 46,298 4,337 50,635
------------- ------------- -------------
Total (cost $1,012,053; $188,048, respectively) 894,710 147,187 1,041,897
Interest receivable 6,501 2,040 8,541
Receivable from brokers for investments sold - 32 32
Receivable for shares issued 78 3 81
Deferred organizational costs - 2 (2) -
Prepaid expenses and other assets 10 11 21
------------- ------------- ------------- -------------
TOTAL ASSETS 901,299 149,275 (2) 1,050,572
------------- ------------- ------------- -------------
LIABILITIES:
Cash overdraft - 20 20
Income payable 4,189 734 4,923
Payable to brokers for investments purchased 39,862 - 39,862
Payable for shares redeemed 3 - 3
Accrued expenses and other payables:
Investment advisory fees 317 65 382
Administration fees 87 17 104
12b-1 fees 18 1 19
Other 168 9 177
------------- ------------- -------------
TOTAL LIABILITIES 44,644 846 45,490
------------- ------------- -------------
NET ASSETS:
Capital 845,755 147,689 (2) 993,442
Undistributed (distributions in excess of)
net investment income (101) 22 (79)
Accumulated undistributed net realized gains (losses)
from investment transactions (17,278) (847) (18,125)
Net unrealized appreciation (depreciation) from
investments 28,279 1,565 29,844
------------- ------------- ------------- -------------
NET ASSETS $ 856,655 $ 148,429 $ (2) $ 1,005,082
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
NET ASSETS
Fiduciary $ 809,738 $ - $ 144,434 $ 954,172 (a)
Class A 32,295 147,269 (144,436) 35,128 (a)
Class B 14,622 1,160 15,782
------------- ------------- ------------- -------------
Total $ 856,655 $ 148,429 $ (2) $ 1,005,082
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary 80,877 - 14,429 95,306 (a)(b)
Class A 3,225 14,677 (14,394) 3,508 (a)(b)
Class B 1,461 115 1 1,576 (b)
------------- ------------- ------------- -------------
Total 85,563 14,792 36 100,390
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Fiduciary offering and redemption price per share $ 10.01 $ - $ 10.01
------------- ------------- -------------
------------- ------------- -------------
Class A
Redemption price per share $ 10.01 $ 10.03 $ 10.01
------------- ------------- -------------
------------- ------------- -------------
Maximum sales charge 4.50% 3.50% 4.50%
------------- ------------- -------------
------------- ------------- -------------
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to
nearest cent) $ 10.48 $ 10.39 $ 10.48
------------- ------------ -------------
------------- ------------ -------------
Class B offering price per share (c) $ 10.01 $ 10.09 $ 10.01
------------- ------------ -------------
------------- ------------ -------------
<CAPTION>
Marquis
Louisiana Louisiana
Municipal Bond Tax-Free Income Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 156,733 $ 41,940 $ 198,673
Repurchase agreements, at cost - - -
------------- ------------- -------------
Total (cost $1,012,053; $188,048, respectively) 156,733 41,940 198,673
Interest receivable 2,682 519 3,201
Receivable from brokers for investments sold - - -
Receivable for shares issued 1 - 1
Deferred organizational costs - - -
Prepaid expenses and other assets 35 13 48
------------- ------------- -------------
TOTAL ASSETS 159,451 42,472 201,923
------------- ------------- -------------
LIABILITIES:
Cash overdraft - - -
Income payable 624 154 778
Payable to brokers for investments purchased 2,734 - 2,734
Payable for shares redeemed - 11 11
Accrued expenses and other payables:
Investment advisory fees 80 16 96
Administration fees 23 5 28
12b-1 fees 18 1 19
Other 22 6 28
------------- ------------- -------------
TOTAL LIABILITIES 3,501 193 3,694
------------- ------------- -------------
NET ASSETS:
Capital 147,152 40,844 187,996
Undistributed (distributions in excess of)
net investment income - 5 5
Accumulated undistributed net realized gains (losses)
from investment transactions (343) (54) (397)
Net unrealized appreciation (depreciation) from
investments 9,141 1,484 10,625
------------- ------------- -------------
NET ASSETS $ 155,950 $ 42,279 $ 198,229
------------- ------------- -------------
------------- ------------- -------------
NET ASSETS
Fiduciary $ 102,802 $ - $ 12,947 $ 115,749 (a)
Class A 49,075 40,307 (12,947) 76,435 (a)
Class B 4,073 1,972 6,045
------------- ------------- ------------- -------------
Total $ 155,950 $ 42,279 $ - $ 198,229
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary 9,982 - 1,257 11,239 (a)(b)
Class A 4,767 3,942 (1,283) 7,426 (a)(b)
Class B 395 193 (2) 586 (b)
------------- ------------- ------------- -------------
Total 15,144 4,135 (28) 19,251
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Fiduciary offering and redemption price per share $ 10.30 $ - $ 10.30
------------- ------------- -------------
------------- ------------- -------------
Class A
Redemption price per share $ 10.29 $ 10.23 $ 10.29
------------- ------------- -------------
------------- ------------- -------------
Maximum sales charge 4.50% 3.50% 4.50%
------------- ------------- -------------
------------- ------------- -------------
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to
nearest cent) $ 10.77 $ 10.60 $ 10.77
------------- ------------- -------------
------------- ------------- -------------
Class B offering price per share (c) $ 10.30 $ 10.23 $ 10.30
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
(a) These figures reflect the conversion of approximately 98% and 32% of
Marquis Class A shares to One Group Fiduciary shares respectively for
each fund.
(b) These figures reflect an adjustment to the number of shares based on the
assets of the Marquis Fund divided by the NAV of the One Group Fund.
(c) Redemption price per Class B varies based on length of time held.
- --------------------------------------------------------------------------------
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Marquis
Disciplined Value
Value Equity Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 629,791 $ 140,899 $ 770,690
Repurchase agreements, at cost 15,355 1,380 16,735
Total (cost $608,093; $731,936, respectively) 645,146 142,279 787,425
Interest & dividends receivable 680 283 963
Receivable from brokers for investments sold 1,296 - 1,296
Receivable for shares issued 22 77 99
Prepaid expenses and other assets 8 8 16
------------- ------------- -------------
TOTAL ASSETS 647,152 142,647 789,799
------------- ------------- -------------
LIABILITIES:
Cash overdraft 3 6 9
Dividends payable 484 311 795
Payable for shares redeemed 10 20 30
Accrued expenses and other payables:
Investment advisory fees 392 138 530
Administration fees 91 3 94
12b-1 fees 27 6 33
Other 150 34 184
------------- ------------- -------------
TOTAL LIABILITIES 1,157 518 1,675
------------- ------------- -------------
NET ASSETS:
Capital 485,221 107,047 592,268
Undistributed (distributions in excess of)
net investment income (37) (3) (40)
Accumulated undistributed net realized gains (losses)
from investment transactions 11,635 4,929 16,564
Net unrealized appreciation (depreciation) from
investments 149,176 30,156 179,332
------------- ------------- -------------
NET ASSETS $ 645,995 $ 142,129 $ 788,124
------------- ------------- -------------
NET ASSETS
Fiduciary $ 591,390 $ - $ 116,876 $ 708,266 (a)
Class A 29,367 131,648 (116,876) 44,139 (a)
Class B 25,238 10,481 - 35,719
Class C - - - -
------------- ------------- ------------- -------------
Total $ 645,995 $ 142,129 $ - $ 788,124
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary 36,772 - 7,268 44,040 (a)(b)
Class A 1,822 8,556 (7,640) 2,738 (a)(b)
Class B 1,571 679 (26) 2,224 (b)
Class C - - - -
------------- ------------- ------------- -------------
Total 40,165 9,235 (398) 49,002
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Fiduciary offering and redemption price per share $ 16.08 - $ 16.08
------------- ------------- -------------
------------- ------------- -------------
Class A
Redemption price per share $ 16.12 15.39 $ 16.12
------------- ------------- -------------
------------- ------------- -------------
Maximum sales charge 4.50% 3.50% 4.50%
------------- ------------- -------------
------------- ------------- -------------
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to
nearest cent) $ 16.88 15.95 $ 16.88
------------- ------------- -------------
------------- ------------- -------------
Class B offering price per share (d) $ 16.06 15.44 $ 16.06
------------- ------------- -------------
------------- ------------- -------------
Class C offering price per share (d) $ - - $ -
------------- ------------- -------------
------------- ------------- -------------
<CAPTION>
Marquis
Growth Growth
Opportunities Equity Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 814,383 $ 37,039 $ 851,422
Repurchase agreements, at cost 35,429 1,564 36,993
Total (cost $608,093; $731,936, respectively) 849,812 38,603 888,415
Interest & dividends receivable 454 47 501
Receivable from brokers for investments sold 23,944 - 23,944
Receivable for shares issued 449 19 468
Prepaid expenses and other assets 10 9 19
------------- ------------- -------------
TOTAL ASSETS 874,669 38,678 913,347
------------- ------------- -------------
LIABILITIES:
Cash overdraft 7 7 14
Dividends payable 15,098 31 15,129
Payable for shares redeemed 176 3 179
Accrued expenses and other payables:
Investment advisory fees 498 28 526
Administration fees 115 4 119
12b-1 fees 63 1 64
Other 187 7 194
------------- ------------- -------------
TOTAL LIABILITIES 16,144 81 16,225
------------- ------------- -------------
NET ASSETS:
Capital 722,544 30,825 753,369
Undistributed (distributions in excess of)
net investment income (2,006)) (1) (2,007)
Accumulated undistributed net realized gains (losses)
from investment transactions (10,711)) (8) (10,719)
Net unrealized appreciation (depreciation) from
investments 148,698 7,781 156,479
------------- ------------- -------------
NET ASSETS $ 858,525 $ 38,597 $ 897,122
------------- ------------- -------------
NET ASSETS
Fiduciary $ 733,898 $ - $ 33,822 $ 767,720 (a)
Class A 62,939 36,627 (33,822) 65,744 (a)
Class B 61,686 1,970 - 63,656
Class C 2 - - 2
------------- ------------- ------------- -------------
Total $ 858,525 $ 38,597 $ - $ 897,122
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary 37,762 - 1,740 39,502 (a)(b)
Class A 3,262 2,375 (2,230) 3,407 (a)(b)
Class B 3,317 128 (22) 3,423 (b)
Class C - (c) - - (c)
------------- ------------- ------------- -------------
Total 44,341 2,503 (512) 46,332
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Fiduciary offering and redemption price per share $ 19.44 $ - $ 19.44
------------- ------------- -------------
------------- ------------- -------------
Class A
Redemption price per share $ 19.30 $ 15.42 $ 19.30
------------- ------------- -------------
------------- ------------- -------------
Maximum sales charge 4.50% 3.50% 4.50%
------------- ------------- -------------
------------- ------------- -------------
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to
nearest cent) $ 20.21 $ 15.98 $ 20.21
------------- ------------- -------------
------------- ------------- -------------
Class B offering price per share (d) $ 18.60 $ 15.34 $ 18.60
------------- ------------- -------------
------------- ------------- -------------
Class C offering price per share (d) $ 19.41 $ - $ 19.41
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
(a) These figures reflect the conversion of approximately 89% and 92% of
Marquis Class A shares to One Group Fiduciary shares respectively for
each fund.
(b) These figures reflect an adjustment to the number of shares based on the
assets of the Marquis Fund divided by the NAV of the One Group Fund.
(c) Amount is less than 1,000.
(d) Redemption price per Class B and Class C shares varies based on length of
time held.
- --------------------------------------------------------------------------------
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Assets and Liabilities
December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Asset Marquis Asset
Allocation Balanced Allocation
Fund Fund Adjustments Fund
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 197,844 $ 136,962 $ $ 334,806
Repurchase agreements, at cost 4,876 - 4,876
------------- ------------ ------------
Total (cost $295,743; $54,995 respectively) 202,720 136,962 339,682
Cash 1 - 1
Interest & dividends receivable 1,329 1,066 2,395
Receivable from brokers for investments sold - 7 7
Receivable for shares issued 220 14 234
Deferred organizational costs - 1 (1)
Prepaid expenses and other assets 2 16 18
------------- ------------ ------------- ------------
TOTAL ASSETS 204,272 138,066 (1) 342,337
------------- ------------ ------------- ------------
LIABILITIES:
Cash Overdraft - - -
Dividends payable 523 977 1,500
Payable for shares redeemed 30 4 34
Net payable for variation margin on futures contracts 2 - 2
Accrued expenses and other payables:
Investment advisory fees 93 82 175
Administration fees 13 16 29
12b-1 fees 65 3 68
Other 88 11 99
------------- ------------ ------------
TOTAL LIABILITIES 814 1,093 1,907
------------- ------------ ------------
NET ASSETS:
Capital 178,352 115,478 (1) 293,829
Undistributed (distributions in excess of)
net investment income (15) 7 (8)
Accumulated undistributed net realized gains (losses)
from investment and futures transactions 2,026 592 2,618
Net unrealized appreciation (depreciation) from
investments and futures 23,095 20,896 43,991
------------- ------------ ------------- ------------
NET ASSETS $ 203,458 $ 136,973 (1) $ 340,430
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
NET ASSETS
Fiduciary/Institutional $ 94,794 $ - $ 128,762 $ 223,556 (a)
Class A 38,874 132,739 (128,763) 42,850 (a)
Class B 69,790 4,234 - 74,024
------------- ------------- ------------- -------------
Total $ 203,458 $ 136,973 $ (1) $ 340,430
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary/Institutional 7,531 - 10,227 17,758 (a)(b)
Class A 3,085 10,844 (10,528) 3,401 (a)(b)
Class B 5,517 344 (9) 5,852 (b)
------------- ------------- ------------- -------------
Total 16,133 11,188 (310) 27,011
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Fiduciary/Institutional offering and
redemption price per share $ 12.59 $ - $ 12.59
------------- ------------- -------------
------------- ------------- -------------
Class A
Redemption price per share $ 12.60 $ 12.24 $ 12.60
------------- ------------- -------------
------------- ------------- -------------
Maximum sales charge 4.50% 3.50% 4.50%
------------- ------------- -------------
------------- ------------- -------------
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to
nearest cent) $ 13.19 $ 12.68 $ 13.19
------------- ------------- -------------
------------- ------------- -------------
Class B offering price per share (c) $ 12.65 $ 12.31 $ 12.65
------------- ------------- -------------
------------- ------------- -------------
<CAPTION>
Treasury Only Institutional Treasury Only
Money Market Money Market Money Market
Fund Fund Adjustments Fund
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 758,055 $ 54,995 $ 813,050
Repurchase agreements, at cost - - -
------------- ------------- -------------
Total (cost $295,743; $54,995 respectively) 758,055 54,995 813,050
Cash 1 - -
Interest & dividends receivable 13,971 269 14,240
Receivable from brokers for investments sold - - -
Receivable for shares issued - - -
Deferred organizational costs - 1 - 1
Prepaid expenses and other assets - 14 14
------------- ------------- -------------
TOTAL ASSETS 772,028 55,278 827,305
------------- ------------- -------------
LIABILITIES:
Cash Overdraft - 229 228
Dividends payable 3,315 271 3,586
Payable for shares redeemed - - -
Net payable for variation margin on futures contracts - - -
Accrued expenses and other payables:
Investment advisory fees 51 32 83
Administration fees 32 5 37
12b-1 fees - - -
Other 14 27 41
------------- ------------- -------------
TOTAL LIABILITIES 3,412 564 3,975
------------- ------------- -------------
NET ASSETS:
Capital 768,705 54,714 823,419
Undistributed (distributions in excess of)
net investment income - - -
Accumulated undistributed net realized gains (losses)
from investment and futures transactions (89) - (89)
Net unrealized appreciation (depreciation) from
investments and futures - - -
------------- ------------- -------------
NET ASSETS $ 768,616 $ 54,714 $ 823,330
------------- ------------- -------------
------------- ------------- -------------
NET ASSETS
Fiduciary/Institutional $ 768,616 $ 54,714 - $ 823,330
Class A - - - -
Class B - - - -
------------- ------------- ------------- -------------
Total $ 768,616 $ 54,714 - $ 823,330
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
OUTSTANDING UNITS OF BENEFICIAL INTEREST
Fiduciary/Institutional 768,703 54,714 - 823,417
Class A - - - -
Class B - - - -
------------- ------------- ------------- -------------
Total 768,703 54,714 - 823,417
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Asset Value:
Fiduciary/Institutional offering and
redemption price per share $ 1.00 $ 1.00 $ 1.00
------------- ------------- -------------
------------- ------------- -------------
Class A
Redemption price per share $ - $ - $ -
------------- ------------- -------------
------------- ------------- -------------
Maximum sales charge - - -
------------- ------------- -------------
------------- ------------- -------------
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to
nearest cent) $ - $ - $ -
------------- ------------- -------------
------------- ------------- -------------
Class B offering price per share (c) $ - $ - $ -
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
(a) These figures reflect the conversion of approximately 97% of Marquis
Class A shares to One Group Fiduciary shares.
(b) These figures reflect an adjustment to the number of shares based on
the assets of the Marquis Fund divided by the NAV of the One Group Fund.
(c) Redemption price per Class B shares varies based on length of time held.
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Year Ended December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
U.S. Treasury Marquis Treasury
Securities Securities
Money Market Money Market Proforma Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 158,642 $ 68,326 $ - $ 226,968
Dividend income - - - -
Income from securities lending 174 - - 174
------------- ------------- ------------- -------------
Total Income 158,816 68,326 - 227,142
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 10,067 3,729 623 14,419
Administration fees 4,735 1,865 182 6,782
12b-1 fees (Retail Class) 1,692 1,400 671 3,763
12b-1 fees (Cash Sweep Class) 2 638 (638) 2
Custodian and accounting fees 226 186 (88) 324
Legal and audit fees 98 121 (79) 140
Organization costs - 34 (34) -
Trustees' fees and expenses 40 30 (13) 57
Transfer agent fees 999 69 363 1,431
Registration and filing fees 781 88 250 1,119
Printing costs 296 62 66 424
Other 233 31 70 334
------------- ------------- ------------- -------------
Total expenses before waivers 19,169 8,253 1,373 28,795
Less waivers (3,430) (489) (1,252) (5,171)
------------- ------------- ------------- -------------
NET EXPENSES 15,739 7,764 121 23,624
------------- ------------- ------------- -------------
Net Investment Income 143,077 60,562 (121) 203,518
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 224 5 - 229
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 143,301 $ 60,567 $ (121) $ 203,747
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
ANNUAL GROSS EXPENSE RATIO
<CAPTION>
Municipal Marquis
Money Tax-Exempt
Market Money Market Proforma Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 20,440 $ 3,434 $ - $ 23,874
Dividend income 150 - - 150
Income from securities lending - - - -
------------- ------------- ------------- -------------
Total Income 20,590 3,434 - 24,024
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 1,950 408 (91) 2,267
Administration fees 916 136 13 1,065
12b-1 fees (Retail Class) 203 227 (91) 339
12b-1 fees (Cash Sweep Class) - - - -
Custodian and accounting fees 4 13 (12) 5
Legal and audit fees - 17 (17) -
Organization costs - 1 (1) -
Trustees' fees and expenses 4 2 (1) 5
Transfer agent fees 7 11 (10) 8
Registration and filing fees 166 - 27 193
Printing costs - 4 (4) -
Other - 6 (6) -
------------- ------------- ------------- -------------
Total expenses before waivers 3,250 825 (193) 3,882
Less waivers (632) (235) 115 (752)
------------- ------------- ------------- -------------
NET EXPENSES 2,618 590 (78) 3,130
------------- ------------- ------------- -------------
Net Investment Income 17,972 2,844 78 20,894
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 13 - - 13
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 17,985 $ 2,844 $ 78 $ 20,907
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
ANNUAL GROSS EXPENSE RATIO
</TABLE>
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Year Ended December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Marquis
Government Government
Bond Securities Proforma Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 53,333 $ 9,486 $ - $ 62,819
Dividend income - - - -
Income from securities lending 67 - - 67
------------- ------------- ------------- -------------
Total Income 53,400 9,486 - 62,886
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 3,481 836 (152) 4,165
Administration fees 1,274 228 22 1,524
12b-1 fees (Class A) 121 - 10 131
12b-1 fees (Class B) 122 6 3 131
Custodian and accounting fees 136 23 4 163
Legal and audit fees 27 16 (11) 32
Organization costs 4 6 (6) 4
Trustees' fees and expenses 16 3 - 19
Transfer agent fees 139 37 (10) 166
Registration and filing fees 151 - 30 181
Printing costs 81 9 7 97
Other 45 5 4 54
------------- ------------- ------------- -------------
Total expenses before waivers 5,597 1,169 (99) 6,667
Less waivers (618) (99) (17) (734)
------------- ------------- ------------- -------------
NET EXPENSES 4,979 1,070 (116) 5,933
------------- ------------- ------------- -------------
Net Investment Income 48,421 8,416 (114) 56,953
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 1,166 (20) - 1,146
Net change in unrealized appreciation (depreciation)
from investments 24,009 3,309 - 27,318
------------- ------------- ------------- -------------
Net realized/unrealized gains
(losses) from investments 25,175 3,289 - 28,464
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 73,596 $ 11,705 $ (114) $ 85,417
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
Marquis
Louisiana
Louisiana Tax-Free
Municipal Income Proforma Proforma
Bond Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 9,105 $ 1,624 $ - $ 10,729
Dividend income 22 - - 22
Income from securities lending - - - -
------------- ------------- ------------- -------------
Total Income 9,127 1,624 - 10,751
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 995 120 79 1,194
Administration fees 273 50 5 328
12b-1 fees (Class A) 173 - 76 249
12b-1 fees (Class B) 38 8 2 48
Custodian and accounting fees 16 5 (2) 19
Legal and audit fees 5 2 (1) 6
Organization costs - - - -
Trustees' fees and expenses 2 - - 2
Transfer agent fees 53 30 (19) 64
Registration and filing fees 15 5 (2) 18
Printing costs 9 1 1 11
Other 1 1 (1) 1
------------- ------------- ------------- -------------
Total expenses before waivers 1,580 222 138 1,940
Less waivers (435) (9) (90) (534)
------------- ------------- ------------- -------------
NET EXPENSES 1,145 213 48 1,406
------------- ------------- ------------- -------------
Net Investment Income 7,982 1,411 (48) 9,345
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 388 - - 388
Net change in unrealized appreciation (depreciation)
from investments 3,213 1,168 - 4,381
------------- ------------- ------------- -------------
Net realized/unrealized gains
(losses) from investments 3,601 1,168 - 4,769
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 11,583 $ 2,579 $ (48) $ 14,114
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Year Ended December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Disciplined Marquis
Value Value Equity Proforma Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 564 $ 125 $ - $ 689
Dividend income 11,486 2,550 - 14,036
Income from securities lending 199 - - 199
------------- ------------- ------------- -------------
Total Income 12,249 2,675 - 14,924
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 4,422 983 (47) 5,358
Administration fees 984 190 19 1,193
12b-1 fees (Class A) 86 - 47 133
12b-1 fees (Class B) 210 57 19 286
Custodian and accounting fees 84 19 (1) 102
Legal and audit fees 12 13 (10) 15
Organization costs - 8 (8) -
Trustees' fees and expenses 8 4 (2) 10
Transfer agent fees 148 38 (7) 179
Registration and filing fees 33 5 2 40
Printing costs 88 15 4 107
Other 19 2 2 23
------------- ------------- ------------- -------------
Total expenses before waivers 6,094 1,334 18 7,446
Less waivers (24) (14) 1 (37)
------------- ------------- ------------- -------------
NET EXPENSES 6,070 1,320 19 7,409
------------- ------------- ------------- -------------
Net Investment Income 6,179 1,355 (19) 7,515
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 103,933 19,767 - 123,700
Net change in unrealized appreciation (depreciation)
from investments 80,009 17,426 - 97,435
------------- ------------- ------------- -------------
Net realized/unrealized gains
(losses) from investments 183,942 37,193 - 221,135
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 190,121 $ 38,548 $ (19) $ 228,650
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
Growth Marquis
Opportunities Growth Equity Proforma Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 1,070 $ 147 $ - $ 1,217
Dividend income 3,237 287 - 3,524
Income from securities lending 745 - - 745
------------- ------------- ------------- -------------
Total Income 5,052 434 - 5,486
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 5,248 224 (1) 5,471
Administration fees 1,167 45 5 1,217
12b-1 fees (Class A) 163 - 8 171
12b-1 fees (Class B) 401 9 3 413
Custodian and accounting fees 171 5 2 178
Legal and audit fees 20 3 (2) 21
Organization costs - 1 (1) -
Trustees' fees and expenses 10 - - 10
Transfer agent fees 334 25 (11) 348
Registration and filing fees 90 3 1 94
Printing costs 107 2 3 112
Other 26 1 - 27
------------- ------------- ------------- -------------
Total expenses before waivers 7,737 318 7 8,062
Less waivers (47) (8) 6 (49)
------------- ------------- ------------- -------------
NET EXPENSES 7,690 310 13 8,013
------------- ------------- ------------- -------------
Net Investment Income (2,638) 124 (13) (2,527)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 93,363 915 - 94,278
Net change in unrealized appreciation (depreciation)
from investments 94,327 5,752 - 100,079
------------- ------------- ------------- -------------
Net realized/unrealized gains
(losses) from investments 187,690 6,667 - 194,357
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 185,052 $ 6,791 $ (13) $ 191,830
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
The One Group Family of Mutual Funds
Proforma Combined Statements of Operations
For the Year Ended December 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Asset Marquis
Allocation Balanced Proforma Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 5,520 $ 3,534 $ - $ 9,054
Dividend income 1,442 1,459 - 2,901
Income from securities lending 50 - - 50
------------- ------------- ------------- -------------
Total Income 7,012 4,993 - 12,005
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 1,107 956 (116) 1,947
Administration fees 280 194 19 493
12b-1 fees (Class A) 106 - 13 119
12b-1 fees (Class B) 454 24 9 487
Custodian and accounting fees 80 19 42 141
Legal and audit fees 5 9 (5) 9
Organization costs 1 4 (4) 1
Trustees' fees and expenses 2 2 - 4
Transfer agent fees 163 41 83 287
Registration and filing fees 46 3 32 81
Printing costs 28 6 15 49
Other 19 3 11 33
------------- ------------- ------------- -------------
Total expenses before waivers 2,291 1,261 99 3,651
Less waivers (355) (74) (177) (606)
------------- ------------- ------------- -------------
NET EXPENSES 1,936 1,187 (78) 3,045
------------- ------------- ------------- -------------
Net Investment Income 5,076 3,806 78 8,960
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FUTURES:
Net realized gains (losses) from investments,
and futures transactions 21,107 8,344 - 29,451
Net change in unrealized appreciation
(depreciation) from investments and futures 15,835 12,993 - 28,828
------------- ------------- ------------- -------------
Net realized/unrealized gains
(losses) from investments and futures 36,942 21,337 - 58,279
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 42,018 $ 25,143 $ 78 $ 67,239
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
Treasury Only Institutional
Money Market Money Market Proforma Proforma
Fund Fund Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 45,605 $ 3,614 $ - $ 49,219
Dividend income - - - -
Income from securities lending 252 - - 252
------------- ------------- ------------- -------------
Total Income 45,857 3,614 - 49,471
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 445 99 (46) 498
Administration fees 277 66 (33) 310
12b-1 fees (Class A) - - - -
12b-1 fees (Class B) - - - -
Custodian and accounting fees 26 10 (7) 29
Legal and audit fees 8 4 (3) 9
Organization costs 4 - - 4
Trustees' fees and expenses 5 1 - 6
Transfer agent fees 8 14 (13) 9
Registration and filing fees 45 34 (29) 50
Printing costs 4 2 (2) 4
Other 19 1 2 22
------------- ------------- ------------- -------------
Total expenses before waivers 842 231 (131) 942
Less waivers - (66) 66 -
------------- ------------- ------------- -------------
NET EXPENSES 842 165 (65) 942
------------- ------------- ------------- -------------
Net Investment Income 45,015 3,449 65 48,529
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FUTURES:
Net realized gains (losses) from investments,
and futures transactions 4 - - 4
Net change in unrealized appreciation
(depreciation) from investments and futures - - - -
------------- ------------- ------------- -------------
Net realized/unrealized gains
(losses) from investments and futures 4 - - 4
------------- ------------- ------------- -------------
Change in net assets resulting from operations $ 45,019 $ 3,449 $ 65 $ 48,533
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS,
(Unaudited)
1. BASIS OF COMBINATION:
The unaudited Pro Forma Combining Statements of Assets and Liabilities,
Statements of Operations, and Schedules of Portfolio Investments reflect the
accounts of eight investment portfolios offered by The One Group: the U.S.
Treasury Securities Money Market Fund, the Municipal Money Market Fund, the
Government Bond Fund, the Louisiana Municipal Bond Fund, the Disciplined Value
Fund, the Growth Opportunities Fund, the Asset Allocation Fund and the Treasury
Only Money Market Fund (the "Surviving Funds") and eight investment portfolios
offered by Marquis Funds: the Treasury Securities Money Market Fund, the Tax-
Exempt Money Market Fund, the Government Securities Fund, the Louisiana Tax-Free
Income Fund, the Value Equity Fund, the Growth Equity Fund, the Balanced Fund
and the Institutional Money Market Fund (the "Transferor Funds"), (collectively,
"Funds") as if the proposed reorganization occurred as of and for the year ended
December 31, 1997. These statements have been derived from books and records
utilized in calculating daily net asset value at December 31, 1997.
The Plan of Reorganization provides that at the time the reorganization
becomes effective (the "Effective Time of the Reorganization"), all of the
assets and liabilities will be transferred as follows such that at and after the
Effective Time of Reorganization, the assets and liabilities of the Transferor
Fund will become the assets and liabilities of the Surviving Fund: the Treasury
Securities Money Market Fund will be transferred to the U.S. Treasury Securities
Money Market Fund, the Tax-Exempt Money Market Fund will be transferred to the
Municipal Money Market Fund, the Government Securities Fund will be transferred
to the Government Bond Fund, the Louisiana Tax-Free Income Fund will be
transferred to the Louisiana Municipal Bond Fund, the Value Equity Fund will be
transferred to the Disciplined Value Fund, the Growth Equity Fund will be
transferred to the Growth Opportunities Fund, the Balanced Fund will be
transferred to the Asset Allocation Fund and the Institutional Money Market Fund
will be transferred to the Treasury Only Money Market Fund. In exchange for the
transfer of assets and liabilities, the One Group will issue to the Transferor
Funds full and fractional shares of the corresponding Surviving Funds, and the
Transferor Funds will make a liquidating distribution of such shares to its
shareholders. The number of shares of the Surviving Funds so issued will be
equal in value to the full and fractional shares of the Transferor Funds that
are outstanding immediately prior to the Effective Time of the Reorganization.
At and after the Effective Time of the Reorganization, all debts, liabilities
and obligations of the Transferor Funds will attach to the Surviving Funds and
may thereafter be enforced against the Surviving Funds to the same extent as if
they had been incurred by it. The pro forma statements give effect to the
proposed transfer described above.
Under the purchase method of accounting for business combinations under
generally accepted accounting principles, the basis on the part of the Surviving
Funds, of the assets of the Transferor Funds will be the fair market value of
such assets on the closing date of the transaction. The Surviving Funds will
recognize no gain or loss for federal tax purposes on its issuance of shares in
the reorganization, and the basis to the Surviving Funds of the assets of the
Transferor Funds
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
received pursuant to the reorganization will equal the fair market value of the
consideration furnished, and costs incurred, by the Surviving Funds in the
reorganization -- i.e., the sum of the liabilities assumed, the fair market
value of the Surviving Funds shares issued, and such costs. For accounting
purposes, the Surviving Funds are the survivor of this reorganization. The pro
forma statements reflect the combined results of operations of the Transferor
Funds and the Surviving Funds. However, should such reorganization be effected,
the statements of operations of the Surviving Funds will not be restated for
precombination period results of the corresponding Transferor Funds.
The Pro Forma Combining Statements of Assets and Liabilities, Statements of
Operations, and Schedules of Portfolio Investments should be read in conjunction
with the historical financial statements of the Funds incorporated by reference
in the Statement of Additional Information.
The Transferor Funds and the Surviving Funds are each separate portfolios
of the Marquis Funds and The One Group Funds respectively, which are registered
as open-end management companies under the Investment Company Act of 1940 (the
"1940 Act"). The Funds investment objectives are as follows:
FUNDS OBJECTIVE
The One Group U.S. Treasury Securities Current income with liquidity and
stability of Money Market Fund principal.
Marquis Treasury Securities Money Preserve principal value and maintain a
Market Fund high degree of liquidity while providing
current income.
The One Group Municipal Money Market As high a level of current interest
Fund income exempt from Federal income tax as
is consistent with capital capital
preservation and stability of principal.
Marquis Tax-Exempt Money Market Fund Preserve principal value and maintain a
high degree of liquidity while providing
current income exempt from Federal
income taxes.
(CONTINUED)
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
The One Group Government Bond Fund A high level of current income with
liquidity and safety of principal.
Marquis Government Securities Fund Current income consistent with relative
stability of capital.
The One Group Louisiana Municipal Current income both consistent with the
Bond Fund preservation of principal and exempt
from Federal income tax and Louisiana
income tax.
Marquis Louisiana Tax-Free Income A level of current income consistent
Fund with relative stability of capital.
The One Group Disciplined Value Capital appreciation with the secondary
Fund goal of achieving current income by
investing primarily in equity
securities.
Marquis Value Equity Fund Long-term capital appreciation by
investing primarily in equity securities
which have a low currency valuation
relative to various measures of
intrinsic value.
The One Group Growth Opportunities Growth of capital and secondarily, Fund
current income by investing primarily in
equity securities.
Marquis Growth Equity Fund Long-term capital appreciation by
investing primarily in companies whose
sales and earnings are expected to grow
at an above average rate.
The One Group Asset Allocation To provide total return while preserving
capital.
Marquis Balanced Fund Capital appreciation and current income
through regular payments of dividends
and interest.
The One Group Treasury Only High current income with liquidity and
Money Market Fund stability of principal with the added
assurance of a fund that does not
purchase securities that are subject to
(CONTINUED)
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
repurchase agreements.
Marquis Institutional Money Preserve principal value and maintain a
Market Fund high degree of liquidity while providing
current income.
SERVICE PROVIDERS:
Banc One Investment Advisors Corporation (the "Advisor"), will serve as
the combined Funds' investment advisor. The One Group Services Company (the
"Administrator"), a wholly owned subsidiary of The BISYS Group, Inc. (BISYS)
will serve as the administrator and distributor to the Funds.
ORGANIZATIONAL EXPENSES:
Organizational costs cannot be carried over when being merged with another
fund. Therefore, in the Statements of Assets and Liabilities, the
organizational costs were reclassified against capital for the Transferor Funds
rather than being carried forward.
TRANSFEROR FUNDS:
The Transferor Funds (except for the Treasury Securities Money Market Fund,
the Tax-Exempt Money Market Fund and the Institutional Money Market Fund) issue
two classes of shares: Class A Shares and Class B Shares. The Treasury
Securities Money Market Fund issues three classes of shares: Retail Class, Trust
Class and Cash Sweep Class. The Tax-Exempt Money Market Fund issues two classes
of shares: Retail Class and Cash Sweep Class. The Institutional Money Market
Fund issues one class of shares. As of December 31, 1997, there were no
shareholders in the Cash Sweep Class of the Tax-Exempt Money Market Fund. Each
class of shares has identical rights and privileges except with respect to fees
paid under shareholder servicing or distribution plans, expenses allocable
exclusively to each class of shares, voting rights on matters affecting a single
class of shares, and the exchange privilege of each class of shares. Class A
shares are subject to an initial sales charge. Class B shares are subject to a
contingent deferred sales charge (CDSC).
Under the terms of the investment advisory agreement, the Advisor is
entitled to receive fees computed at the annual rate of 0.74% of the average
daily net assets for the Value Equity Fund, the Balanced Fund and the Growth
Equity fund, 0.55% for the Government Securities Fund, 0.45% for
(CONTINUED)
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
the Tax-Exempt Money Market Fund, 0.35% for the Louisiana Tax-Free Income Fund,
0.30% for the Treasury Securities Money Market Fund and 0.15% for the
Institutional Money Market Fund. Such fees are accrued daily and paid monthly.
For the year ended December 31, 1997, total investment advisory fees incurred by
the Funds were as follows:
<TABLE>
<CAPTION>
Total Fees Waiver
---------- ------
<S> <C> <C>
Treasury Securities Money Market 3,729 ---
Tax-Exempt Money Market 408 ---
Government Securities 836 59
Louisiana Tax-Free Income 120 ---
Value Equity 983 ---
Growth Equity 224 ---
Balanced 956 40
Institutional Money Market 99 66
</TABLE>
Under the terms of the administration agreement, the Administrator is
entitled to receive fees at an annual rate of 0.10% of the average daily net
assets for the Institutional Money Market Fund and 0.15% for the remaining
funds. Such fees are accrued daily and paid monthly. For the year ended
December 31, 1997, the Administrator's fees earned from the Funds were as
follows:
<TABLE>
<CAPTION>
Total Fees Waiver
---------- ------
<S> <C> <C>
Treasury Securities Money Market 1,865 114
Tax-Exempt Money Market 136 14
Government Securities 228 40
Louisiana Tax-Free Income 50 9
Value Equity 190 14
Growth Equity 45 8
Balanced 194 34
Institutional Money Market 66 --
</TABLE>
SURVIVING FUNDS:
(CONTINUED)
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
The surviving funds (except for the U.S. Treasury Securities Money Market
Fund, the Municipal Money Market Fund and the Treasury Only Money Market Fund)
are authorized to issue four classes of shares: Fiduciary, Class A, Class B and
Class C. The U.S. Treasury Securities Money Market Fund is authorized to issue
five classes of shares: Fiduciary, Class A, Class B, Class C and Service Class.
Municipal Money Market Fund is authorized to issue three classes of shares:
Fiduciary, Class A and Class C. The Treasury Only Money Market Fund is
authorized to issue Fiduciary shares. As of December 31, 1997, there were no
shareholders in Class C of the Funds except for the Growth Opportunities Fund or
in the Service Class. Each class of shares has identical rights and privileges
except with respect to fees paid under shareholder servicing or distribution
plans, expenses allocable exclusively to each class of shares, voting rights on
matters affecting a single class of shares, and the exchange privilege of each
class of shares. Class A shares are subject to an initial sales charge upon
purchase. Class B shares and Class C shares are subject to a contingent
deferred sales change (CDSC).
Under the terms of the investment advisory agreement, the Advisor is
entitled to receive fees computed at the annual rate of 0.35% of the average
daily net assets of the U.S. Treasury Securities Money Market Fund and the
Municipal Money Market Fund, 0.45% of the Government Bond Fund, 0.60% of the
Louisiana Municipal Bond Fund, 0.74% of the Disciplined Value Fund and the
Growth Opportunities Fund, 0.65% of the Asset Allocation Fund and 0.08% of the
Institutional Money Market Fund. Such fees are accrued daily and paid monthly.
For the year ended December 31, 1997, total investment advisory fees incurred by
the funds were as follows:
<TABLE>
<CAPTION>
Total Fees Waiver
---------- ------
<S> <C> <C>
U.S. Treasury Securities Money Market 10,067 2,841
Municipal Money Market 1,950 557
Government Bond 3,481 227
Louisiana Municipal Bond 995 381
Disciplined Value 4,422 ---
Growth Opportunities 5,248 ---
Asset Allocation 1,107 170
Treasury Only Money Market 445 ---
</TABLE>
(CONTINUED)
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
Under the terms of the administration agreement, the Administrator's fees
for all funds except the Treasury Only Money Market Fund, are computed at the
annual rate of 0.20% on the first $1.5 billion of the One Group net assets
(excluding the Investor Growth Fund, the Investor Growth & Income Fund, the
Investor Conservative fund, and the Investor Balanced Fund (the "Investor Funds)
and the Treasury Only Money Market Fund and the Government Money Market Fund
(the "Institutional Money Market Funds")); 0.18% on the next $0.5 billion of the
One Group net assets (excluding the Investor Funds and the Institutional Money
Market funds); and 0.16% of the One Group net assets (excluding the Investor
Funds and the Institutional Money Market Funds) over $2 billion. The
Administrator's fees for the Treasury Only Money Market Fund are computed at the
annual rate of 0.05% of the average daily net assets. The Advisor also serves
as Sub-Administrator of each Fund of the One Group, 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. For the year ended December 31, 1997,
the Administrator's fee were as follows:
<TABLE>
<CAPTION>
Total Fees Waiver
---------- ------
<S> <C> <C>
U.S. Treasury Securities Money Market 4,735 337
Municipal Money Market 916 41
Government Bond 1,274 345
Louisiana Municipal Bond 273 ---
Disciplined Value 984 ---
Growth Opportunities 1,167 ---
Asset Allocation 280 154
Treasury Only Money Market 277 ---
</TABLE>
PRO FORMA ADJUSTMENTS AND PRO FORMA COMBINED COLUMNS:
The pro forma adjustments and pro forma combined columns of the statements
of operations reflect the adjustments necessary to show expenses at the rates
which would have been in effect if the Transferor Funds were included in the
Surviving Funds for the year ended December 31, 1997. Investment advisory and
shareholder service and 12b-1 fees in the pro forma combined column are
calculated at the rates in effect for the Surviving Funds based upon the
combined net assets of the Transferor Funds and the Surviving Funds.
(CONTINUED)
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
For the year ended December 31, 1997, approximately $5,807 (in thousands)
of the investment advisory fees on a pro forma combined basis for the Surviving
Funds were waived.
The pro forma schedules of portfolio investments give effect to the
proposed transfer of such assets as if the reorganization had occurred at
December 31, 1997.
2. PORTFOLIO VALUATION, SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities of the Money Market Funds are valued utilizing the amortized
cost method permitted in accordance with Rule 2a-7 under the 1940 Act. Under
the amortized cost method, discount or premium is amortized on a constant basis
to the maturity of the security. In addition, the Funds may not (a) purchase
any instrument with a remaining maturity greater than thirteen months unless
such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
Pricing policies of the Survivor Funds and the Transferor Funds are the
same except as indicated. Listed securities of the Variable Net Asset Value
Funds are valued at the latest available sales price on the principal exchange
where such securities are traded. Unlisted securities of the Survivor Funds or
listed securities for which latest sales prices are not available are valued at
the mean of the latest bid and asked price in the principal market where such
securities are normally traded. Unlisted securities of the Transferor Funds or
listed securities for which latest sales prices are not available are valued at
the last quoted bid. For the Survivor funds, corporate debt securities and debt
securities of U.S. issuers (other than short-term investments maturing in 60
days or less), including municipal securities, are valued on the basis of
valuations provided by dealers or by an independent pricing service approved by
the Board of Trustees. Similarly for the Transferor funds, these securities are
valued at the most recent quoted bid price. Short-term investments maturing in
60 days or less are valued at amortized cost, which approximates market value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded. Options traded on the
exchange are valued using the last sale price or, in the absence of a sale, the
last offering price. Options traded over-the counter- are valued using dealer-
supplied valuations. Investments of the Survivor Funds for which there are no
such quotations or valuations are carried at fair value as determined by the
Fair Value committee which is comprised of members of Banc One Investment
Advisors Corporation (the "Advisor") and The One Group Services Company ("the
Administrator") under the direction of the Board of Trustees. Investments of
the Transferor Funds for which quotations are not readily available are valued
at fair value using methods determined in good faith as approved by the Board of
Trustees.
(CONTINUED)
<PAGE>
THE ONE GROUP FAMILY OF MUTUAL FUNDS
NOTES TO PRO FORMA FINANCIAL STATEMENTS, (Continued)
(Unaudited)
-----------
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on the
accrual basis. Dividends are recorded on the ex-divided date. Interest Income,
including any discount or premium, is accrued as earned using the effective
interest method.
3. CAPITAL SHARES:
The pro forma net asset values per share assume the issuance of shares of
the Surviving Funds, which would have occurred at December 31, 1997 in
connection with the proposed reorganization. The pro forma number of shares
outstanding consists of the following:
<TABLE>
<CAPTION>
Shares Additional Proforma
outstanding at Shares Shares at
December 31, Assumed in the December 31,
1997 Reorganization 1997
(000) (000) (000)
<S> <C> <C> <C>
U.S. Treasury Securities Money
Market Fund 3,521,481 1,420,474 4,941,955
Municipal Money Market Fund 596,488 126,377 722,865
Government Bond Fund 85,563 14,828 100,391
Louisiana Municipal Bond Fund 15,144 4,105 19,249
Disciplined Value Fund 40,165 8,837 49,002
Growth Opportunities Fund 44,341 1,986 46,327
Asset Allocation 16,133 10,879 27,012
Treasury Only Money Market Fund 768,703 54,714 823,417
</TABLE>
(CONTINUED)
<PAGE>
PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The information required by this item is incorporated by reference to the
Item 27 of Post-Effective Amendment No. 35 (filed August 29, 1995) to
Registrant's Registration Statement on Form N-1A (File No. 2-95973) under the
Securities Act of 1933 and the Investment Company Act of 1940 (File
No. 811-4236).
ITEM 16. EXHIBITS
(1) Amended and Restated Declaration of Trust is incorporated by reference
to Exhibit (1) to Post Effective Amendment No. 39 (filed August 16,
1996) to Registrant's Registration Statement on Form N-1A.
(2) Code of Regulations as amended and restated July 26, 1990 is
incorporated by reference to Exhibit (2) to Post-Effective Amendment
No. 39 (filed August 16, 1996) to Registrant's Registration Statement
on Form N-1A.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is filed herewith.
(5)(a) Article V, Article VIII and Article IX, Sections 4 and 5 of the
Amended and Restated Declaration of Trust are incorporated by
reference to Exhibit (1) to Post-Effective Amendment No. 39 (filed
August 16, 1996) to Registrant's Registration Statement on Form N-1A.
(5)(b) Article I of the Code of Regulations as amended and restated July 26,
1990 is incorporated by reference to Exhibit (2) to Post-Effective
Amendment No. 39 (filed August 16, 1996) to Registrant's Registration
Statement on Form N-1A.
(6)(a) Investment Advisory Agreement dated January 11, 1993 between
Registrant and Banc One Investment Advisors Corporation is
incorporated by reference to Exhibit 5(a) to Post-Effective Amendment
No. 27 (filed March 17, 1993) to Registrant's Registration Statement
on Form N-1A.
(6)(b) Revised Schedule A to the Investment Advisory Agreement between
Registrant and Banc One Investment Advisors Corporation is filed
herewith.
(6)(c) Sub-Investment Advisory Agreement dated October 1, 1996 between Banc
One Investment Advisors Corporation and Independence International
Associates, Inc. is incorporated by reference to Exhibit (5) (c) to
Post-Effective Amendment No. 42 (filed June 18, 1997) to Registrant's
Registration Statement on Form N-1A.
(6)(d) Form of Sub-Investment Advisory Agreement between Banc One Investment
Advisors Corporation and Banc One High Yield Partners, Inc. is filed
herewith.
(7)(a) Distribution Agreement dated November 1, 1995 between the Registrant
and The One Group Services Company is incorporated by reference to
Exhibit (6) (a) to Post-Effective Amendment No. 36 (filed November 24,
1995) to Registrant's Registration Statement on Form N-1A.
(7)(b) Revised Schedules A-D to the Distribution Agreement between The One
Group Services Company and the Registrant are incorporated by
reference, to Exhibit (6)(b) to Post-Effective Amendment 40 (filed
August 24, 1996) to Registrant's Registration Statement on Form N-1A.
-1-
<PAGE>
(7)(c) Re-executed Distribution Agreement dated December 13, 1995 between
Registrant and The One Group Services Company is incorporated by
reference to Exhibit (7)(c) to Registrant's Registration Statement on
Form N-14 (filed January 19, 1996).
(7)(d) Revised Schedule E to the Distribution Agreement between the
Registrant and The One Group Services Company is incorporated by
reference to Exhibit (6)(d) to Post-Effective Amendment 43 to
Registrant's Registration Statement on Form N-1A (filed August 29,
1997).
(7)(e) Dealer's Agreement for The One Group dated November 11, 1995 between
The One Group Services Company and Banc One Securities Corporation is
incorporated by reference to Exhibit (7)(d) to Registrant's
Registration Statement on Form N-14 (filed January 19, 1996).
(7)(f) Form of Shareholder Servicing Agreement between The One Group and
Participating Service Organizations is filed herewith.
(8) Not applicable.
(9)(a) Custodian Contract between Registrant and State Street Bank and Trust
Company is incorporated by reference to Exhibit (8) to Post-Effective
Amendment No. 12 (filed September 9, 1988) to Registrant's
Registration Statement on Form N-1A.
(9)(b) Sub-Custodian Agreement between State Street Bank and Trust Company
and Bank One Trust Company, NA is incorporated by reference to Exhibit
(8)(b) to Post-Effective Amendment No. 37 (filed June 13, 1996) to the
Registrant's Registration Statement on Form N-1A.
(10)(a) Re-Executed Distribution and Shareholder Services Plan - Class A and
Service Class shares dated November 1, 1995 between the Registrant and
The One Group Services Company is incorporated by reference to
Exhibit (15) (a) to Post-Effective Amendment No. 43 (filed August 29,
1997) to Registrant's Registration Statement on Form N-1A.
(10)(b) Distribution and Shareholder Services Plan - Class B and Class C
shares dated January 1, 1994, as amended August 20, 1997, between the
Registrant and The One Group Services Company is incorporated by
reference to Exhibit (15)(b) Post-Effective Amendment No. 43 (filed
August 29, 1997) to Registrant's Registration Statement on Form N-1A.
(10)(c) Agency Services and Delegation Agreement dated January 1, 1996 between
the Registrant and BISYS Qualified Plan Services is incorporated by
reference to Exhibit (9)(g) to Post-Effective Amendment No. 37 (filed
June 13, 1996) to the Registrant's Registration Statement on Form
N-1A.
(10)(d) Form of Agency Services and Delegation Agreement dated August 20, 1997
between the Registrant and Bank One Trust Company, NA is incorporated
by reference to Exhibit (9)(i) to Post-Effective Amendment No. 43
(filed August 29, 1997) to Registrant's Registration Statement on Form
N-1A.
(10)(e) Form of Order Processing Agreement dated August 20, 1997 between the
Registrant and Bank One Trust Company, NA is incorporated by reference
to Exhibit (9)(j) to Post-Effective Amendment No. 43 (filed August 29,
1997) to the Registrant's Registration Statement on Form N-1A.
(10)(f) Shareholder Servicing Agreement is incorporated by reference to
Exhibit (9)(h) to Post-Effective Amendment No. 37 (filed June 13,
1996) to the Registrant's Registration Statement on Form N-1A.
(10)(g) Form of Services Agreement between the Registrant and Charles Schwab &
Company, incorporated by reference to Exhibit 9)(l) to Post-Effective
Amendment No. 43 (filed August 29, 1997) to Registrant's Registration
Statement on Form N-1A.
-2-
<PAGE>
(10)(h) Form of Operating Agreement between the Registrant and Charles Schwab
& Company, incorporated by reference to Exhibit (9)(l) to Post-
Effective Amendment No 43 (filed August 29, 1997) to Registrant's
Registration Statement on Form N-1A.
(10)(i) Form of Retirement Services Order Processing Agreement between the
Registrant and Charles Schwab & Company, is incorporated by reference
to Exhibit (9)(n) to Post-Effective Amendment No. 43 (filed August 29,
1997) to Registrant's Registration Statement on Form N-1A.
(10)(j) Agency Services and Delegation Agreement between INVESCO Trust Company
and Registrant dated January 1, 1998 is filed herewith.
(10)(k) Multiple Class Plan for The One Group adopted by the Board of Trustees
on May 22, 1995, as amended May 21, 1997 is filed herewith.
(11) Opinion of Ropes & Gray, including consent, is filed herewith.
(12) Opinion of Ropes & Gray, including consent, as to Tax Matters is filed
herewith.
(13)(a) Management and Administration Agreement dated December 1, 1995 between
the Registrant and The One Group Services Company is incorporated by
reference to Exhibit (13)(a) to Registrant's Registration Statement on
Form N-14 (filed January 19, 1996).
(13)(b) Re-executed Management and Administration Agreement dated November 20,
1997 is filed herewith.
(13)(c) Revised Schedule A to Management and Administration Agreement dated
December 1, 1995 between Registrant and The One Group Services Company
is incorporated by reference to Post-Effective Amendment No. 43 (filed
August 29, 1997) to Registrant's Registration Statement on Form N-1A.
(13)(d) Transfer Agency and Service Agreement between the Registrant and State
Street Bank and Trust Company is incorporated by reference to
Exhibit (9)(b) to Post-Effective Amendment No. 12 (filed September 9,
1988) to Registrant's Registration Statement on Form N-1A.
(13)(e) Fund Accounting Agreement dated December 1, 1995 between the
Registrant and The One Group Services Company is incorporated by
reference to Post-Effective Amendment No. 43 (filed August 29, 1997)
to Registrant's Registration Statement on Form N-1A.
(13)(f) Revised Schedule A to the Fund Accounting Agreement between the
Registrant and The One Group Services Company is incorporated by
reference to Exhibit (9)(e) to Post-Effective Amendment No. 40 (filed
August 29, 1996) to the Registrant's Registration Statement on Form
N-1A.
(13)(h) Revised Schedule A to the Sub-Administration Agreement between The One
Group Services Company and Banc One Investment Advisors is
incorporated by reference to Exhibit (9)(g) to the Post-Effective
Amendment No. 40 (filed August 29, 1996) to the Registrant's
Registration Statement on Form N-1A.
(14)(a) Consent of Coopers & Lybrand L.L.P., is filed herewith.
(14)(b) Consent of Ropes & Gray is filed herewith.
(14)(c) Consent of Price Waterhouse LLP is filed herewith.
(14)(d) Consent of KPMG Peat Marwick, LLP is filed herewith.
(14)(e) Consent of Arthur Andersen LLP is filed herewith.
-3-
<PAGE>
(15) Not applicable.
(16) Executed Powers of Attorney are filed herewith.
(17)(a) Declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940 for the Registrant dated August 29, 1997 is filed herewith.
(17)(b) Prospectuses for The One Group Treasury Only Money Market Fund, The
One Group U.S. Treasury Securities Money Market Fund, The One Group
Municipal Money Market Fund, The One Group Government Bond Fund, The
One Group Income Bond Fund, The One Group Louisiana Municipal Bond
Fund, The One Group Asset Allocation Fund, The One Group Disciplined
Value Fund, The One Group Growth Opportunities Fund, The One Group
Small Capitalization Fund, and The One Group International Equity
Index Fund dated November 1, 1997, and prospectuses for Marquis
Institutional Money Market Fund, Marquis Treasury Securities Money
Market Fund, Marquis Tax-Exempt Money Market Fund, Marquis Government
Securities Fund, Marquis Strategic Income Fund, Marquis Louisiana Tax-
Free Income Fund, Maquis Balanced Fund, Marquis Value Equity Fund,
Marquis Growth Equity Fund, Marquis Small Cap Fund, and Marquis
International Equity Fund dated February 1, 1998 are filed herewith.
(17)(c) Statement of Additional Information of the One Group, dated
November 1, 1997, and Statement of Additional Information for Marquis
Funds dated February 1, 1998, are filed herewith.
(17)(d) The One Group Semi-Annual Report for the period ended December 31,
1998 is filed herewith.
(17)(e) Marquis Funds Semi-Annual Report for the period ended March 31, 1998
is filed herewith.
(17)(f) Marquis Funds Annual Report for the period ended September 30, 1997 is
filed herewith.
ITEM 17. UNDERTAKINGS
(1) The registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act, the reoffering
prospectus will contain the information called for by the applicable
registration form for reoffering by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant in the City of Washington, District of
Columbia, on the 29th day of May, 1998.
The One Group
Registrant
/s/ MARK S. REDMAN
* Mark S. Redman
PRESIDENT
-4-
<PAGE>
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Mark S. Redman President May 29, 1998
*/s/ MARK S. REDMAN
William Tomko Treasurer May 29, 1998
*/s/ WILLIAM TOMKO
Peter C. Marshall Trustee May 29, 1998
*/s/ PETER C. MARSHALL
Charles I. Post Trustee May 29, 1998
*/s/ CHARLES I. POST
John S. Randall Trustee May 29, 1998
*/s/ JOHN S. RANDALL
Frederick W. Ruebeck Trustee May 29, 1998
*/s/ FREDERICK W. RUEBECK
Robert A. Oden, Jr. Trustee May 29, 1998
*/s/ ROBERT ODEN
*BY: /s/ ALAN G. PRIEST May 29, 1998
Alan G. Priest
ATTORNEY-IN-FACT
-5-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
<S> <C>
(4) Agreement and Plan of Reorganization
(6)(b) Revised Schedule A to the Investment Advisory Agreement between
Registrant and Banc One Investment Advisors Corporation.
(6)(d) Form of Sub-Investment Advisory Agreement between Banc One Investment
Advisors Corporation and Banc One High Yield Partners, Inc.
(7)(e) Form of Shareholder Servicing Agreement between The One Group and
Participating Service Organizations.
(10)(j) Agency Services and Delegation Agreement between INVESCO Trust Company
and Registrant dated January 1, 1998.
(10)(k) Multiple Class Plan adopted by the Board of Trustees on May 22, 1995,
as amended May 21, 1998.
(11) Opinion and Consent of Counsel.
(12) Opinion of Ropes & Gray, including consent, as to Tax Matters.
(13)(b) Re-Executed Management and Administration Agreement dated November 20,
1997 between Registrant and The One Group Services Company.
(14)(a) Consent of Coopers & Lybrand.
(14)(b) Consent of Ropes & Gray.
<PAGE>
(14)(c) Consent of Price Waterhouse, LLP.
(14)(d) Consent of KPMG Peat Marwick, LLP.
(14)(e) Consent of Arthur Anderson LLP.
(16) Executed Powers of Attorney
(17)(a) Declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940 for the Registrant dated August 29, 1997.
(17)(b) Prospectuses for The One Group Treasury Only Money Market Fund, The
One Group U.S. Treasury Securities Money Market Fund, The One Group
Municipal Money Market Fund, The One Group Government Bond Fund, The
One Group Income Bond Fund, The One Group Louisiana Municipal Bond
Fund, The One Group Asset Allocation Fund, The One Group Disciplined
Value Fund, The One Group Growth Opportunities Fund, The One Group
Small Capitalization Fund, and The One Group International Equity
Index Fund dated November 1, 1997, and prospectuses for Marquis
Institutional Money Market Fund, Marquis Treasury Securities Money
Market Fund, Marquis Tax-Exempt Money Market Fund, Marquis Government
Securities Fund, Marquis Strategic Income Fund, Marquis Louisiana Tax-
Free Income Fund, Maquis Balanced Fund, Marquis Value Equity Fund,
Marquis Growth Equity Fund, Marquis Small Cap Fund, and Marquis
International Equity Fund dated February 1, 1998.
(17)(c) Statement of Additional Information of the One Group, dated
November 1, 1997, and Statement of Additional Information for Marquis
Funds dated February 1, 1998.
(17)(d) The One Group Semi-Annual Report for the period ended December 31,
1998.
(17)(e) Marquis Funds Semi-Annual Report for the period ended March 31, 1998.
(17)(f) Marquis Funds Annual Report for the period ended September 30, 1997.
</TABLE>
<PAGE>
EXHIBIT (4)
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
May __, 1998 by and between The One Group-Registered Trademark-, a Massachusetts
business trust, ("One Group") and Marquis Funds, a Massachusetts business trust
("Marquis"). The capitalized terms used herein shall have the meaning ascribed
to them in this Agreement.
I. PLAN OF REORGANIZATION
(a) Marquis will sell, assign, convey, transfer and deliver to One Group,
and One Group will acquire, on the Exchange Date all of the properties and
assets existing at the Valuation Time in Marquis' Institutional Money Market
Fund ("Marquis Institutional"), Marquis' Treasury Securities Money Market Fund
("Marquis Treasury Securities"), Marquis' Tax-Exempt Money Market Fund ("Marquis
Tax-Exempt"), Marquis' Government Securities Fund ("Marquis Government"),
Marquis' Strategic Income Bond Fund ("Marquis Strategic Income"), Marquis'
Louisiana Tax-Free Income Fund ("Marquis Louisiana"), Marquis' Balanced Fund
("Marquis Balanced"), Marquis' Value Equity Fund ("Marquis Value"), Marquis'
Growth Equity Fund ("Marquis Growth"), Marquis' Small Cap Equity Fund ("Marquis
Small Cap"), and Marquis' International Equity Fund ("Marquis International"),
(Marquis Institutional, Marquis Treasury Securities, Marquis Tax-Exempt, Marquis
Government, Marquis Strategic Income, Marquis Louisiana, Marquis Balanced,
Marquis Value, Marquis Growth, Marquis Small Cap and Marquis International, each
is a "Marquis Fund" and are collectively the "Marquis Funds"), such acquisition
to be made by The One Group Treasury Only Money Market Fund ("One Group Treasury
Only"), The One Group U.S. Treasury Securities Money Market Fund ("One Group
Treasury Securities"), The One Group Municipal Money Market Fund ("One Group
Municipal"), One Group Government Bond Fund ("One Group
<PAGE>
Government"), The One Group Income Bond Fund ("One Group Income"), The One Group
Louisiana Municipal Bond Fund ("One Group Louisiana"), The One Group Asset
Allocation Fund ("One Group Asset Allocation"), The One Group Disciplined Value
Fund ("One Group Value"), The One Group Growth Opportunities Fund ("One Group
Growth"), The One Group Small Capitalization Fund ("One Group Small
Capitalization"), and The One Group International Equity Index Fund ("One Group
International Index") (One Group Treasury Only, One Group Treasury Securities,
One Group Municipal, One Group Government, One Group Income, One Group
Louisiana, One Group Asset Allocation, One Group Value, One Group Growth, One
Group Small Capitalization and One Group International Index, each is a "One
Group Fund" and are collectively the "One Group Funds"), respectively, of One
Group. For purposes of this Agreement the respective Marquis Funds correspond
to the One Group Funds as follows: Marquis Institutional corresponds to One
Group Treasury Only; Marquis Treasury Securities corresponds to One Group
Treasury Securities; Marquis Tax-Exempt corresponds to One Group Municipal;
Marquis Government corresponds to One Group Government; Marquis Strategic Income
corresponds to One Group Income; Marquis Louisiana corresponds to One Group
Louisiana; Marquis Balanced corresponds to One Group Asset Allocation; Marquis
Value corresponds to One Group Value; Marquis Growth corresponds to One Group
Growth; Marquis Small Cap corresponds to One Group Small Capitalization; and
Marquis International corresponds to One Group International Index. In
consideration therefor, each One Group Fund shall, on the Exchange Date, assume
all of the liabilities of the corresponding Marquis Fund in exchange for a
number of full and fractional One Group Class A, Fiduciary Class or Class B
shares of the corresponding One Group Fund (collectively, "Shares") having an
aggregate net asset value equal to the value of all of the assets of
- 2 -
<PAGE>
each Marquis Fund transferred to the corresponding One Group Fund on such date
less the value of all of the liabilities of each Marquis Fund assumed by the
corresponding One Group Fund on that date. It is intended that each
reorganization described in this Agreement shall be a tax-free reorganization
under the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, each Marquis Fund shall distribute in complete liquidation to
its respective shareholders of record as of the Exchange Date the Shares
received by it, each shareholder being entitled to receive that number of Shares
equal to the proportion which the number of shares of beneficial interest of the
applicable class of the Marquis Fund held by such shareholder bears to the
number of such shares of such class of the Marquis Fund outstanding on such
date. If the Marquis shareholder of record is a financial organization
authorized to act in a fiduciary, advisory, custodial or similar capacity, that
shareholder will receive One Group Fiduciary Class Shares. All other Marquis
Class A, Retail Class and Cash Sweep Class shareholders will receive One Group
Class A Shares. Shareholders of record holding Marquis Class B Shares will
receive One Group Class B shares.
II. AGREEMENT
One Group and Marquis represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF MARQUIS. Marquis and each Marquis
Fund jointly and severally represent and warrant to and agree with One Group and
each One Group Fund that:
(a) Marquis is a business trust duly established and validly existing
under the laws of the Commonwealth of Massachusetts and has power to own all
of its properties and assets and to carry out its obligations under this
Agreement. Marquis and each Marquis Fund is not required to qualify as a
foreign association in any jurisdiction. Marquis and each Marquis Fund has
all necessary
- 3 -
<PAGE>
federal, state and local authorizations to carry on its business as now being
conducted and to fulfill the terms of this Agreement, except as set forth in
Section 1(l).
(b) Marquis is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
Each Marquis Fund has elected to qualify and has qualified as a regulated
investment company under Part 1 of Subchapter M of the Code, as of and since its
first taxable year, and qualifies and intends to continue to qualify as a
regulated investment company for its taxable year ending upon its liquidation.
Each Marquis Fund has been a regulated investment company under such sections of
the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each Marquis Fund at and for the year ended
September 30, 1997, such statements and schedules having been audited by Arthur
Anderson, LLP, independent accountants to Marquis, have been furnished to One
Group. Unaudited statements of net assets, statement of operations, statement
of changes in net assets, and schedules of portfolio investments for the period
ended March 31, 1998 also have been provided to One Group.
(d) The prospectuses of each Marquis Fund dated February 1, 1998
(collectively, the "Marquis Prospectuses") and the Statement of Additional
Information for the Marquis Funds dated February 1, 1998 and on file with the
Securities and Exchange Commission (the "Commission"), which have been
previously furnished to One Group, did not as of their dates and do not as of
the date hereof contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
- 4 -
<PAGE>
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Marquis or any Marquis Fund, threatened against
Marquis or any Marquis Fund which assert liability on the part of Marquis or any
Marquis Fund.
(f) There are no material contracts outstanding to which Marquis or any
Marquis Fund is a party, other than as disclosed in the Marquis Prospectuses and
the corresponding Statement of Additional Information, or in the Registration
Statement and the Proxy Statement as defined herein.
(g) Neither Marquis nor any Marquis Fund has any known liabilities of a
material nature, contingent or otherwise, other than those shown as belonging to
it on its statement of assets and liabilities as of March 31, 1998, and those
incurred in the ordinary course of Marquis's business as an investment company
since that date. Prior to the Exchange Date, Marquis will advise One Group of
all known material liabilities, contingent or otherwise, incurred by it and each
Marquis Fund subsequent to March 31, 1998, whether or not incurred in the
ordinary course of business.
(h) As used in this Agreement, the term "Investments" shall mean each
Marquis Fund's investments shown on the schedule of its portfolio investments as
of September 30, 1997 and March 31, 1998, referred to in Section 1(c) hereof, as
supplemented with such changes as Marquis or each Marquis Fund shall make after
March 31, 1998, which changes have been disclosed to One Group, and changes made
on and after the date of this Agreement after advising One Group of such
proposed changes, and changes resulting from stock dividends, stock split-ups,
mergers and similar corporate actions.
(i) Each Marquis Fund has filed or will file all federal and state tax
returns which, to the knowledge of Marquis's officers, are required to be filed
by each Marquis Fund and has paid or will pay all federal and state taxes shown
to be due on said returns or on any assessments received by
- 5 -
<PAGE>
each Marquis Fund. All tax liabilities of each Marquis Fund have been
adequately provided for on its books, and no tax deficiency or liability of any
Marquis Fund has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval as described in Section 8(a) and otherwise as described in
Section 1(1), Marquis on behalf of each Marquis Fund will have full right, power
and authority to sell, assign, transfer and deliver the Investments and any
other assets and liabilities of each Marquis Fund to be transferred to the
corresponding One Group Fund pursuant to this Agreement. At the Exchange Date,
subject only to the delivery of the Investments and any such other assets and
liabilities as contemplated by this Agreement, One Group will, on behalf of each
One Group Fund, acquire the Investments and any such other assets subject to no
encumbrances, liens or security interests in favor of any third party creditor
of Marquis or a Marquis Fund and, except as described in Section 1(k), without
any restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as amended (the
"1933 Act"), of any of the Investments would be required if they were, as of the
time of such transfer, the subject of a public distribution by either of Marquis
or One Group, except as previously disclosed to One Group by Marquis in writing.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Marquis or any
Marquis Fund of the transactions contemplated by this Agreement, except such as
may be required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, state securities or blue sky laws (which
term
- 6 -
<PAGE>
as used herein shall include the laws of the District of Columbia and of Puerto
Rico) or the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "H-S-R
Act").
(m) The registration statement (the "Registration Statement") filed with
the Commission by One Group on Form N-14 relating to the Shares issuable
hereunder, and the proxy statement of Marquis included therein (the "Proxy
Statement"), on the effective date of the Registration Statement and insofar as
they relate to Marquis and the Marquis Funds, (i) will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
at the time of the shareholders' meeting referred to in Section 8(a) below and
on the Exchange Date, the prospectus contained in the Registration Statement of
which the Proxy Statement is a part (the "Prospectus"), as amended or
supplemented by any amendments or supplements filed with the Commission by One
Group, insofar as it relates to Marquis and the Marquis Funds, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the representations and warranties in this
subsection shall apply only to statements of fact relating to Marquis and any
Marquis Fund contained in the Registration Statement, the Prospectus or the
Proxy Statement, or omissions to state in any thereof a material fact relating
to Marquis or any Marquis Fund, as such Registration Statement, Prospectus and
Proxy Statement shall be furnished to Marquis in definitive form as soon as
practicable following effectiveness of the Registration Statement and before
any public distribution of the Prospectus or Proxy Statement.
- 7 -
<PAGE>
(n) All of the issued and outstanding shares of beneficial interest of
each Marquis Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws.
(o) Each of the Marquis Funds is qualified, and will at all times through
the Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code.
(p) At the Exchange Date, each of the Marquis Funds, as One Group may
reasonably direct via written instructions, will have sold such of its assets,
if any, as necessary to assure that, after giving effect to the acquisition of
the assets pursuant to this Agreement, each of the One Group Funds (other than
One Group Louisiana) will remain a "diversified company" within the meaning of
Section 5(b) (l) of the 1940 Act and in compliance with such other mandatory
investment restrictions as are set forth in the One Group Prospectuses
previously furnished to Marquis.
2. REPRESENTATIONS AND WARRANTIES OF ONE GROUP. One Group and each One
Group Fund jointly and severally represent and warrant to and agree with Marquis
and each Marquis Fund that:
(a) One Group is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts and has power to carry on
its business as it is now being conducted and to carry out this Agreement. One
Group and each One Group Fund is not required to qualify as a foreign
association in any jurisdiction. One Group and each One Group Fund has all
necessary federal, state and local authorizations to own all of its properties
and assets and to carry on its business as now being conducted and to fulfill
the terms of this Agreement, except as set forth in Section 2(i).
(b) One Group is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect.
- 8 -
<PAGE>
Each One Group Fund has elected to qualify and has qualified as a regulated
investment company under Part 1 of Subchapter M of the Code, as of and since its
first taxable year, and qualifies and intends to continue to qualify as a
regulated investment company for its taxable year ending June 30, 1998. Each
One Group Fund has been a regulated investment company under such sections of
the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each One Group Fund for the year ended
June 30, 1997, such statements and schedules having been audited by Coopers &
Lybrand L.L.P., independent accountants to One Group, have been furnished
to Marquis. Unaudited statements of assets and liabilities, statements of
operations, statements of changes in net assets and schedules of portfolio
investments (indicating their market values) for each One Group Fund as of
December 31, 1997 have also been furnished to Marquis. Such statements of
assets and liabilities and schedules fairly present the financial position of
the One Group Funds as of their respective dates, and said statements of
operations and changes in net assets fairly reflect the results of its
operations and changes in financial position for the periods covered thereby
in conformity with generally accepted accounting principles.
(d) The prospectuses of each One Group Fund dated November 1, 1997,
(collectively, the "One Group Prospectuses"), and the Statement of Additional
Information for the One Group Funds, dated November 1, 1997, and on file with
the Commission, which have been previously furnished to Marquis, did not as of
their dates and do not as of the date hereof contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
- 9 -
<PAGE>
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of One Group or any One Group Fund, threatened
against One Group or any One Group Fund which assert liability on the part of
One Group or any One Group Fund.
(f) There are no material contracts outstanding to which One Group or any
One Group Fund is a party, other than as disclosed in the One Group Prospectuses
and the corresponding Statement of Additional Information or in the Registration
Statement and the Proxy Statement.
(g) Neither One Group nor any One Group Fund has any known liabilities of
a material nature, contingent or otherwise, other than those shown on its
statement of assets and liabilities as of December 31, 1997 referred to above
and those incurred in the ordinary course of the business of One Group as an
investment company or any One Group Fund since such date. Prior to the Exchange
Date, One Group will advise Marquis of all known material liabilities,
contingent or otherwise, incurred by it and each One Group Fund subsequent to
December 31, 1997, whether or not incurred in the ordinary course of business.
(h) Each One Group Fund has filed or will file all federal and state tax
returns which, to the knowledge of One Group's officers, are required to be
filed by each One Group Fund and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by each One
Group Fund. All tax liabilities of each One Group Fund have been adequately
provided for on its books, and no tax deficiency or liability of any One Group
Fund has been asserted, and no question with respect thereto has been raised, by
the Internal Revenue Service or by any state or local tax authority for taxes in
excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by One Group or any One Group Fund of
the transactions contemplated by
- 10 -
<PAGE>
this Agreement, except such as may be required under the 1933 Act, the 1934 Act,
the 1940 Act, state securities or Blue Sky laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise as
described in Section 2 (i), One Group on behalf of each One Group Fund will have
full right, power and authority to purchase the Investments and any other assets
and assume the liabilities of each Marquis Fund to be transferred to the
corresponding One Group Fund pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement, on
the effective date of the Registration Statement and insofar as they relate to
One Group and the One Group Funds: (i) will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of the
shareholders' meeting referred to in Section 8(a) and at the Exchange Date, the
Prospectus, as amended or supplemented by any amendments or supplements filed
with the Commission by One Group or any One Group Fund, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the Registration
Statement, the Prospectus or the Proxy Statement made in reliance upon and in
conformity with information furnished by Marquis or any Marquis Fund for use in
the Registration Statement, the Prospectus or the Proxy Statement.
(l) Shares to be issued to each Marquis Fund have been duly authorized
and, when issued and delivered pursuant to this Agreement and the Prospectus,
will be legally and validly issued and
- 11 -
<PAGE>
will be fully paid and nonassessable by One Group and no shareholder of One
Group will have any preemptive right of subscription or purchase in respect
thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each One Group Fund is qualified and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code.
3. REORGANIZATION. (a) Subject to the requisite shareholder approval as
described in Section 8(a) and to the other terms and conditions contained herein
(including each Marquis Fund's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof ), Marquis and each Marquis Fund agree to
sell, assign, convey, transfer and deliver to the corresponding One Group Fund,
and One Group and each One Group Fund agree to acquire from the corresponding
Marquis Fund, on the Exchange Date all of the Investments and all of the cash
and other assets of each Marquis Fund in exchange for that number of Shares of
the corresponding One Group Fund provided for in Section 4 and the assumption by
the corresponding One Group Fund of all the liabilities of the Marquis Fund.
Pursuant to this Agreement, each Marquis Fund will, as soon as practicable after
the Exchange Date, distribute in liquidation all of the Shares received by it to
its shareholders in exchange for their shares of beneficial interest of such
Marquis Fund.
(b) Marquis, on behalf of each Marquis Fund, will pay or cause to be paid
to the corresponding One Group Fund any interest and cash dividends received by
it on or after the Exchange Date with respect to the Investments transferred to
the One Group Funds hereunder. Marquis, on behalf of each Marquis Fund, will
transfer to the corresponding One Group Fund any
- 12 -
<PAGE>
rights, stock dividends or other securities received by Marquis or any Marquis
Fund after the Exchange Date as stock dividends or other distributions on or
with respect to the Investments transferred, which rights, stock dividends and
other securities shall be deemed included in the assets transferred to each One
Group Fund at the Exchange Date and shall not be separately valued, in which
case any such distribution that remains unpaid as of the Exchange Date shall be
included in the determination of the value of the assets of the Marquis Fund
acquired by the corresponding One Group Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, One Group will
deliver to Marquis a number of Shares having an aggregate net asset value equal
to the value of the assets of the corresponding Marquis Fund acquired by each
One Group Fund, less the value of the liabilities of such Marquis Fund assumed,
determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each Marquis Fund's net
assets will be computed as of the Valuation Time using the valuation procedures
for the corresponding One Group Fund as set forth in the One Group Prospectus
for the particular One Group Fund.
(b) Subject to Section 4(d) hereof, the net asset value of a share of each
One Group Fund will be determined to the nearest full cent as of the Valuation
Time, using the valuation procedures set forth in the One Group Prospectus for
the particular One Group Fund.
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m. Eastern
Standard time on August 7, 1998 or such earlier or later day as may be mutually
agreed upon in writing by the parties hereto (the "Valuation Time").
(d) No formula will be used to adjust the net asset value of any Marquis
Fund or One Group Fund to take into account differences in realized and
unrealized gains and losses.
- 13 -
<PAGE>
(e) Each One Group Fund shall issue its Shares to the corresponding
Marquis Fund on one share deposit receipt registered in the name of the
corresponding Marquis Fund. Each Marquis Fund shall distribute in liquidation
the Shares received by it hereunder pro rata to its shareholders of each class
of shares by redelivering such share deposit receipt to One Group's transfer
agent which will as soon as practicable set up open accounts for each Marquis
Fund shareholder in accordance with written instructions furnished by Marquis.
(f) Each One Group Fund shall assume all liabilities of the corresponding
Marquis Fund, whether accrued or contingent, in connection with the acquisition
of assets and subsequent dissolution of the corresponding Marquis Fund or
otherwise, except that recourse for assumed liabilities relating to a particular
Marquis Fund will be limited to the corresponding One Group Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5
(e), all fees and expenses, including accounting expenses, portfolio transfer
taxes (if any) or other similar expenses incurred in connection with the
consummation by One Group and Marquis of the transactions contemplated by
this Agreement will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; PROVIDED, HOWEVER, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the
disqualification of any One Group Fund or any Marquis Fund, as the case may
be, as a "regulated investment company" within the meaning of Section 851 of
the Code.
(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of Marquis being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Marquis's obligations referred to in Section 8(a) or
- 14 -
<PAGE>
Section 10) Marquis shall pay directly all reasonable fees and expenses incurred
by One Group in connection with such transactions, including, without
limitation, legal, accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of One Group being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to One Group's obligations referred to in Section 8(a) or Section 9), One Group
shall pay directly all reasonable fees and expenses incurred by Marquis in
connection with such transactions, including without limitation legal,
accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) One Group or Marquis being either
unwilling or unable to go forward or (ii) the nonfulfillment or failure of any
condition to Marquis or One Group's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of Marquis and One Group
shall bear the expenses it has actually incurred in connection with such
transactions.
(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
6. PERMITTED ASSETS. One Group agrees to advise Marquis promptly if at
any time prior to the Exchange Date the assets of any Marquis Fund include any
assets that the corresponding One Group Fund is not permitted, or reasonably
believes to be unsuitable for it, to acquire, including without limitation any
security that, prior to its acquisition by any Marquis Fund, One Group has
informed Marquis is unsuitable for the corresponding One Group Fund to acquire.
- 15 -
<PAGE>
7. EXCHANGE DATE. Delivery of the assets of the Marquis Funds to be
transferred, assumption of the liabilities of the Marquis Funds to be assumed,
and the delivery of Shares to be issued shall be made at the offices of Banc One
Investment Advisors Corporation at 9:00 am. on August 10, 1998, or at such
other time and date agreed to by Marquis and One Group, the date and time upon
which such delivery is to take place being referred to herein as the "Exchange
Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Marquis agrees to
call a special meeting of the shareholders of each Marquis Fund as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of each Marquis Fund to and
the assumption of all of the liabilities of each Marquis Fund by the
corresponding One Group Fund as herein provided, adopting this Agreement, and
authorizing the liquidation and dissolution of any Marquis Fund, and, except as
set forth in Section 13, it shall be a condition to the obligations of each of
the parties hereto that the holders of the shares of beneficial interest of each
Marquis Fund, and each class of shares of each Marquis Fund if such is required
under the 1940 Act, shall have approved this Agreement and the transactions
contemplated herein in the manner required by law and Marquis's Declaration of
Trust at such a meeting on or before the Valuation Time.
(b) Marquis and each Marquis Fund agree that the liquidation and
dissolution of each Marquis Fund will be effected in the manner provided in
Marquis's Declaration of Trust in accordance with applicable law, and that it
will not make any distributions of any Shares to the shareholders of a Marquis
Fund without first paying or adequately providing for the payment of all of such
Marquis Fund's known debts, obligations and liabilities.
- 16 -
<PAGE>
(c) Each of One Group and Marquis will cooperate with the other, and each
will furnish to the other the information relating to itself required by the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
to be set forth in the Registration Statement, including the Prospectus and the
Proxy Statement.
9. CONDITIONS TO ONE GROUP'S OBLIGATIONS. The obligations of One Group
and each One Group Fund hereunder shall be subject to the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Marquis
Funds, shall have been approved as set forth in Section 8(a).
(b) Marquis shall have furnished to One Group a statement of each Marquis
Fund's assets and liabilities, with values determined as provided in Section 4
of this Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on Marquis's behalf by its
President (or any Vice President) and Treasurer, and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation Time
and as of the Exchange Date there has been no material adverse change in the
financial position of any Marquis Fund since March 31, 1998, other than changes
in the Investments since that date or changes in the market value of the
Investments, or changes due to net redemptions of shares of the Marquis Funds,
dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Marquis and each Marquis Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, Marquis and each Marquis Fund has complied with this Agreement and
satisfied all the conditions on its part to be performed or satisfied at or
prior to each
- 17 -
<PAGE>
of such dates, and Marquis shall have furnished to One Group a statement, dated
the Exchange Date, signed by Marquis's President (or any Vice President) and
Treasurer certifying those facts as of such dates.
(d) Marquis shall have delivered to One Group a letter from SEI
Investments Company dated the Exchange Date stating that such firm prepared
the federal and state income tax returns of each Marquis Fund for the year
ended September 30, 1997.
(e) There shall not be any material litigation pending with respect to the
matters contemplated by this Agreement.
(f) One Group shall have received an opinion of Morgan, Lewis & Bockius
LLP, in form reasonably satisfactory to One Group and dated the Exchange Date,
to the effect that (i) Marquis is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts, and neither
Marquis nor any Marquis Fund is, to the knowledge of such counsel, required to
qualify to do business as a foreign association in any jurisdiction, (ii) this
Agreement has been duly authorized, executed, and delivered by Marquis and,
assuming that the Registration Statement, the Prospectus and the Proxy Statement
comply with the 1933 Act, the 1934 Act and the 1940 Act and assuming due
authorization, execution and delivery of this Agreement by One Group, is a valid
and binding obligation of Marquis subject to applicable bankruptcy, insolvency,
fraudulent conveyance and similar laws or court decisions regarding enforcement
of creditor's rights generally, (iii) Marquis and each Marquis Fund has power to
sell, assign, convey, transfer and deliver the Investments and other assets
contemplated hereby and, upon consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement, Marquis and each Marquis
Fund will have duly sold, assigned, conveyed, transferred and delivered such
Investments and other
- 18 -
<PAGE>
assets to One Group, (iv) the execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not, violate
Marquis's Declaration of Trust, or Bylaws, as amended, or any provision of any
agreement known to such counsel to which Marquis or any Marquis Fund is a party
or by which it is bound, it being understood that with respect to investment
restrictions as contained in Marquis's Declaration of Trust, or Bylaws, or
then-current prospectus or statement of additional information of each Marquis
Fund, such counsel may rely upon a certificate of an officer of Marquis whose
responsibility it is to advise Marquis with respect to such matters and (v) to
the best of counsel's knowledge after reasonable inquiry, no consent, approval,
authorization or order of any court or governmental authority is required for
the consummation by Marquis or any Marquis Fund of the transactions contemplated
herein, except (a) such as have been obtained under the 1933 Act, the 1934 Act
and the 1940 Act and such as may be required under state securities or blue sky
laws and the H-S-R Act, and it being understood that such opinion shall not be
deemed to apply to One Group's compliance obligations under the 1933 Act, 1934
Act, 1940 Act, state securities or blue sky laws and H-S-R Act, and (b) where
the failure to obtain any such consent, approval, authorization or order would
not have a material adverse effect. For purposes of analysis regarding the
1940 Act, Morgan, Lewis & Bockius LLP may assume as fact that the Marquis Funds
and the One Group Funds may be considered affiliated persons or affiliated
persons of an affiliated person solely by reason of having a common investment
adviser.
(g) One Group shall have received an opinion of Ropes & Gray, counsel to
One Group addressed to The One Group and each One Group Fund, in form reasonably
satisfactory to One Group and dated the Exchange Date, to the effect that for
Federal income tax purposes (i) no gain or loss will be recognized by any
Marquis Fund upon the transfer of the assets to the corresponding
- 19 -
<PAGE>
One Group Fund in exchange for Shares and the assumption by such One Group Fund
of the liabilities of the Marquis Fund or upon the distribution of Shares by the
Marquis Fund to its shareholders in liquidation; (ii) no gain or loss will be
recognized by the shareholders of any Marquis Fund upon the exchange of their
shares for Shares; (iii) the basis of the Shares a Marquis shareholder receives
in connection with the transaction will be the same as the basis of his or her
Marquis Fund shares exchanged therefor; (iv) a Marquis shareholder's holding
period for his or her Shares will be determined by including the period for
which he or she held the Marquis Fund shares exchanged therefor, provided that
he or she held such Marquis Fund shares as capital assets; (v) no gain or loss
will be recognized by any One Group Fund upon the receipt of the assets of the
corresponding Marquis Fund in exchange for Shares and the assumption by the One
Group Fund of the liabilities of the corresponding Marquis Fund; (vi) the basis
in the hands of the One Group Fund of the assets of the corresponding Marquis
Fund transferred to the One Group Fund in the transaction will be the same as
the basis of the assets in the hands of the corresponding Marquis Fund
immediately prior to the transfer; and (vii) the holding periods of the assets
of the corresponding Marquis Fund in the hands of the One Group Fund will
include the periods for which such assets were held by the corresponding Marquis
Fund.
(h) The assets of each Marquis Fund to be acquired by the corresponding
One Group Fund will include no assets which the corresponding One Group Fund, by
reason of limitations contained in its Declaration of Trust or of investment
restrictions disclosed in the One Group Prospectuses in effect on the Exchange
Date, may not properly acquire.
(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been
- 20 -
<PAGE>
instituted or, to the knowledge of One Group contemplated by the Commission and
or any state regulatory authority.
(j) All proceedings taken by Marquis in connection with the transactions
contemplated by this Agreement and all documents incidental thereto reasonably
shall be satisfactory in form and substance to One Group and Ropes & Gray.
(k) Prior to the Exchange Date, each Marquis Fund shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its shareholders all of its investment
company taxable income for its taxable year ended September 30, 1997 and the
short taxable year beginning on October 1, 1997 and ending on the Exchange Date
(computed without regard to any deduction for dividends paid), and all of its
net capital gain realized in its taxable year ended September 30, 1997 and the
short taxable year beginning on October 1, 1997 and ending on the Exchange Date
(after reduction for any capital loss carryover).
(l) Marquis shall have furnished to One Group a certificate, signed by the
President (or any Vice President) and the Treasurer of Marquis, as to the tax
cost to One Group of the securities delivered to One Group pursuant to this
Agreement, together with any such other evidence as to such tax cost as One
Group may reasonably request.
(m) Marquis's custodian shall have delivered to One Group a certificate
identifying all of the assets of each Marquis Fund held by such custodian as of
the Valuation Time.
(n) Marquis's transfer agent shall have provided to One Group (i) the
originals or true copies of all of the records of each Marquis Fund in the
possession of such transfer agent as of the Exchange Date, (ii) a certificate
setting forth the number of shares of each class of Marquis Fund outstanding as
of the Valuation Time and (iii) the name and address of each holder of record of
any
- 21 -
<PAGE>
such shares of each Marquis Fund and the number of shares of each class held of
record by each such shareholder.
(o) All of the issued and outstanding shares of beneficial interest of
each Marquis Fund shall have been offered for sale and sold in conformity with
all applicable federal or state securities or blue sky laws and, to the extent
that any audit of the records of Marquis or any Marquis Fund or its transfer
agent by One Group or its agents shall have revealed otherwise, either (i)
Marquis and each Marquis Fund shall have taken all actions that in the
reasonable opinion of One Group or Ropes & Gray are necessary to remedy any
prior failure on the part of Marquis to have offered for sale and sold such
shares in conformity with such laws or (ii) Marquis shall have furnished (or
caused to be furnished) surety, or deposited (or caused to be deposited) assets
in escrow, for the benefit of One Group in amounts sufficient and upon terms
satisfactory, in the opinion of One Group or its counsel, to indemnify One Group
against any expense, loss, claim, damage or liability whatsoever that may be
asserted or threatened by reason of such failure on the part of Marquis to have
offered and sold such shares in conformity with such laws.
(p) Marquis shall have duly executed and delivered to One Group bills of
sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as One Group may deem necessary or desirable to transfer all of
Marquis's and each Marquis Fund's entire right, title and interest in and to the
Investments and all other assets of each Marquis Fund.
10. CONDITIONS TO MARQUIS'S OBLIGATIONS. The obligations of Marquis and
each Marquis Fund hereunder shall be subject to the following conditions:
- 22 -
<PAGE>
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Marquis
Funds, shall have been approved as described in Section 8(a).
(b) One Group shall have furnished to Marquis a Statement of each One
Group Fund's net assets, together with a list of portfolio holdings with values
determined as provided in Section 4, all as of the Valuation Time, certified on
One Group's behalf by its President (or any Vice President) and Treasurer (or
any Assistant Treasurer), and a certificate of both such officers, dated the
Exchange Date, to the effect that as of the Valuation Time and as of the
Exchange Date there has been no material adverse change in the financial
position of any One Group Fund since December 31, 1997, other than changes in
its portfolio securities since that date, changes in the market value of its
portfolio securities, changes due to net redemptions, dividends paid or losses
from operations.
(c) One Group shall have executed and delivered to Marquis an Assumption
of Liabilities Certificate and other instruments as Marquis may deem necessary
and desirable dated as of the Exchange Date pursuant to which each One Group
Fund will assume all of the liabilities of the corresponding Marquis Fund
existing at the Valuation Time in connection with the transactions contemplated
by this Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of One Group and each One Group Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, One Group and each One Group Fund has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to each of such dates, and One Group shall have furnished
to Marquis a statement, dated the
- 23 -
<PAGE>
Exchange Date, signed by One Group's President (or any Vice President) and
Treasurer certifying those facts as of such dates.
(e) There shall not be any material litigation pending with respect to the
matters contemplated by this Agreement.
(f) Marquis shall have received an opinion of Ropes & Gray, in form
reasonably satisfactory to Marquis and dated the Exchange Date, to the effect
that (i) One Group is a business trust and validly existing in conformity with
the laws of The Commonwealth of Massachusetts, and, (to the knowledge of such
counsel), neither One Group nor any One Group Fund is required to qualify to do
business as a foreign association in any jurisdiction, (ii) the Shares to be
delivered to Marquis as provided for by this Agreement are duly authorized and
upon such delivery will be validly issued and will be fully paid and
nonassessable by One Group and no shareholder of One Group has any preemptive
right to subscription or purchase in respect thereof, (iii) this Agreement has
been duly authorized, executed and delivered by One Group and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Marquis, is a valid and binding
obligation of One Group, subject to applicable bankruptcy, insolvency,
fraudulent conveyance and similar laws or court decisions regarding the
enforcement of credit rights generally, (iv) One Group and each One Group Fund
has the power to acquire and assume all of the liabilities of Marquis and the
Marquis Funds and, upon consummation of the transactions contemplated hereby in
accordance with the terms of this Agreement, One Group and each respective One
Group Fund shall have duly acquired and assumed such liabilities, and (v) the
execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate
- 24 -
<PAGE>
One Group's Declaration of Trust, as amended, or Code of Regulations, or any
provision of any agreement known to such counsel to which One Group or any One
Group Fund is a party or by which it is bound, it being understood that with
respect to investment restrictions as contained in One Group's Declaration of
Trust, as amended, Code of Regulations or then-current prospectus or statement
of additional information of each One Group Fund, such counsel may rely upon a
certificate of an officer of One Group whose responsibility it is to advise One
Group with respect to such matters, (vi) no consent, approval, authorization or
order of any court or governmental authority is required for the consummation by
One Group or any One Group Fund of the transactions contemplated herein, except
such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities or blue sky laws and the H-S-R
Act and it being understood that such opinion shall not be deemed to apply to
Marquis's compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state
securities or blue sky laws and the H-S-R Act; and (vii) the Registration
Statement has become effective under the 1933 Act, and to the best of the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the 1933 Act.
(g) Marquis shall have received an opinion of Ropes & Gray addressed to
Marquis, and each Marquis Fund, and in a form reasonably satisfactory to Marquis
and dated the Exchange Date, with respect to the matters specified in Section
9(g) of this Agreement.
(h) All proceedings taken by One Group in connection with the transactions
contemplated by this Agreement and all documents incidental thereto reasonably
shall be satisfactory in form and substance to Marquis and Morgan, Lewis &
Bockius LLP.
- 25 -
<PAGE>
(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of Marquis,
contemplated by the Commission or any state regulatory authority.
11. INDEMNIFICATION. (a) The Marquis Funds will indemnify and hold
harmless One Group, its trustees and its officers (for purposes of this
subsection, the "Indemnified Parties") against any and all expenses, losses,
claims, damages and liabilities at any time imposed upon or reasonably incurred
by any one or more of the Indemnified Parties in connection with, arising out
of, or resulting from any claim, action, suit or proceeding in which any one or
more of the Indemnified Parties may be involved or with which any one or more of
the Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to Marquis or any Marquis
Fund contained in the Registration Statement, the Prospectus or the Proxy
Statement or any amendment or supplement to any of the foregoing, or arising out
of or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to Marquis or any Marquis Fund required to be
stated therein or necessary to make the statements relating to Marquis or any
Marquis Fund therein not misleading, including, without limitation, any amounts
paid by any one or more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding or threatened claim,
action, suit or proceeding made with the prior consent of Marquis. The
Indemnified Parties will notify Marquis in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any notice of legal
process or any suit brought against or claim made against any Indemnified Party
as to any matters covered by this Section 11(a). Marquis shall be entitled to
participate at its own expense in the defense of any claim, action, suit
- 26 -
<PAGE>
or proceeding covered by this Section 11(a), or, if it so elects, to assume at
its expense by counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and if Marquis elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the defense
of any such claim, action, suit or proceeding at their expense. The Marquis
Funds' obligation under this Section 11(a) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the Marquis
Funds will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this Section 11(a) without the
necessity of the Indemnified Parties first paying the same.
(b) The One Group Funds will indemnify and hold harmless Marquis, its
trustees and its officers (for purposes of this subsection, the "Indemnified
Parties") against any and all expenses, losses, claims, damages and liabilities
at any time imposed upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or resulting from any
claim, action, suit or proceeding in which any one or more of the Indemnified
Parties may be involved or with which any one or more of the Indemnified Parties
may be threatened by reason of any untrue statement or alleged untrue statement
of a material fact relating to One Group or any One Group Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any amendment
or supplement to any of the foregoing, or arising out of or based upon the
omission or alleged omission to state in any of the foregoing a material fact
relating to One Group or any One Group Fund required to be stated therein or
necessary to make the statements relating to One Group or any One Group Fund
therein not misleading, including, without limitation, any amounts paid by any
one or more of the Indemnified Parties in a reasonable compromise or settlement
of any such claim, action, suit or proceeding, or threatened claim, action, suit
or proceeding made with the prior
- 27 -
<PAGE>
consent of One Group. The Indemnified Parties will notify One Group in writing
within ten days after the receipt by any one or more of the Indemnified Parties
of any notice of legal process or any suit brought against or claim made against
any Indemnified Party as to any matters covered by this Section 11(b). One
Group shall be entitled to participate at its own expense in the defense of any
claim, action, suit or proceeding covered by this Section 11(b), or, if it so
elects, to assume at its expense by counsel satisfactory to the Indemnified
Parties the defense of any such claim, action, suit or proceeding, and, if One
Group elects to assume such defense, the Indemnified Parties shall be entitled
to participate in the defense of any such claim, action, suit or proceeding at
their own expense. The One Group Funds' obligation under this Section 11(b) to
indemnify and hold harmless the Indemnified Parties shall constitute a guarantee
of payment so that the One Group Funds will pay in the first instance any
expenses, losses, claims, damages and liabilities required to be paid by it
under this Section 11(b) without the necessity of the Indemnified Parties first
paying the same.
12. NO BROKER, ETC. Each of One Group and Marquis represents that there
is no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
13. TERMINATION. One Group and Marquis may, by mutual consent of their
respective trustees, terminate this Agreement, and One Group or Marquis, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by October 30, 1998, this Agreement shall
automatically terminate on that date unless a later date is agreed to by One
Group and Marquis.
- 28 -
<PAGE>
Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by this
Agreement is obtained with respect to only one or more Marquis Funds but not all
of the Marquis Funds, One Group and Marquis agree to consummate those
transactions with respect to those Marquis Funds whose shareholders have
approved this Agreement and those transactions.
In the event that shareholder approval of this Agreement and the
transactions contemplated by this Agreement is required, but is obtained with
respect to only one class of shares of a Marquis Fund, the transaction with
respect to that Marquis Fund will not be consummated unless and until
shareholder approval is obtained with respect to both classes.
14. RULE 145. Pursuant to Rule 145 under the 1933 Act, One Group will, in
connection with the issuance of any Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a party to the
transaction pursuant to Rule 145 (c), cause to be affixed upon the certificates
issued to such person (if any) a legend as follows:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
TO THE ONE GROUP OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ONE GROUP SUCH REGISTRATION IS NOT
REQUIRED."
- 29 -
<PAGE>
and, further, One Group will issue stop transfer instructions to One Group's
transfer agent with respect to such shares. Marquis will provide One Group on
the Exchange Date with the name of any shareholder of the Marquis Funds who is
to the knowledge of Marquis an affiliate of Marquis on such date.
15. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
16. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts provided, however, that no such amendment may
have the effect of changing the provisions for determining the number or value
of shares to be paid to the Marquis Fund's shareholders under Sections I(b) and
II(4)(b) this Agreement to the material detriment of such shareholder's without
their further approval.
17. AGREEMENT AND DECLARATION OF TRUST. The names "Marquis Funds" and
"Trustees of Marquis Funds" refer respectively to Marquis and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust, to which reference is hereby made and a copy of which is
on file at the office of the Secretary of The Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "Marquis Funds" entered into in the name or
on behalf thereof by any of the
- 30 -
<PAGE>
Trustees, officers, employees or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, officers, employees,
agents or shareholders of Marquis personally, but bind only the assets of
Marquis, and all persons dealing with any of the series or funds of Marquis,
such as Marquis Funds, must look solely to the assets of Marquis belonging to
such series or funds for the enforcement of any claims against Marquis.
The names "The One Group" and "Trustees of The One Group" refer
respectively to One Group and the Trustees, as trustees but not individually or
personally, acting from time to time under a Declaration of Trust dated May 23,
1985 to which reference is hereby made and a copy of which is on file at the
office of the Secretary of The Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The One Group" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders or representatives of One Group personally, but bind only
the assets of One Group, and all persons dealing with any series or fund of One
Group, such as the One Group Funds, must look solely to the assets of One Group
belonging to such series for the enforcement of any claims against One Group.
- 31 -
<PAGE>
This Agreement may be executed in any number of counter-parts, each of
which, when executed and delivered, shall be deemed to be an original.
MARQUIS FUNDS
By: /s/ Mark E. Nagle
-------------------------------
THE ONE GROUP
By: /s/ Mark S. Redman
-------------------------------
- 32 -
<PAGE>
EXHIBIT (6)(b)
REVISED SCHEDULE A TO THE INVESTMENT ADVISORY AGREEMENT
BETWEEN
REGISTRANT
AND
BANC ONE INVESTMENT ADVISORS CORPORATION
<PAGE>
Amended and Restated
Schedule A
to the
Investment Advisory Agreement between The One Group
and Banc One Investment Advisors Corporation
dated May 21, 1998
NAME OF FUND COMPENSATION
The Treasury Money Market Annual rate of eight one-hundredths of one
Fund percent (.08%) of The Treasury Money
Market Fund's average daily net assets.
The Treasury Only Money Annual rate of eight one-hundredths of one
Market Fund percent (.08%) of The Treasury Only Money
Market Fund's average daily net assets.
The Government Money Market Annual rate of eight one-hundredths of one
Fund percent (.08%) of The Government Money
Market Fund's average daily net assets.
The Tax Exempt Money Market Annual rate of eight one-hundredths of one
Fund percent (.08%) of The Tax Exempt Money
Market Fund's average daily net assets.
The Institutional Prime Money Annual rate of ten one-hundredths of one
Market Fund percent (.10%) of The Institutional Prime
Money Market Fund's average daily net
assets.
The U.S. Treasury Securities Annual rate of thirty-five one-hundredths
Money Market Fund of one percent (.35%) of The U.S. Treasury
Securities Money Market Fund's
average daily net assets.
The Prime Money Market Annual rate of thirty-five one-hundredths
Fund of one percent (.35%) of The Prime Money
Market Fund's average daily net assets.
The Municipal Money Market Annual rate of thirty-five one-hundredths
Fund of one percent (.35%) of The Municipal
Money Market Fund's average daily net
assets.
<PAGE>
The Ohio Municipal Money Annual rate of thirty one-hundredths of
Market Fund one percent (.30%) of The Ohio Municipal
Money Market Fund's average daily net
assets.
The Income Equity Fund Annual rate of seventy-four one-hundredths
of one percent (.74%) of The Income Equity
Fund's average daily net assets.
The Disciplined Value Annual rate of seventy-four one-hundredths
Fund of one percent (.74%) of The Disciplined
Value Fund's average daily net assets.
The Growth Opportunities Annual rate of seventy-four one-hundredths
Fund of one percent (.74%) of The Growth
Opportunities Fund's average daily net
assets.
The International Equity Annual rate of fifty-five one-hundredths
Index Fund of one percent (.55%) of The International
Equity Index Fund's average daily net
assets.
The Equity Index Fund Annual rate of thirty one-hundredths of
one percent (.30%) of The Equity Index
Fund's average daily net assets.
The Large Company Value Annual rate of seventy-four one-hundredths
Fund of one percent (.74%) of The Large Company
Value Fund's average daily net assets.
The Income Bond Fund Annual rate of sixty one-hundredths of one
percent (.60%) of The Income Bond Fund's
average daily net assets.
The Limited Volatility Bond Annual rate of sixty one-hundredths of one
Fund percent (.60%) of The Limited Volatility
Bond Fund's average daily net assets.
2
<PAGE>
The Intermediate Tax-Free Annual rate of sixty one-hundredths of one
Bond Fund percent (.60%) of The Intermediate Tax-
Free Bond Fund's average daily net assets.
The Ohio Municipal Bond Annual rate of sixty one-hundredths of one
Fund percent (.60%) of The Ohio Municipal Bond
Fund's average daily net assets.
The Government Bond Fund Annual rate of forty-five one-hundredths
of one percent (.45%) of The Government
Bond Fund's average daily net assets.
The Ultra Short-Term Income Annual rate of fifty-five one-hundredths
Fund of one percent (.55%) of The Ultra Short-Term
Income Fund's average daily net assets.
The Asset Allocation Annual rate of sixty-five one-hundredths
Fund of one percent (.65%) of The Asset Allocation
Fund's average daily net assets.
The Municipal Income Fund Annual rate of forty-five one-hundredths
of one percent (.45%) of The Municipal Income
Bond Fund's average daily net assets.
The Texas Tax-Free Bond Annual rate of forty-five one-hundredths
Fund of one percent (.45%) of The Texas Tax-
Free Bond Fund's average daily net assets.
The West Virginia Municipal Annual rate of forty-five one-hundredths
Bond Fund of one percent (.45%) of The West Virginia
Tax-Free Bond Fund's average daily
net assets.
The Treasury & Agency Annual rate of forty one-hundredths of one
Fund percent (.40%) of the Treasury & Agency
Fund's average daily net assets.
3
<PAGE>
The Kentucky Municipal Bond Annual rate of forty-five one-hundredths
Fund of one percent (.45%) of The Kentucky
Municipal Bond Fund's average daily net
assets.
The Louisiana Municipal Bond Annual rate of sixty one-hundredths
Fund of one percent (.60%) of The Louisiana
Municipal Bond Fund's average daily net
assets.
The Value Growth Annual rate of seventy-four one-hundredths
Fund of one percent (.74%) of The Value Growth
Fund's average daily net assets.
The Small Capitalization Annual rate of seventy-four one-hundredths
Fund of one percent (.74%) of The Small
Capitalization Fund's average daily net
assets.
The Large Company Growth Annual rate of seventy-four one-hundredths
Fund of one percent (.74%) of The Large Company
Growth Fund's average daily net assets.
The Intermediate Bond Annual rate of sixty one-hundredths
Fund of one percent (.60%) of The Intermediate
Bond Fund's average daily net assets.
Arizona Municipal Bond Annual rate of forty-five one-hundredths
Fund of one percent (.45%) of The Arizona Tax-Free
Bond Fund's average daily net assets.
High Yield Bond Fund Annual rate of seventy-five one-hundredths of
one percent (.75%) of the High Yield Bond
Fund's average daily net assets.
Investor Aggressive Growth Annual rate of five one-hundredths of one
Fund percent (.05%) of The Investor Aggressive
Growth Fund's average daily net assets.
Investor Conservative Growth Annual rate of five one-hundredths of one
Fund percent (.05%) of The Investor Conservative
Growth Fund's average daily net assets.
Investor Growth & Income Annual rate of five one-hundredths of one
Fund percent (.05%) of The Investor Growth &
Income Fund's average daily net assets.
4
<PAGE>
Investor Growth Fund Annual rate of five one-hundredths of one
percent (.05%) of The Investor Growth Fund's
average daily net assets.
Investor Balanced Annual rate of five one-hundredths of one
Fund percent (.05%) of the Investor Balanced
Fund's average daily net assets.
Investor Fixed Income Annual rate of five one-hundredths of one
Fund percent (.05%) of The Investor Fixed Income
Fund's average daily net assets.
THE ONE GROUP
(formerly The Helmsman Fund)
By: Mark S. Redman
Dated: May 21, 1998
BANC ONE INVESTMENT ADVISORS
CORPORATION
By: Mark Beeson
Dated: May 21, 1998
5
<PAGE>
EXHIBIT (6)(d)
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN
BANC ONE INVESTMENT ADVISORS CORPORATION
AND
BANC ONE HIGH YIELD PARTNERS, INC.
<PAGE>
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of May 21, 1998 by and between BANC ONE INVESTMENT
ADVISORS CORPORATION, an Ohio corporation with its principal office in Columbus,
Ohio (hereinafter called the "Investment Adviser") and BANC ONE HIGH YIELD
PARTNERS, LLC, an investment adviser with its principal office in Cincinnati,
Ohio (hereinafter called the "Sub-Adviser").
WHEREAS, the Investment Adviser serves as the Investment Adviser to The One
Group High Yield Fund (the "Fund") of The One Group (the "Trust"), a
Massachusetts business trust and an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser to
provide investment sub-advisory services to the Trust with regard to the Fund
and the Sub-Adviser is willing and believes it possesses legal authority to make
available such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. RETENTION. The Investment Adviser hereby retains the Sub-Adviser to
provide certain sub-investment advisory services herein set forth to it with
regard to the Fund for the period and on the terms set forth in this Agreement.
The Sub-Adviser accepts such retention and agrees to furnish the services herein
set forth for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Investment Adviser has furnished the
Sub-Adviser with copies properly certified or authenticated of each of the
following documents:
(a) the Trust's Declaration of Trust, as filed with the Secretary of
State of the Commonwealth of Massachusetts on May 23, 1985, and all
amendments thereto or restatements thereof (such Declaration, as presently
in effect and as it shall from time to time be amended or restated, is
herein called the "Declaration of Trust");
(b) the Trust's Code of Regulations and amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Sub-Adviser and approving this Agreement;
(d) the Trust's original Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission on
February 20, 1985 and all amendments thereto;
<PAGE>
(e) the Trust's current Registration Statement on Form N-lA under the
Securities Act of 1933, as amended ("1933 Act"), and under the 1940 Act as
filed with the Securities and Exchange Commission and all amendments
thereto; and
(f) the Trust's most recent prospectus and Statement of Additional
Information relating to the Fund (such prospectus and Statement of
Additional Information, as presently in effect, and all amendments and
supplements thereto are herein collectively called the "Prospectus").
The Investment Adviser will promptly furnish the Sub-Adviser with copies of
all amendments of or supplements to the foregoing documents.
3. MANAGEMENT. Subject always to the instructions and supervision of the
Investment Adviser and the Trust's Board of Trustees, the Sub-Adviser will
provide a continuous investment program for the Fund, including investment
research and management with respect to all securities and investments and cash
equivalents in the Fund. The Sub-Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Trust with respect to the Fund and will place all purchase and sale orders on
behalf of the Trust with respect to the Fund. The Sub-Adviser will provide the
services under this Agreement in accordance with the Fund's investment
objective, policies and restrictions as stated in the Prospectus and resolutions
of the Trust's Board of Trustees. The Sub-Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will comply in all material respects with all applicable Rules
and Regulations of the Securities and Exchange Commission and in addition
will conduct its activities under this Agreement in accordance with any
applicable regulations pertaining to the investment advisory activities of
the Sub-Adviser;
(c) will not make loans to any person to purchase or carry units of
beneficial interest ("Shares") in the Fund or make loans to the Trust;
(d) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Sub-Adviser will attempt to
obtain prompt execution of orders in an effective manner at the most
favorable price. Consistent with this obligation, when the execution and
price offered by two or more brokers or dealers are comparable, the
Sub-Adviser may, in its discretion, purchase and sell portfolio securities
to and from brokers and dealers who provide the Sub-Adviser with research
advice and other services. In no instance will portfolio securities be
purchased from
2
<PAGE>
or sold to The One Group Services Company, the Investment Adviser, the
Sub-Adviser or any affiliated person of either the Trust, The One Group
Services Company, the Investment Adviser, or the Sub-Adviser, except to the
extent permitted by the 1940 Act;
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Fund and prior,
present or potential shareholders, and will not use such records and
information for any purpose other than in the performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be
unreasonably withheld. The foregoing shall not apply to any information
that is publicly available when provided or thereafter becomes publicly
available other than through a breach of this Agreement, or that is
required or requested to be disclosed by the Securities and Exchange
Commission or any other regulatory examiner of the Sub-Adviser, any auditor
of the parties hereto, by judicial or administrative process or otherwise
by applicable law or regulation. Nothing herein shall restrict the
Sub-Adviser's ability to publish information regarding the performance of
accounts under its management; and
(f) will maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Fund, the Sub-Adviser's personnel will not inquire or take into
consideration whether the issuers of securities proposed for purchase or
sale for the Fund's account are customers of the Investment Adviser, the
Sub-Adviser or the parents or subsidiaries or affiliates of the Investment
Adviser or Sub-Adviser. In dealing with such customers, the Sub-Adviser
and its parent, subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the Trust.
4. SERVICES NOT EXCLUSIVE. The investment advisory services furnished by
the Sub-Adviser hereunder are not to be deemed exclusive. Except to the extent
necessary to perform the Sub-Adviser's obligations under this Agreement, nothing
herein shall be deemed to limit or restrict the right of the Sub-Adviser, or any
subsidiary or affiliate of the Sub-Adviser, or any employee of the Sub-Adviser,
to engage in any other business, whether of a similar or dissimilar nature, or
to render services of any kind to any other person.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Sub-Adviser further agrees to preserve for the periods prescribed by Rule
3la-2 under the 1940 Act all records which it maintains for the Fund that are
required to be maintained by Rule 3la-1 under the 1940 Act.
3
<PAGE>
6. EXPENSES. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Trust. The Trust and the Investment Adviser will be
responsible for all of their respective expenses and liabilities.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Investment Adviser will pay the Sub-Adviser and
the Sub-Adviser will accept as full compensation therefor a fee computed daily
and paid monthly in arrears on the first business day of each month at an annual
rate of seventy one-hundredths of one percent (0.70%) of the Fund's average
daily net assets.
If the fee payable to the Sub-Adviser pursuant to this Section 7 begins to
accrue before the end of any month or if this Agreement terminates before the
end of any month, the fee for the period from such date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs. For purposes of
calculating fees, the value of the Trust's net assets shall be computed in the
manner specified in the Prospectus and the Trust's Declaration of Trust for the
computation of the value of the Trust's net assets in connection with the
determination of the net asset value of the Trust's shares. Payment of said
compensation shall be the sole responsibility of the Investment Adviser and
shall in no way be an obligation of the Fund or of the Trust.
8. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or fact or for any loss suffered by the
Trust or the Investment Adviser in connection with the performance of this
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Sub-Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective as of
the date first written above, provided that it shall have been approved by vote
of a majority of the outstanding voting securities of the Fund, in accordance
with the requirements under the 1940 Act, and, unless sooner terminated as
provided herein, shall continue in effect until November 30, 1999.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months each ending on November 30 of each year,
PROVIDED such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Trust's Board of Trustees who are not
parties to this Agreement or interested persons of the Trust, the Sub-Adviser,
or the Investment Adviser, cast in person at a meeting
4
<PAGE>
called for the purpose of voting on such approval, and (b) by the vote of a
majority of the Trust's Board of Trustees or by the vote of a majority of the
outstanding voting securities of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated at any time on sixty days' written notice, without
the payment of any penalty, by the Trust (by vote of the Trust's Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund), by the Investment Adviser or by the Sub-Adviser. This Agreement will
immediately terminate in the event of its assignment and upon termination of the
Investment Advisory Agreement between the Trust and the Investment Advisor. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
of such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by the laws
of the Commonwealth of Massachusetts.
The names "The One Group" and "Trustees of The One Group" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated as of May 23, 1985 to which reference is hereby made and a copy of
which is on file at the office of the Secretary of State of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of "The One Group" entered
into in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, Shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series of Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
BANC ONE INVESTMENT ADVISORS CORPORATION
By: ____________________________________
Title: _________________________________
BANC ONE HIGH YIELD PARTNERS, LLC
Seal By: ____________________________________
Title: _________________________________
The One Group hereby acknowledges
and agrees to the provisions of paragraph
3(e) of this Agreement.
THE ONE GROUP
By: ____________________________________
Title: _________________________________
6
<PAGE>
EXHIBIT (7)(e)
FORM OF SHAREHOLDER SERVICING AGREEMENT
<PAGE>
ONE GROUP SERVICES COMPANY
3435 STELZER ROAD
COLUMBUS, OHIO 42319
SHAREHOLDER SERVICING AGREEMENT
The One Group Services Company (the "Distributor") serves as the
Distributor to The One Group (the "Company"), an open-end management investment
company organized as a Massachusetts business trust and registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940 (the "1940 ACT"). Pursuant to Rule 12b-1 under the 1940 Act
("Rule 12b-l"), but subject to the provisions of Section 4.1 hereof, the holders
of the units of beneficial interest ("Shares") of the investment portfolios
identified in Schedule A hereto (individually, a "Fund"; collectively, the
"Funds") have adopted Distribution and Shareholder Servicing Plans (the "Plans")
which, among other things, authorize the Distributor to enter into this
Shareholder Servicing Agreement with _________________________________, (the
"Service Organization"), with its principal office located at _________________
__________________, concerning the provision of support services to the Service
Organization's customers ("Customers") who may from time to time beneficially
own Fund Shares. The terms and conditions of this Agreement are as follows:
1. REFERENCE TO PROSPECTUS; DETERMINATION OF NET ASSET VALUE.
1.1 Reference is made to the prospectuses of the Funds (individually, a
"Prospectus"; collectively, the "Prospectuses") as from time to time
are effective under the Securities Act of 1933 (the "1933 Act").
Terms defined therein and not otherwise defined herein are used herein
with then meaning so defined.
2. SERVICES AS A SERVICE ORGANIZATION.
2.1 The Service Organization shall provide any combination of the
following support services, as agreed upon by the parties from time to
time, to Customers who may from time to time beneficially own Shares
of a Fund: (i) aggregating and processing purchase and redemption
requests for a Fund's Shares from Customers and placing net purchase
and redemption orders with the Distributor, (ii) processing dividend
payments from the Company on behalf of Customers; (iii) arranging for
bank wire transfer of funds to or from a Customer's account; (iv)
responding to inquiries from Customers relating to the services
performed by the Service Organization under this Agreement; (v)
providing subaccounting with respect to a Fund's Shares beneficially
owned by Customers or the information to the Company necessary for
subaccounting, (vi) if required by law, forwarding Shareholder
communications from the Company (such as proxies, Shareholders
reports, annual and semi-annual financial statements, and dividend,
distribution, and tax notices) to Customers; (vii) forwarding to
Customers proxy statements and proxies containing any proposals
regarding this Agreement or a Fund's Plan; (viii) providing such other
similar services as the Distributor may reasonable request to the
extent the Service Organization is permitted to do so under applicable
statutes, rules, or regulations.
2.2 The Service Organization will provide such office space and equipment,
telephone facilities, and personnel (which may be any part of the
space, equipment, and facilities currently used in the Servicing
Organization's business, or any personnel employed by the Servicing
Organization) as may be reasonable necessary or beneficial in order to
provide such services to Customers,
1
<PAGE>
2.3 All orders for Fund Shares are subject to acceptance or rejection by
the Company in its sole discretion, and the Company may, in its
discretion and without notice, suspend or withdraw the sale of Fund
Shares, including the sale of such Shares to the Service Organization
for the account of any Customer or Customers.
2.4 In providing services hereunder, the Service Organization shall act
solely as agent for its Customers. For all purposes of this
Agreement, the Organization will be deemed to be an independent
contractor, and will have no authority to act as agent for the
Distributor in any matter or in any respect. No person is authorized
to make any representations concerning the Distributor, the Company,
or any Fund's Shares except those representations contained in the
Funds' then-current Prospectuses and the Company's Statement of
Additional Information and in such printed information as the
Distributor or the Company may subsequently prepare. The Service
Organization further agrees to deliver to Customers, upon the request
of the Distributor, copies of any amended Prospectus and Statement of
Additional Information.
2.5 The Service Organization and its employees will, upon request, be
available during normal business hours to consult with the Distributor
or its designees concerning the performance of the Service
Organization's responsibilities under this Agreement. In addition,
the Service Organization will furnish to the Distributor, the Company
or their designees such information as the Distributor, the Company or
their designees may reasonable request (including, without limitation,
periodic certifications confirming the provision to Customers of the
services described herein), and will otherwise cooperate with the
Distributor, the Company and their designees (including, without
limitation, any auditors designated by the Company, in the preparation
of reports to the Company's Board of Trustees concerning this
Agreement, as well as any other reports or filings that may be
required by law.
3. COMPENSATION.
3.1 The Distributor shall pay the Service Organization for the Services to
be provided by the Service Organization under this Agreement in
accordance with, and in the manner set forth in, Schedule B hereto, as
such Schedule may be amended from time to time.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
4.1 By written acceptance of this Agreement, the Service Organization
further represents, warrants, and agrees that: (i) the Service
Organization believes that it possesses the legal authority to perform
the services contemplated by this Agreement without violation of
applicable Federal banking laws (including the Glass-Steagall Act) and
regulations.
5. EXCULPATION; INDEMNIFICATION.
5.1 The Distributor shall not be liable to the Service Organization and
the Service Organization shall not be liable to the Distributor except
for acts or failures to act which constitute lack of good faith or
gross negligence and for obligations expressly assumed by either party
hereunder. Nothing contained in this Agreement is intended to
operate as a waiver by the Distributor or by the Service Organization
of compliance with any applicable federal or state law, rule, or
regulation and the rules and regulations promulgated by the National
Association of Securities Dealers, Inc.
6. EFFECTIVE DATE, TERMINATION.
6.1 This Agreement will become effective on the date a fully executed copy
of this Agreement is received by the Distributor or its designee.
Unless sooner terminated, this Agreement will
2
<PAGE>
continue until _______________19____, and thereafter will continue
automatically for successive annual periods ending on
___________________,19_______ of each year.
6.2 This Agreement will automatically terminate in the event of its
assignment (as such term is defined in the 1940 Act). This Agreement
may be terminated by the Distributor or by the Service Organization,
without penalty, upon ten days' prior written notice to the other
party. This Agreement may also be terminated at any time without
penalty by the vote of a majority of the members of the Board of
Trustees of the Company who are not "interested persons" (as such term
is defined in the 1940 Act) and who have no direct or indirect
financial Interest in the Plans or any agreement relating to such
Plans, including this Agreement, or by a vote of a majority of the
Shares of a Fund, with respect to such Fund, on ten days' written
notice.
7. GENERAL
7.1 All notices and other communications to either the Service
Organization or the Distributor will be duly given if mailed,
telegraphed or telecopied to the appropriate address set forth on page
1 thereof, or at such other address as either party provide in writing
to the other party.
7.2 The Distributor may enter into other similar agreements for the
provision of Shareholder services with any other person OR persons
without the Service Organization's consent.
7.3 This Agreement supersedes any other agreement between the Distributor
and the Service Organization relating to the provision of support
services to the Service Organization's Customers who beneficially own
Fund Shares and relating to any other matters discussed herein. All
covenants, agreements, representations, and warranties made herein
shall be deemed to have been material and relied on by each party,
notwithstanding any investigation made by either party or on behalf of
either party, and shall survive the execution and delivery of this
Agreement. The invalidity or unenforceability of any term or
provision hereof shall not affect the validity or enforceability of
any other term or provision hereof . The headings in this Agreement
are for convenience of reference only and shall not alter or otherwise
affect the meaning hereof. This Agreement may be executed in any
number of counterparts which together shall constitute one instrument
and shall be governed by and construed in accordance with the laws
(other than the conflict of laws rules) of the State of Ohio and shall
bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
3
<PAGE>
Please confirm that the foregoing is in accordance with your understanding
by indicating your acceptance hereof at the place below indicated.
THE ONE GROUP SERVICES COMPANY
By:
------------------------------
Name:
-----------------------------
Title:
----------------------------
Date:
-----------------------------
ACCEPTED AND AGREED TO:
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Date:
-----------------------------
4
<PAGE>
Schedule A
to the
Shareholder Servicing Agreement
Between The One Group Services Company
and
--------------------------------------------------------------
(Service Organization)
FUNDS
MONEY MARKET FUNDS
U.S. Treasury Securities Money Market - Class A Shares
Prime Money Market Fund - Class A Shares
Municipal Money Market Fund - Class A Shares
Ohio Municipal Money Market Fund - Class A Shares
EQUITY FUNDS
Income Equity Fund - Class A Shares
Disciplined Value Fund - Class A Shares
Growth Opportunities Fund - Class A Shares
International Equity Index Fund - Class A Shares
Large Company Value Fund - Class A Shares
Equity index Fund - Class A Shares
Asset Allocation Fund - Class A Shares
Large Company Growth Fund - Class A Shares
Value Growth Fund - Class A Shares
Small Capitalization Fund (Formerly, the Gulf South Growth Fund - Class A Shares
Investor Aggressive Growth Fund - Class A Shares
Investor Growth Fund - Class A Shares
Investor Growth and Income Fund - Class A Shares
Investor Balanced Fund - Class A Shares
Investor Conservative Growth Fund - Class A Shares
FIXED INCOME FUNDS
Income Bond Fund - Class A Shares
Limited Volatility Bond Fund - Class A Shares
Intermediate Tax-Free Bond Fund - Class A Shares
Ohio Municipal Bond Fund - Class A Shares
Government Bond Fund - Class A Shares
Ultra Short-Term Income Fund - Class A Shares
Municipal Income Fund - Class A Shares
West Virginia Municipal Bond Fund - Class A Shares
Kentucky Municipal Bond Fund
Intermediate Bond Fund - Class A Shares
Arizona Municipal Bond Fund - Class A Shares
Louisiana Municipal Bond Fund - Class A Shares
Treasury & Agency Fund - Class A Shares
Accepted and Agreed to:
The One Group Services Company
-------------------------------
(Service Organization)
By: By:
------------------------------- ---------------------------
Date: Date:
----------------------------- -------------------------
5
<PAGE>
SCHEDULE B
TO THE
SHAREHOLDER SERVICING AGREEMENT
BETWEEN THE ONE GROUP SERVICES COMPANY
AND
------------------------------------------
(SERVICE ORGANIZATION)
COMPENSATION (1)
THE SERVICE ORGANIZATION shall receive A FEE CALCULATED AT AN ANNUAL RATE
OF TWENTY-FIVE ONE-HUNDREDTHS OF one PERCENT (.25%) of THE FUND'S AVERAGE DAILY
NET ASSETS ATTRIBUTABLE TO SHARES BENEFICIALLY OWNED BY the Service Organization
Customers.
Accepted and Agreed to:
The One Group Services Company
----------------------------
(Service Organization)
By: By:
-------------------------------- ------------------------
Date: Date:
------------------------------ ----------------------
- ----------------------------
(1) All fees are computed daily and paid monthly.
6
<PAGE>
EXHIBIT (10(j)
AGENCY SERVICES AND DELEGATION AGREEMENT
BETWEEN
INVESCO TRUST COMPANY
AND
REGISTRANT
DATED JANUARY 1, 1998
<PAGE>
AGENCY AND SERVICES DELEGATION AGREEMENT
AGREEMENT made as of January 1, 1998 by and between INVESCO RETIREMENT PLAN
SERVICES, a division of INVESCO Funds Group, Inc. ("Recordkeeper") and The One
Group-Registered Trademark- (the "Fund Company").
WITNESSETH
WHEREAS, the Fund Company desires to enter into an Agency and Services
Delegation Agreement pursuant to which the Fund Company will retain the
Recordkeeper to perform certain recordkeeping and accounting services and
functions with respect to transactions in shares ("Shares") of series ("Funds")
of the Fund Company made by or on behalf of participants, beneficiaries or plan
sponsors (collectively, "Participants") in certain employee pension benefit
plans as defined in Section 3(2)(A) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") ("Plans"), and with respect to holdings of
Shares maintained by or on behalf of such Participants, when with respect to the
Fund Company such Plans maintain with the Fund Company's transfer agent
("Transfer Agent") a single master shareholder account; and
NOW, THEREFORE, in consideration of the following premises and mutual covenants,
the parties agree as follows:
1. SERVICES PROVIDED BY THE RECORDKEEPER
When and to the extent requested by the Fund Company, the Recordkeeper
agrees to perform recordkeeping and accounting services and functions with
respect to transactions in and holdings of Shares by or on behalf of
Participants in Plans which maintain Plan level shareholder accounts with
the Fund Company's Transfer Agent. To the extent requested, the
Recordkeeper will provide the following services:
A. Maintain separate records for each Participant reflecting Shares
purchased, redeemed and exchanged on behalf of such Participant and
outstanding balances of Shares owned by or for the benefit of such
Participant.
B. Prepare and transmit to each Plan and/or its Participants periodic
account statements indicating the number of Shares of the Fund Company
owned by or for the benefit of Participants and purchases, redemptions
and exchanges made on behalf of Participants.
C. With respect to each Plan, aggregate all purchase, redemption and
exchange instructions ("Instructions") made by or on behalf of the
Plan's Participants and Sponsors and transmit orders ("Orders") based
an such aggregate Instructions to the Transfer Agent for acceptance.
D. Provide to the Fund Company, the Transfer Agent and/or other parties
designated by them such other information relating to transactions in
and holdings of Shares by or on behalf of Participants as is
reasonably requested.
E. As agreed upon with the Fund Company, deliver or arrange for the
delivery of appropriate documentation in connections with Orders.
2. PROVISION OF NET ASSET VALUE.
The Fund Company or its designee shall furnish the Recordkeeper with the
confirmed net asset value ("NAV") information as of the close of trading on
the New York Stock Exchange (generally, 4:00 p.m., Eastern Time ("ET"))
("Market Close") on any day that the Fund Company is open for business
("Business Day"), and dividend and capital gains information as it arises.
The Fund Company or its designee shall use its best efforts to provide such
information by 6:30 p.m., ET on each Business Day.
1
<PAGE>
3. THE RECORDKEEPERS RECEIPT AND TRANSMISSION OF ORDERS.
A. The Recordkeeper agrees that (i) Orders derived from Participant
Instructions received by the Recordkeeper prior to the Market Close on
any Business Day of the Fund Company, as defined in the Fund Company's
registration statement, ("Day 1") will be electronically transmitted
to the Fund Company by 9:00 p.m., ET that Business Day (such Orders
are referred to as "Day 1 Trades"); and (ii) orders derived from
Instructions received by the Recordkeeper after the Market Close ("Day
2 Trades") on Day 1 will be electronically transmitted to the Fund
Company on the next Business Day following Day 1 ("Day 2").
B. If the Recordkeeper cannot electronically transmit Day 1 Trades by
9:00 p.m. on Day 1, the Recordkeeper will transmit such Orders by
facsimile prior to the Market Open (generally 8:00 a.m.) on Day 2. If
Day 2 Trades cannot be electronically transmitted by 9:00 p.m. on Day
2, the Recordkeeper will transmit such Orders by facsimile prior to
the Market Open on the second business day following Day 1 ("Day 3").
4. PRICING OF ORDERS.
The Fund Company agrees that Day 1 Trades will be effected at the NAV
calculated as of the Market Close on Day 1, provided that such trades are
received by the Fund Company by 9:00 p.m., ET on Day 1 or prior to 8:00
a.m. on Day 2; and Day 2 Trades will be effected at the NAV calculated as
of the Market Close on Day 2, provided they are received by the Fund
Company by 9:00 p.m., ET on Day 2 or prior to 8:00 a.m. on Day 3. The Fund
Company agrees that, consistent with the foregoing, Day 1 Trades will have
been received by the Fund Company prior to the Market Close on Day 1, and
Day 2 trades will have been received by the Fund Company prior to the
Market Close on Day 2 for all purposes, including, without limitation,
effecting distributions.
5. CONFIRMATIONS
The Fund Company will send a confirmation of each Business Day's Order via
electronic transmission or facsimile by Market Close on Day 2 for Day
1Trades received by 8:00 a.m on Day 2.
6. VERIFICATION
Each party shall, as soon as practicable after notification that a report,
confirmations, notification or other information has been transmitted by
the other party via facsimile or other electronic transmission, confirm the
receipt of such report, notification or other information. Such
confirmation shall be in oral, written or electronic format. In the
absence of such confirmation, a party to whom the transmission was sent
shall not be held liable for any failure to act in accordance with the
transmission, and absent evidence to the contrary, the sending party may
not claim that the transmission was received by the other party. Each
party shall promptly notify the other of any errors, omission or
interruptions in, or delay or unavailability of, any such transmission as
promptly as possible.
7. APPOINTMENT AS AGENT FOR LIMITED PURPOSE
The Recordkeeper shall be deemed the agent of the Fund Company for the sole
and limited purpose of receiving purchase, redemption and exchange
Instructions from Participants or Plan sponsors and transmitting
corresponding Orders to the Transfer Agent. Except as provided
specifically herein, neither the Fund Company nor any person to which the
Fund Company may delegate any of its duties hereunder shall be or hold
itself out as an agent of the Transfer Agent or the Fund Company.
8. REPRESENTATIONS OF RECORDKEEPER
The Recordkeeper agrees, represents and warrants that:
2
<PAGE>
A. It will forward Orders within such time periods and to such parties as
are specified by the Fund Company, the Transfer Agent, the Fund
Company's prospectuses and applicable law and regulation.
B. If and to the extent required under applicable federal and state
securities laws and regulations, it is duly registered pursuant to
such laws and regulations; and the receipt of any fees by it from the
Fund Company, and the corresponding reduction of fees payable to the
Recordkeeper by the Plan (or by the Plan sponsor, according to
Recordkeeper's agreement with the Plan) will not constitute a
"prohibited transaction" for purposes of Title I of ERISA, and section
4975 of the Internal Revenue Code of 1986, as amended.
C. At all times during the term of this contract, the Recordkeeper will
maintain errors and omissions coverage in an amount not less than
$1,000,000 per occurrence, and in the aggregate. A certificate of
insurance evidencing such coverage will be provided by the
Recordkeeper to the Fund Company as soon as is practicable after
commencement of this agreement.
9. RECORDS AND REPORTING
A. The Recordkeeper will maintain and preserve all records as required by
the Investment Company Act of 1940 (the "1940 Act"), as amended, and
the rules thereunder, in connection with its provision of services
under this Agreement. All records maintained by the Recordkeeper
hereunder shall be made available in accordance with the 1940 Act and
the rules thereunder. Upon the reasonable request of the Fund Company
and at its sole reasonable expense, the Transfer Agent, or the
independent accountants for the Fund Company, the Recordkeeper will
promptly provide copies, or originals if required, of (i) historical
records relating to transactions involving the Fund Company and
Participants; (ii) written communications regarding the Fund Company
to or from Participants; (iii) and other materials relating to the
provision of services by the Recordkeeper under this Agreement. The
Recordkeeper will comply with any reasonable request for such
information and documents made by the Fund Company or its board of
Trustees or any governmental body or self-regulatory organization.
B. The Recordkeeper agrees that, with respect to the Plans for which it
is providing services under this Agreement, the Recordkeeper will
permit the Fund Company, the Transfer Agent, or their representatives,
to have reasonable access to its personnel and records in order to
facilitate the monitoring of the quality of the services provided by
the Recordkeeper. Notwithstanding anything herein to the contrary,
the Recordkeeper shall not be required to provide the names and
addresses of Participants to the Transfer Agent or the Fund Company,
unless applicable law or regulation otherwise requires.
C. This Section 9 shall survive termination of this Agreement.
10. ABILITY TO PROVIDE SERVICES
The Recordkeeper agrees to notify the Fund Company promptly if for any
reason it is unable to perform its obligations under this Agreement.
11. COMPENSATION
A. In consideration of performance of the services by the Recordkeeper
hereunder, the Fund Company will compensate the Recordkeeper per
calendar quarter at a rate of one dollar and twenty-five cents ($1.25)
per participant account per Fund with a balance at each calendar
quarter end not to exceed three Funds per participant, or as to which
the Fund Company and the Recordkeeper shall agree from time-to-time in
writing. Said compensation will commence with the calendar quarter
ending June 30, 1998.
3
<PAGE>
B. The Recordkeeper will permit the Fund Company and its representatives
(including counsel and independent accountants) at its sole cost,
reasonable access to its records to enable the Fund Company to verify
that the Recordkeeper's charges hereunder comply with the provisions
of this Agreement. Such access shall include, but not be limited to,
up to four on-site inspections of the Recordkeeper's records each
calendar year.
12. INDEMNIFICATION
The Recordkeeper shall indemnify and hold harmless the Fund Company from
and against any and all losses and liabilities that it may incur, including
without limitation reasonable attorneys' fees, expenses and costs arising
out of or related to the performance or non-performance of the Recordkeeper
of its responsibilities under this Agreement; excluding, however, any such
claims, suits, loss, damage or costs caused by, contributed to or arising
from any noncompliance by the Fund Company with its obligations under this
Agreement, including the late or inaccurate provision of NAV information,
as to which the Fund Company as pertinent, shall indemnify, hold harmless
and defend the Recordkeeper and its directors, officers, employees,
shareholders, partners and agents, on the same basis as set forth above.
This Section 12 shall survive termination of this Agreement.
13. TERMINATION
The Fund Company will provide the Recordkeeper with ninety (90) days prior
written notice if purchase Orders may no longer be effected in accordance
with this Agreement. Such termination shall not affect the remaining
provisions of this Agreement and redemption Orders shall continue to be
effected. Either party may terminate this Agreement upon ninety (90) day's
prior written agreement to the Fund Company.
14. LIMITATION OF LIABILITY OF TRUSTEES, DIRECTORS AND SHAREHOLDERS
It is expressly agreed that the obligations of the Fund Company and the
Recordkeeper hereunder shall not be binding upon any of the Trustees,
directors, shareholders, nominees, officers, agents or employees of the
Fund Company and the Recordkeeper personally, but shall bind only the Fund
Company or the Recordkeeper. The execution and delivery of this Agreement
have been authorized by the Trustees of the Fund Company and the directors
of the Recordkeeper, and this Agreement has been signed and delivered by an
authorized officer of the Fund Company and the Recordkeeper, acting as
such, and neither such authorization by the Trustees of the Fund Company or
the Directors of the Recordkeeper, nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the
Fund Company as provided in the Fund Company's Agreement and Declaration of
Trust and the Recordkeeper.
15. NOTICES. Unless otherwise specified, all notices and other communications
shall be in writing and shall be duly given if hand delivered, delivered by
facsimile with written confirmation, or mailed by first class mail to the
following addresses:
IF TO THE FUND COMPANY:
The One Group
Attn: Mark Redman
3435 Stelzer Road
Columbus, Ohio 43219
IF TO THE RECORDKEEPER:
INVESCO RETIREMENT PLAN SERVICES
Attn: Barbara March
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, GA 30361
4
<PAGE>
16. SEVERABILITY. If any provision of this Agreement are held or made invalid
by a statute, rule, regulation , decision of a tribunal or otherwise, the
remainder of this Agreement shall not be affected and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
17. GOVERNING LAW. This Agreement shall be governed by the laws of the state
of Ohio, except as such laws are superseded by or preempted by any Federal
law.
18. ASSIGNMENT. This Agreement may not be assigned by either party without the
prior written consent of the other party.
19. DISPUTE RESOLUTION AND ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or the breach of the same which gives rise
to a remedy at law, shall be settled through consultation and negotiation
in good faith and a spirit of mutual cooperation. However, if those
attempts fail, the parties agree that any misunderstandings or disputes
arising from this Agreement shall be decided by arbitration which shall be
conducted, upon request by either party, before three (3) arbitrators
(unless both parties agree on one (1) arbitrator) designated by the
American Arbitration Association (the "AAA"), in accordance with the terms
of the Commercial Arbitration Rules of the AAA, and, to the maximum extent
applicable, the United States Arbitration Act (Title 9 of the United States
Code), or if such Act is not applicable, any substantially equivalent Ohio
state law. The parties further agree that the arbitrator(s) will decide
which party must bear the expenses of the arbitration proceedings. The
arbitration will take place in Columbus, Ohio.
20. ENTIRE AGREEMENT. This Agreement represents the entire agreement between
the parties, supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, and shall not be modified or
amended except by a writing signed by both parties.
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
THE ONE GROUP-Registered Trademark- INVESCO RETIREMENT PLAN SERVICES, a
division of INVESCO Fund Services,
Inc.
Mark S. Redman Robert J. O'Connor
By: Mark S. Redman By: Robert J. O'Connor
Title: President Title: Chief Executive Office
5
<PAGE>
EXHIBIT (10)(k)
MULTIPLE CLASS PLAN
ADOPTED BY THE BOARD OF TRUSTEES
ON MAY 22, 1995, AS AMENDED
MAY 21, 1998
<PAGE>
MULTIPLE CLASS PLAN FOR THE ONE GROUP
(AS AMENDED May 21, 1998)
The One Group (the "Trust") is an open-end investment company that offers
units of beneficial interest ("shares") in forty separate portfolios ("funds")
and five different classes of certain of the funds. The five classes are Class
A, Class B, Class C, Fiduciary Class, and Service Class. The classes provide
for variations in distribution costs, voting rights, dividends, and per share
net asset value. The differences among the classes are discussed below.
Attached as Exhibit A, which may be amended from time to time, is a list of the
funds and the class of shares available in each fund.
A. DISTRIBUTION AND SHAREHOLDER SERVICES
Class A, Class B and Class C shares are distributed to the general public.
Investors may purchase Class A, Class B and Class C shares of a fund by
completing and signing an account application form and mailing it, along with a
check (or other negotiable bank instrument or money order) to the Trust's
transfer agent and custodian. Subsequent purchases of shares may be made at any
time by mailing a check to the transfer agent.
Class A, Class B and Class C investors may make automatic monthly
investments in a fund from their bank, savings and loan or other depository
institution accounts. The Trust pays the costs associated with these transfers,
but reserves the right, upon thirty days' written notice, to impose reasonable
charges for this service.
Fiduciary Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository institution,
insurance company, pension plan or other organization authorized to act in a
fiduciary, advisory, agency, custodial or similar capacity (each an "Authorized
Financial Organization"). Purchases of Fiduciary Class shares that are offered
to investors in certain retirement plans such as 401(k) and similar plans, other
than Individual Retirement Accounts, are purchased by a Shareholder Servicing
Agent on behalf of an investor.
Service Class shares are available only in the Prime Money Market and U.S.
Treasury Securities Money Market Funds. This class of shares is available to
broker-dealers, other financial intermediaries, banks and other depository
institutions. Service Class shares offer administrative and accounting (sweep
processing) services.
A purchase order will be effective as of the day received by the
distributor if the distributor receives the order before 4:00 p.m., eastern
time. However, an order may be canceled if the transfer agent does not receive
Federal funds before close of business on the next Business Day for Fiduciary
Class shares, and before the close of business on the fifth Business Day for
Class A, Class B and Class C shares.
B. SALES LOAD
CLASS A SHARES
Class A shares are subject to a front-end sales charge. The front-end
sales charge is based on a percentage of the offering price and may vary based
on the amount of purchase.
Class A shares also are subject to a distribution and shareholder services
fee assessed pursuant to the distribution and shareholder services plan (the
"Plan"). As provided in the Plan, the Trust will pay the distributor a fee
based on the average daily net assets of Class A shares of the fund. A certain
percentage of the fee payable under the Plan may be used as compensation for
shareholder services by the distributor and/or financial institutions and
intermediaries. All such fees that may be paid under the Plan will be paid
pursuant to Rule 12b-1 of the 1940 Act. The distributor may apply these fees
toward: (i) compensation for its services in connection with distribution
assistance or provision of shareholder services; or (ii) payments to financial
institutions and intermediaries such as banks (including affiliates of the
Adviser),
1
<PAGE>
savings and loan associations, insurance companies, investment counselors,
broker-dealers, and the distributor's affiliates and subsidiaries, as
compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of shareholder services.
A shareholder of Class A shares may reduce the sales charge by completing
the Letter of Intent section of the account application form. The Letter of
Intent includes a provision for a sales charge adjustment depending on the
amount actually purchased within the 13-month period. In addition, pursuant to
a Letter of Intent, the Custodian will hold in escrow the difference between the
sales charge applicable to the amount initially purchased and the sales charge
paid at the time of investment, which is based on the amount covered by the
Letter of Intent.
No sales charge is imposed on Class A shares of the Fund: (i) issued
through reinvestment of dividends and capital gains distributions; (ii)
acquired through the exercise of exchange privileges where a comparable sales
charge has been paid for exchanged shares; (iii) purchased by officers,
directors or trustees, retirees and employees (and their spouses and
immediate family members) of the Trust, of BANC ONE CORPORATION and its
subsidiaries and affiliates, of the Distributor and its subsidiaries and
affiliates, of the Transfer Agent and Custodian and their subsidiaries and
affiliates, of broker/dealers who have entered into dealer agreements with
The One Group and their subsidiaries and affiliates, or of an investment
sub-adviser of a Fund of the Trust and such sub-adviser's subsidiaries and
affiliates; (iv) sold to affiliates of BANC ONE CORPORATION and certain
accounts (other than Individual Retirement Accounts) for which Authorized
Financial Organizations act in fiduciary, advisory, agency, custodial or
similar capacities, or purchased by investment advisers, financial planners
or other intermediaries who have a dealer arrangement with the Distributor,
who place trades for their own accounts or for the accounts of their clients
and who charge a management, consulting or other fee for their services, as
well as clients of such investment advisers, financial planners or other
intermediaries who place trades for their own accounts if the accounts are
linked to the master account of such investment adviser, financial planner or
other intermediary; (v) purchased with proceeds from the recent redemption of
Fiduciary Class shares of a Fund of the Trust or acquired in an exchange of
Fiduciary Class shares of a Fund for Class A shares of the same Fund; (vi)
purchased with proceeds from the recent redemption of shares of a mutual fund
for which a sales charge was paid; (vii) purchased in an Individual
Retirement Account with the proceeds of a distribution from an employee
benefit plan, provided that, at the time of distribution, the employee
benefit plan had plan assets invested in a Fund of the Trust; (viii)
purchased with Trust assets; (ix) purchased in accounts as to which a bank or
broker-dealer charges an asset allocation fee, provided the bank or
broker-dealer has an agreement with the Distributor; (x) directly purchased
with the proceeds of a distribution on a bond for which a BANC ONE
CORPORATION affiliate bank or trust company is the Trustee or Paying Agent;
(xi) purchased in connection with plans of reorganization of a Fund, such as
mergers, asset acquisitions and exchange offers to which the Fund is a party;
or (xii) purchased by retirement and deferred compensation plans and trusts
used to fund these plans including, but not limited to, those defined in
Sections 401(a), 403(b) or 457 of The Internal Revenue Code and rabbi trusts.
Further, an initial purchase of shares in the amount of $1 million or more
is not subject to a front-end sales charge. However, if such shares are
redeemed prior to the first anniversary of purchase, the shareholder will be
subject to a contingent deferred sales charge ("Class A CDSC") on the initial
purchase in an amount not to exceed any promotional incentives or additional
compensation paid by the Distributor to registered representatives who have sold
or are expected to sell significant amounts of shares of the Funds.
An investor relying upon any of the categories of waivers of the sales
charge must qualify for such waiver in advance of the purchase with the
Distributor or the financial institution or intermediary through which shares
are purchased by the investor.
The waiver of the sales charge under circumstances (v), (vi), and (vii)
above applies only if the purchase is made within 60 days of the redemption or
distribution and if conditions imposed by the Distributor are met. This waiver
policy with respect to the purchase of shares through the use of proceeds from a
recent redemption or distribution as described in clauses (v), (vi), and (vii)
above will not be continued indefinitely and may be discontinued at any time
without notice.
2
<PAGE>
CLASS B SHARES
Class B shares are subject to a Contingent Deferred Sales Charge and a
distribution and shareholder services fee. If the Shareholder redeems Class B
shares prior to the sixth anniversary of purchase, the Shareholder will pay a
Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge is
assessed on an amount equal to the lesser of the then current market value or
the cost of the shares being redeemed. Accordingly, no sales charge is imposed
on increases in net asset value above the initial purchase price. In addition,
no charge is assessed on shares derived from reinvestment of dividends or
capital gain distributions.
The amount of the Contingent Deferred Sales Charge, if any, varies
depending on the number of years from the time of payment for the purchase of
Class B shares until the time of redemption of such shares. Solely for purposes
of determining the number of years from the time of any payment for the purchase
of shares, all payments during a month are aggregated and deemed to have been
made on the first day of the month.
In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Class A
shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class B shares redeemed first) or shares representing capital appreciation, next
of shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.
Class B shares of the fund also are subject to an ongoing distribution and
shareholder service fee as provided in the Class B and Class C distribution and
shareholder services plan (the "Class B and Class C Plan") at an annual rate
based on a percentage of the fund's average daily net assets. This fee
arrangement will cause Class B shares to have a higher expense ratio and to pay
lower dividends than Class A shares. Class B shares convert automatically to
Class A shares after six years, commencing from the end of the calendar month in
which the purchase order was accepted.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
shareholder service fee under the Class B Plan are payable to the distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
shareholder services to the fund in connection with the sale of the Class B
shares, such as the payment of compensation to dealers and agents for selling
Class B shares. The combination of the Contingent Deferred Sales Charge and the
distribution and shareholder services fees facilitate the ability of the fund to
sell the Class B shares without a front-end sales charge.
The Contingent Deferred Sales Charge is waived on redemption of shares: (i)
for distributions that are limited to no more than 10% of the account value
annually, determined in the first year as of the date the redemption request is
received by the Transfer Agent, and in subsequent years, as of the most recent
anniversary of that date; (ii) following the death or disability of a
shareholder or a participant or beneficiary of certain qualifying retirement
plans if redemption is made within one year of such death or disability; or
(iii) to the extent that the redemption represents a minimum required
distribution from an Individual Retirement Account or other qualifying
retirement plan to a shareholder who has attained the age of 70 1/2; or (iv)
bought in connection with certain retirement plans, such as 401(k) and similar
qualified plan. In addition, the following circumstances are not deemed to
result in a "redemption" of Class B shares for purposes of the assessment of a
Contingent Deferred Sales Charge, which is therefore waived: (i) plans of
reorganization of the fund, such as mergers, asset acquisitions and exchange
offers to which the Fund is a party; or (ii) exchanges for Class B shares of
other funds of the Trust.
CLASS C SHARES
Class C shares are subject to a Contingent Deferred Sales Charge and a
distribution and shareholder services fee. If the Shareholder redeems Class C
shares prior to the first anniversary of purchase, the Shareholder will pay a
Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge is
assessed on an amount equal to the lesser of the then current market value or
the cost of the shares being redeemed. Accordingly, no sales charge is imposed
on increases in net asset value above the initial purchase price. In addition,
no charge is assessed on shares derived from reinvestment of dividends or
capital gain distributions.
3
<PAGE>
Solely for purposes of determining the number of years from the time of any
payment for the purchase of shares, all payments during a month are aggregated
and deemed to have been made on the first day of the month.
In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Class A
shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class C shares redeemed first) or shares representing capital appreciation, next
of shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.
Class C shares of the fund also are subject to an ongoing distribution and
shareholder service fee as provided in the Class B and Class C distribution and
shareholder services plan (the "Class B and Class C Plan") at an annual rate
based on a percentage of the fund's average daily net assets. This fee
arrangement will cause Class C shares to have a higher expense ratio and to pay
lower dividends than Class A shares.
Proceeds from the Contingent Deferred Sales Charge and the distribution and
shareholder service fee under the Class C Plan are payable to the distributor
and financial intermediaries to defray the expenses of advance brokerage
commissions and expenses related to providing distribution-related and
shareholder services to the fund in connection with the sale of the Class C
shares, such as the payment of compensation to dealers and agents for selling
Class C shares. The combination of the Contingent Deferred Sales Charge and the
distribution and shareholder services fees facilitate the ability of the fund to
sell the Class C shares without a front-end sales charge.
The Contingent Deferred Sales Charge is waived on redemption of shares: (i)
for distributions that are limited to no more than 10% of the account value
annually, determined in the first year as of the date the redemption request is
received by the Transfer Agent, and in subsequent years, as of the most recent
anniversary of that date; (ii) following the death or disability of a
shareholder or a participant or beneficiary of certain qualifying retirement
plans if redemption is made within one year of such death or disability; (iii)
IF THE TRUST'S DISTRIBUTOR RECEIVES NOTICE PRIOR TO THE TIME OF A SHAREHOLDER'S
INVESTMENT INDICATING THAT THE SHAREHOLDER SERVICING AGENT, DUE TO THE NATURE OF
THE SHAREHOLDER'S ACCOUNT, WAIVES THE COMMISSION IT WOULD OTHERWISE BE PAID; or
(iv) to the extent that the redemption represents a minimum required
distribution from an Individual Retirement Account or other qualifying
retirement plan to a shareholder who has attained the age of 70 1/2; or (iv)
bought in connection with certain retirement plans, such as 401(k) and similar
qualified plan. In addition, the following circumstances are not deemed to
result in a "redemption" of Class C shares for purposes of the assessment of a
Contingent Deferred Sales Charge, which is therefore waived: (i) plans of
reorganization of the fund, such as mergers, asset acquisitions and exchange
offers to which the Fund is a party; or (ii) exchanges for Class C shares of
other funds of the Trust.
FIDUCIARY CLASS SHARES
Fiduciary class shares are not subject to a sales charge at the time of
purchase or redemption, nor are they subject to a distribution or shareholder
services fee.
SERVICE CLASS SHARES
Service class shares are not subject to a sales charge at the time of
purchase or redemption. However, service class shares are subject to a
distribution and shareholder services fee based on a percentage of the fund's
average daily net assets.
C. EXCHANGE RIGHTS
CLASS A AND FIDUCIARY CLASS SHARES
Fiduciary Class Shareholders of the Fund may exchange their shares for
Class A shares of the fund or for Class A shares or Fiduciary Class shares of
another fund of the Trust.
4
<PAGE>
Class A Shareholders may exchange their shares for Fiduciary Class shares
of the fund or for Fiduciary Class or Class A shares of another fund of the
Trust if the shareholder is eligible to purchase such shares.
The exchange privilege may be exercised only in those states where the
shares of the fund or such other fund of the Trust may be legally sold. All
exchanges discussed herein are made at the net asset value of the exchanged
shares, except as provided below. The Trust does not impose a charge for
processing exchanges of shares. If a shareholder seeks to exchange Class A
shares of a fund that does not impose a sales charge for Class A shares of a
fund that does or the fund being exchanged into has a higher sales charge, the
Shareholder will be required to pay a sales charge in the amount equal to the
difference between the sales charge applicable to the fund into which the shares
are being exchanged and any sales charges previously paid for the exchanged
shares, including any sales charges incurred on any earlier exchanges of the
shares (unless such sales charge is otherwise waived). The exchange of
Fiduciary Class shares for Class A shares also will require payment of the sales
charge unless the sales charge is waived.
CLASS B SHARES
Class B shareholders of the fund may exchange their shares for Class B
shares of any other fund of the Trust on the basis of the net asset value of the
exchanged Class B shares, without the payment of any Contingent Deferred Sales
Charge that might otherwise be due upon redemption of the outstanding Class B
shares. The newly acquired Class B shares will be subject to the higher
Contingent Deferred Sales Charge of either the fund from which the shares were
exchanged or the fund into which the shares were exchanged. With respect to
outstanding Class B shares as to which previous exchanges have taken place,
"higher Contingent Deferred Sales Charge" shall mean the higher of the
Contingent Deferred Sales Charge applicable to either the fund the shares are
exchanging into or any other fund from which the shares previously have been
exchanged. For purposes of computing the Contingent Deferred Sales Charge that
may be payable upon a disposition of the newly acquired Class B shares, the
holding period for outstanding Class B shares of the fund from which the
exchange was made is "tacked" to the holding period of the newly acquired Class
B shares. For purposes of calculating the holding period applicable to the
newly acquired Class B shares, the newly acquired Class B shares shall be deemed
to have been issued on the date of receipt of the shareholder's order to
purchase the outstanding Class B shares of the fund from which the initial
exchange was made.
CLASS C SHARES
Class C shareholders of the fund may exchange their shares for Class C
shares of any other fund of the Trust on the basis of the net asset value of the
exchanged Class C shares, without the payment of any Contingent Deferred Sales
Charge that might otherwise be due upon redemption of the outstanding Class C
shares. The newly acquired Class C shares will be subject to the higher
Contingent Deferred Sales Charge of either the fund from which the shares were
exchanged or the fund into which the shares were exchanged. With respect to
outstanding Class C shares as to which previous exchanges have taken place,
"higher Contingent Deferred Sales Charge" shall mean the higher of the
Contingent Deferred Sales Charge applicable to either the fund the shares are
exchanging into or any other fund from which the shares previously have been
exchanged. For purposes of computing the Contingent Deferred Sales Charge that
may be payable upon a disposition of the newly acquired Class C shares, the
holding period for outstanding Class C shares of the fund from which the
exchange was made is "tacked" to the holding period of the newly acquired Class
C shares. For purposes of calculating the holding period applicable to the
newly acquired Class C shares, the newly acquired Class C shares shall be deemed
to have been issued on the date of receipt of the shareholder's order to
purchase the outstanding Class C shares of the fund from which the initial
exchange was made.
SERVICE CLASS SHARES
Service Class shareholders may not exchange their Service Class shares for
Class A, Class B, Class C, or Fiduciary Class shares, nor may Class A, Class B,
Class C, or Fiduciary Class shares be exchanged for Service Class shares.
ADDITIONAL INFORMATION REGARDING EXCHANGES
5
<PAGE>
The Trust reserves the right to change the terms or conditions of the
exchange privilege discussed herein upon sixty days' written notice. An
exchange between classes of shares of the same fund is not considered a taxable
event; however, an exchange between funds of the Trust is considered a sale of
shares and usually results in a capital gain or loss for Federal income tax
purposes.
D. CONVERSION RIGHTS
Class B shares will automatically convert to Class A shares six or eight
years (depending on the fund) after the end of the month in which the shares
were purchased and will be subject to the lower distribution and fees charged to
Class A shares. Such conversion will be on the basis of the relative net asset
values of the two classes, without the imposition of any sales charge, fee or
other charge. The conversion is not a taxable event to a shareholder.
For purposes of conversion to Class A shares, shares received as dividends
and other distributions paid on Class B shares in a shareholder's fund account
will be considered to be held in a separate sub-account. Each time any Class B
shares in a shareholder's fund account (other than those in the sub-account)
convert to Class A shares, a pro-rata portion of the Class B shares in the
sub-account will also convert to Class A shares.
If a shareholder effects one or more exchanges among Class B shares of the
funds of the Trust during the six-year period, the Trust will aggregate the
holding periods for the shares of each fund of the Trust for purposes of
calculating that six-year period. Because the per share net asset value of the
Class A shares may be higher than that of the Class B shares at the time of
conversion, a shareholder may receive fewer Class A shares than the number of
Class B shares converted, although the dollar value will be the same.
Class C shares issued through November 1, 1997 ("Grandfathered Shares")
will automatically convert to Class A shares six years after the end of the
month in which the shares were purchased under the terms above described with
respect to Class B shares (including the treatment of shares received as
dividends or as other distributions. All other Class C shares shall not convert
to Class A shares.
E. VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund
of the Trust will vote separately on matters relating solely to that fund. In
addition, each class of a fund shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to that class, and shall have
separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class. However,
all fund shareholders will have equal voting rights on matters that affect all
fund shareholders equally.
F. EXPENSE ALLOCATION
Each class shall pay the expenses associated with its different
distribution and shareholder services arrangement. Each class may, at the
Board's discretion, also pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to the management of the
Trust's assets, if these expenses are actually incurred in a different amount by
that class, or if the class receives services of a different kind or to a
different degree than other classes. All other expenses will be allocated to
each class on the basis of the net asset value of that class in relation to the
net asset value of the Fund. However, money market funds operating in reliance
on Rule 2a-7, and other funds making daily distributions of their net investment
income, may allocate such other expenses to each share regardless of class, or
based on the relative net assets (settled shares).
Expenses may be waived or reimbursed by a fund's advisor, underwriter or
any other service provider to the fund.
G. REDEMPTIONS
Shareholders may redeem their shares without charge (except Class B and
Class C shares, and Class A shares initially purchased in an amount of $1
million or more, as provided above) on any Business Day; shares may ordinarily
6
<PAGE>
be redeemed by mail, by telephone or by wire. All redemption orders are
effected at the net asset value per share next determined for Class A shares,
except for Class A shares initially purchased in an amount of $1 million or
more, which will be reduced by any applicable Class A CDSC, and at net asset
value per share next determined reduced by any applicable Contingent Deferred
Sales Charge for Class B and Class C shares, after receipt of a valid request
for redemption.
Pursuant to the Systematic Withdrawal Plan, Class B and Class C
Shareholders may elect to receive, or may designate another person to receive,
distributions provided that the distributions are limited to no more than 10% of
their account value annually, determined in the first year as of the date the
redemption request is received by the Transfer Agent, and in subsequent years,
as of the most recent anniversary of that date. In addition, Shareholders who
have attained the age of 70 1/2 may elect to receive distributions, to the
extent that the redemption represents a minimum required distribution from an
Individual Retirement Account or other qualifying retirement plan.
H. DIVIDENDS
Shareholders automatically receive all income dividends and capital gain
distributions in additional Class A, Class B, Class C, Service Class and
Fiduciary Class shares, as applicable, at the net asset value next determined
following the record date, unless the shareholder has elected to take such
payment in cash. Reinvested dividends and distributions receive the same tax
treatment as dividends and distributions paid in cash.
Class B shares received as dividends and capital gains distributions at the
net asset value next determined following the record date shall be held in a
separate Class B sub-account. Each time any Class B shares (other than those in
the sub-account) convert to Class A shares, a pro-rata portion of the Class B
shares in the sub-account will also convert to Class A shares.
The amount of dividends payable on Fiduciary Class shares will be more than
the dividends payable on Class A, Class B, Class C, and Service Class shares
because of the distribution expenses charged to Class A, Class B, Class C, and
Service Class shares.
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
NAME OF FUND CLASS OF SHARES
- ------------ ---------------
<S> <C>
U.S. Treasury Securities Class A, Class B, Class C, Fiduciary Class,
Money Market Fund Service Class
Prime Money Market Fund Class A, Class B, Class C, Fiduciary Class,
Service Class
Municipal Money Market Fund Class A, Class C, Fiduciary Class
Ohio Municipal Money Market Fund Class A, Class C, Fiduciary Class
Income Equity Fund Class A, Class B, Class C, Fiduciary Class
Disciplined Value Fund Class A, Class B, Class C, Fiduciary Class
Growth Opportunities Fund Class A, Class B, Class C, Fiduciary Class
International Equity Index Fund Class A, Class B, Class C, Fiduciary Class
Equity Index Fund Class A, Class B, Class C, Fiduciary Class
Large Company Value Fund Class A, Class B, Class C, Fiduciary Class
Large Company Growth Fund Class A, Class B, Class C, Fiduciary Class
Asset Allocation Fund Class A, Class B, Class C, Fiduciary Class
Value Growth Fund Class A, Class B, Class C, Fiduciary Class
Small Capitalization Fund Class A, Class B, Class C, Fiduciary Class
Income Bond Fund Class A, Class B, Class C, Fiduciary Class
Limited Volatility Bond Fund Class A, Class B, Class C, Fiduciary Class
Intermediate Bond Fund Class A, Class B, Class C, Fiduciary Class
Government Bond Fund Class A, Class B, Class C, Fiduciary Class
Ultra-Short Term Fund Class A, Class B, Class C, Fiduciary Class
Louisiana Municipal Bond Fund Class A, Class B, Class C, Fiduciary Class
High Yield Bond Fund Class A, Class B, Class C, Fiduciary Class
Municipal Income Fund Class A, Class B, Class C, Fiduciary Class
Intermediate Tax-Free Bond Fund Class A, Class B, Class C, Fiduciary Class
Ohio Municipal Bond Fund Class A, Class B, Class C, Fiduciary Class
Texas Tax-Free Bond Fund Class A, Class B, Class C, Fiduciary Class
West Virginia Municipal Bond Fund Class A, Class B, Class C, Fiduciary Class
Kentucky Municipal Bond Fund Class A, Class B, Class C, Fiduciary Class
Arizona Municipal Bond Fund Class A, Class B, Class C, Fiduciary Class
Treasury Money Market Fund Fiduciary Class
Treasury Only Money Market Fund Fiduciary Class
8
<PAGE>
Government Money Market Fund Fiduciary Class
Tax Exempt Money Market Fund Fiduciary Class
Institutional Prime Money Market Fund Fiduciary Class
Investor Aggressive Growth Fund Class A, Class B, Class C, Fiduciary Class
Investor Growth Fund Class A, Class B, Class C, Fiduciary Class
Investor Growth and Income Fund Class A, Class B, Class C, Fiduciary Class
Investor Conservative Growth Fund Class A, Class B, Class C, Fiduciary Class
Investor Balanced Fund Class A, Class B, Class C, Fiduciary Class
Investor Fixed Income Fund Class A, Class B, Class C, Fiduciary Class
Treasury & Agency Fund Class A, Class B, Class C, Fiduciary Class
</TABLE>
9
<PAGE>
EXHIBIT (11)
OPINION AND CONSENT OF COUNSEL
<PAGE>
May 29, 1997
The One Group-Registered Trademark-
3435 Stelzer Road
Columbus, Ohio 43219
Ladies and Gentlemen:
You have registered under the Securities Act of 1933, as amended (the "1933
Act") an indefinite number of shares of beneficial interest ("Shares") of The
One Group ("Trust"), as permitted by Rule 24f-2 under the Investment Company Act
of 1940, as amended (the "1940 Act"). You propose to file a registration
statement on Form N-14 (the "Registration Statement") relating to a combination
with Marquis Funds that will involve the issuance as consideration of certain
units of beneficial interest in the Trust (the "Shares").
We have examined your Agreement and Declaration of Trust on file in the
office of the Secretary of The Commonwealth of Massachusetts and the Clerk of
the City of Boston. We have also examined a copy of your Bylaws and such other
documents, receipts and records as we have deemed necessary for the purpose of
this opinion.
Based on the foregoing, we are of the opinion that the issuance and sale of
the Shares have been duly authorized under Massachusetts law. Upon the issuance
of the Shares and upon receipt of the authorized consideration therefor in an
amount not less than the net asset value of the Shares established and in force
at the time of their sale, the Shares issued will be validly issued, fully paid
and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust provides for indemnification out
of the property of a particular series of Shares for all loss and expenses of
any shareholder of that series held personally liable solely by reason of his
being or having been a shareholder. Thus, the risk of shareholder liability is
limited to circumstances in which that series of Shares itself would be unable
to meet its obligations.
We understand that this opinion is to be used in connection with the filing
of the Registration Statement. We consent to the filing of this opinion with
and as part of your Registration Statement.
Sincerely,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
EXHIBIT (12)
OPINION OF ROPES & GRAY, INCLUDING CONSENT, AS TO TAX MATTERS
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Institutional Money Market Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Treasury Only Money Market Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group
Treasury Only Money Market Fund ("Acquiring Fund"), a series of The One Group
(the "One Group Trust"), a Massachusetts business trust, and the Marquis
Institutional Money Market Fund ("Target Fund"), a series of the Marquis Funds
(the "Marquis Trust"), a Massachusetts business trust. The Agreement describes
a proposed transaction (the "Transaction") to occur on or about August 10, 1998
(the "Exchange Date"), pursuant to which Acquiring Fund will acquire
substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 9(g) and 10(g) of the Agreement.
Capitalized terms not defined herein are used herein as defined in the
Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue the
historic business
<PAGE>
-4- May 29, 1998
of Target Fund as an open-end investment company that is a "money market
fund" subject to the provisions of Rule 2a-7 under the 1940 Act that invests
in U.S. Government-backed obligations.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund.
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an
enhanced range of investment options, lower expense ratios, the ability to
benefit from possible economies of scale due to the Acquiring Fund's larger
size relative to the Target Fund, and increased investment leverage and
market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the
disqualification of either of the Target Fund or the Acquiring Fund as a
regulated investment company under the Code. All such fees and expenses
incurred and borne by any party to the Transaction shall be solely and
directly related to the Transaction and shall be paid directly such, as the
case may be, to the relevant providers of services or other payees, in
accordance with the principles set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Treasury Securities Money Market Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group U.S. Treasury Securities Money Market Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group U.S.
Treasury Securities Money Market Fund ("Acquiring Fund"), a series of The One
Group (the "One Group Trust"), a Massachusetts business trust, and the Marquis
Treasury Securities Money Market Fund ("Target Fund"), a series of the Marquis
Funds (the "Marquis Trust"), a Massachusetts business trust. The Agreement
describes a proposed transaction (the "Transaction") to occur on or about August
10, 1998 (the "Exchange Date"), pursuant to which Acquiring Fund will acquire
substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 9(g) and 10(g) of the Agreement.
Capitalized terms not defined herein are used herein as defined in the
Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In
addition, following the Transaction, Acquiring Fund will continue the
historic business of Target Fund as an open-end investment company that is a
"money market fund" subject to the provisions of Rule 2a-7 under the 1940 Act
that invests in U.S. Treasury obligations and repurchase agreements involving
such obligations.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) [and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund].
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an enhanced
range of investment options, the ability to benefit from possible economies of
scale due to the Acquiring Fund's larger size relative to the Target Fund, and
increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the
disqualification of either of the Target Fund or the Acquiring Fund as a
regulated investment company under the Code. All such fees and expenses
incurred and borne by any party to the Transaction shall be solely and
directly related to the Transaction and shall be paid directly such, as the
case may be, to the relevant providers of services or other payees, in
accordance with the principles set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Tax-Exempt Money Market Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Municipal Money Market Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group
Municipal Money Market Fund ("Acquiring Fund"), a series of The One Group (the
"One Group Trust"), a Massachusetts business trust, and the Marquis Tax-Exempt
Money Market Fund ("Target Fund"), a series of the Marquis Funds (the "Marquis
Trust"), a Massachusetts business trust. The Agreement describes a proposed
transaction (the "Transaction") to occur on or about August 10, 1998 (the
"Exchange Date"), pursuant to which Acquiring Fund will acquire substantially
all of the assets of Target Fund in exchange for shares of beneficial interest
in Acquiring Fund (the "Acquiring Fund Shares") and the assumption by Acquiring
Fund of all of the liabilities of Target Fund following which the Acquiring Fund
Shares received by Target Fund will be distributed by Target Fund to its
shareholders in liquidation and termination of Target Fund. This opinion as to
certain federal income tax consequences of the Transaction is furnished to you
pursuant to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not
defined herein are used herein as defined in the Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In addition,
following the Transaction, Acquiring Fund will continue the historic business of
Target Fund as an open-end investment company that is a "money market fund"
subject to the provisions of Rule 2a-7 under the 1940 Act that invests in
obligations the interest of which is exempt from federal tax.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) [and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund].
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an
enhanced range of investment options, the ability to benefit from possible
economies of scale due to the Acquiring Fund's larger size relative to the
Target Fund, and increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the
disqualification of either of the Target Fund or the Acquiring Fund as a
regulated investment company under the Code. All such fees and expenses
incurred and borne by any party to the Transaction shall be solely and
directly related to the Transaction and shall be paid directly such, as the
case may be, to the relevant providers of services or other payees, in
accordance with the principles set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Government Securities Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Government Bond Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group
Government Bond Fund ("Acquiring Fund"), a series of The One Group (the "One
Group Trust"), a Massachusetts business trust, and the Marquis Government
Securities Fund ("Target Fund"), a series of the Marquis Funds (the "Marquis
Trust"), a Massachusetts business trust. The Agreement describes a proposed
transaction (the "Transaction") to occur on or about August 10, 1998 (the
"Exchange Date"), pursuant to which Acquiring Fund will acquire substantially
all of the assets of Target Fund in exchange for shares of beneficial interest
in Acquiring Fund (the "Acquiring Fund Shares") and the assumption by Acquiring
Fund of all of the liabilities of Target Fund following which the Acquiring Fund
Shares received by Target Fund will be distributed by Target Fund to its
shareholders in liquidation and termination of Target Fund. This opinion as to
certain federal income tax consequences of the Transaction is furnished to you
pursuant to Sections 9(g) and 10(g) of the Agreement. Capitalized terms not
defined herein are used herein as defined in the Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In addition,
following the Transaction, Acquiring Fund will continue the historic business of
Target Fund as an open-end investment company that seeks to provide current
income by investing primarily in U.S. Government securities.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) [and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund].
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an
enhanced range of investment options, the ability to benefit from possible
economies of scale due to the Acquiring Fund's larger size relative to the
Target Fund, and increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the
disqualification of either of the Target Fund or the Acquiring Fund as a
regulated investment company under the Code. All such fees and expenses
incurred and borne by any party to the Transaction shall be solely and
directly related to the Transaction and shall be paid directly such, as the
case may be, to the relevant providers of services or other payees, in
accordance with the principles set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Strategic Income Bond Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Income Bond Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group Income
Bond Fund ("Acquiring Fund"), a series of The One Group (the "One Group Trust"),
a Massachusetts business trust, and the Marquis Strategic Income Bond Fund
("Target Fund"), a series of the Marquis Funds (the "Marquis Trust"), a
Massachusetts business trust. The Agreement describes a proposed transaction
(the "Transaction") to occur on or about August 10, 1998 (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are used herein as defined in the Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In addition,
following the Transaction, Acquiring Fund will continue the historic business of
Target Fund as an open-end investment company that seeks to provide current
income by investing primarily in investment grade debt securities.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund.
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an
enhanced range of investment options, lower expense ratios, the ability to
benefit from possible economies of scale due to the Acquiring Fund's larger
size relative to the Target Fund, and increased investment leverage and
market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the
disqualification of either of the Target Fund or the Acquiring Fund as a
regulated investment company under the Code. All such fees and expenses
incurred and borne by any party to the Transaction shall be solely and
directly related to the Transaction and shall be paid directly such, as the
case may be, to the relevant providers of services or other payees, in
accordance with the principles set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Louisiana Tax-Free Income Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Louisiana Municipal Bond Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group
Louisiana Municipal Bond Fund ("Acquiring Fund"), a series of The One Group (the
"One Group Trust"), a Massachusetts business trust, and the Marquis Louisiana
Tax-Free Income Fund ("Target Fund"), a series of the Marquis Funds (the
"Marquis Trust"), a Massachusetts business trust. The Agreement describes a
proposed transaction (the "Transaction") to occur on or about August 10, 1998
(the "Exchange Date"), pursuant to which Acquiring Fund will acquire
substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 9(g) and 10(g) of the Agreement.
Capitalized terms not defined herein are used herein as defined in the
Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In addition,
following the Transaction, Acquiring Fund will continue the historic business of
Target Fund as an open-end investment company that seeks to provide a level of
current income that is exempt from both Federal income tax and Louisiana
personal income tax.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) [and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund].
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an enhanced
range of investment options, the ability to benefit from possible economies of
scale due to the Acquiring Fund's larger size relative to the Target Fund, and
increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid by
the party directly incurring such expenses if and to the extent that the payment
by the other party of such expenses would result in the disqualification of
either of the Target Fund or the Acquiring Fund as a regulated investment
company under the Code. All such fees and expenses incurred and borne by any
party to the Transaction shall be solely and directly related to the Transaction
and shall be paid directly such, as the case may be, to the relevant providers
of services or other payees, in accordance with the principles set forth in
Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Balanced Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Asset Allocation Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group Asset
Allocation Fund ("Acquiring Fund"), a series of The One Group (the "One Group
Trust"), a Massachusetts business trust, and the Marquis Balanced Fund ("Target
Fund"), a series of the Marquis Funds (the "Marquis Trust"), a Massachusetts
business trust. The Agreement describes a proposed transaction (the
"Transaction") to occur on or about August 10, 1998 (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are used herein as defined in the Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In addition,
following the Transaction, Acquiring Fund will continue the historic business of
Target Fund as an open-end investment company that seeks to invest in a
combination of equity, fixed income and money market instruments.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund.
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an enhanced
range of investment options, the ability to benefit from possible economies of
scale due to the Acquiring Fund's larger size relative to the Target Fund, and
increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the
disqualification of either of the Target Fund or the Acquiring Fund as a
regulated investment company under the Code. All such fees and expenses
incurred and borne by any party to the Transaction shall be solely and directly
related to the Transaction and shall be paid directly such, as the case may be,
to the relevant providers of services or other payees, in accordance with the
principles set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Value Equity Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Disciplined Value Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group
Disciplined Value Fund ("Acquiring Fund"), a series of The One Group (the "One
Group Trust"), a Massachusetts business trust, and the Marquis Value Equity Fund
("Target Fund"), a series of the Marquis Funds (the "Marquis Trust"), a
Massachusetts business trust. The Agreement describes a proposed transaction
(the "Transaction") to occur on or about August 10, 1998 (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are used herein as defined in the Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In addition,
following the Transaction, Acquiring Fund will continue the historic business of
Target Fund as an open-end investment company that seeks to provide long-term
capital appreciation by investing in equity securities with low current
valuations relative to various measures of intrinsic value.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund.
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an enhanced
range of investment options, the ability to benefit from possible economies of
scale due to the Acquiring Fund's larger size relative to the Target Fund, and
increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid by
the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the disqualification
of either of the Target Fund or the Acquiring Fund as a regulated investment
company under the Code. All such fees and expenses incurred and borne by any
party to the Transaction shall be solely and directly related to the Transaction
and shall be paid directly such, as the case may be, to the relevant providers
of services or other payees, in accordance with the principles set forth in
Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Growth Equity Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Growth Opportunities Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group Growth
Opportunities Fund ("Acquiring Fund"), a series of The One Group (the "One Group
Trust"), a Massachusetts business trust, and the Marquis Growth Equity Fund
("Target Fund"), a series of the Marquis Funds (the "Marquis Trust"), a
Massachusetts business trust. The Agreement describes a proposed transaction
(the "Transaction") to occur on or about August 10, 1998 (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are used herein as defined in the Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund. Specifically, Acquiring Fund will use such significant portion
of Target Fund's historic business assets in its business by continuing to hold
at least such portion of the total assets transferred to it by Target Fund.
That is, Acquiring Fund will continue to hold historic business assets of Target
Fund, defined for purposes of this opinion as those assets transferred to it on
the Exchange Date which were either (i) acquired by Target Fund prior to its
management's decision to propose to its Trustees that it transfer any or all of
its assets to Acquiring Fund, or (ii) acquired subsequent to such decision but
not with a view to the Agreement or the Transaction, in an amount equal to at
least 50% of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by the amounts, if any, that Target Fund paid to its shareholders in
redemption of its shares, where such redemptions, if any, appear to have been
initiated by such shareholders in connection with or as a result of the
<PAGE>
-4- May 29, 1998
Agreement or Transaction. In making this determination, dispositions made in
the ordinary course of Acquiring Fund's business as an open-end investment
company (I.E., dispositions made in the ordinary course of business and
independent of the Transaction) shall not be taken into account. In addition,
following the Transaction, Acquiring Fund will continue the historic business of
Target Fund as an open-end investment company that seeks to provide long-term
capital appreciation by investing primarily in equity securities.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for (i)
dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction) and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Acquiring Fund of the historic
business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to have
been made by Acquiring Fund.
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an enhanced
range of investment options, the ability to benefit from possible economies of
scale due to the Acquiring Fund's larger size relative to the Target Fund, and
increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid by
the party directly incurring such expenses if and to the extent that the payment
by the other party of such expenses would result in the disqualification of
either of the Target Fund or the Acquiring Fund as a regulated investment
company under the Code. All such fees and expenses incurred and borne by any
party to the Transaction shall be solely and directly related to the Transaction
and shall be paid directly such, as the case may be, to the relevant providers
of services or other payees, in accordance with the principles set forth in
Rev. Rul. 73-54, 1973-1 C.B. 187.
<PAGE>
-5- May 29, 1998
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to Target Fund for its current taxable year beginning October 1, 1997 and
will continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
<PAGE>
-6- May 29, 1998
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis Small Cap Equity Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group Small Capitalization Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group Small
Capitalization Fund ("Acquiring Fund"), a series of The One Group (the "One
Group Trust"), a Massachusetts business trust, and the Marquis Small Cap Equity
Fund ("Target Fund"), a series of the Marquis Funds (the "Marquis Trust"), a
Massachusetts business trust. The Agreement describes a proposed transaction
(the "Transaction") to occur on or about August 10, 1998 (the "Exchange Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets of
Target Fund in exchange for shares of beneficial interest in Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by Acquiring Fund of all of the
liabilities of Target Fund following which the Acquiring Fund Shares received by
Target Fund will be distributed by Target Fund to its shareholders in
liquidation and termination of Target Fund. This opinion as to certain federal
income tax consequences of the Transaction is furnished to you pursuant to
Sections 9(g) and 10(g) of the Agreement. Capitalized terms not defined herein
are used herein as defined in the Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets, and
Acquiring Fund will assume all of the liabilities of Target Fund, as of the
Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by each
Target Fund shareholder will be approximately equal to the fair market value of
the Target Fund shares surrendered in exchange therefor. The Target Fund
shareholders will receive no consideration other than Acquiring Fund Shares
(which may include fractional shares) in exchange for their shares of beneficial
interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees of
Target Fund, if any, will be separate consideration for, or allocable to, any of
their Target Fund Shares; none of the Acquiring Fund Shares received by any
Target Fund shareholder-employees will be separate consideration for, or
allocable to, any employment; and the compensation paid to any Acquiring Fund or
Target Fund shareholder-employees, if any, will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder who owns
5% or more of the total outstanding Target Fund Shares, and to the best of the
knowledge of the management of Target Fund, there is no plan or intention on the
part of the remaining Target Fund shareholders to sell, exchange, or otherwise
dispose of a number of Acquiring Fund Shares received in the Transaction that
would reduce Target Fund shareholders' ownership of Acquiring Fund Shares to a
number of Acquiring Fund Shares having a value, as of the date of the
Transaction, of less than 50 percent of the value of all of the formerly
outstanding Target Fund Shares as of the same date. For purposes of this
representation, Acquiring Fund Shares or Target Fund Shares surrendered by
Target Fund shareholders in redemption or otherwise disposed of, where such
dispositions, if any, appear to be initiated by Target Fund shareholders in
connection with or as a result of the Agreement or the Transaction, will be
treated as outstanding Target Fund Shares on the date of the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Transaction, except for Acquiring Fund
Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by Target Fund immediately prior to the Transaction. For
purposes of this representation, (a) amounts paid by Target Fund, out of the
assets of Target Fund, to Target Fund shareholders in redemption of Target Fund
Shares, where such redemptions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, (b) amounts used by Target Fund to pay expenses of the Transaction,
and (c) amounts used to effect all redemptions and distributions (except for
regular, normal dividends declared and paid in order to ensure Target Fund's
continued qualification as a regulated investment company and to avoid fund-
level tax (including for this purpose any dividends referred to in
representation 14 herein)) made by Target Fund immediately preceding the
transfer will be included as assets of Target Fund held immediately prior to the
Transaction. Further, to the best of the knowledge of the managements of each
of Acquiring Fund and Target Fund, this representation will remain true even if
the amounts, if any, that Acquiring Fund pays after the Transaction to Acquiring
Fund shareholders who are former Target Fund shareholders in redemption of
Acquiring Fund Shares received in exchange for Target Fund Shares, where such
redemptions, if any, appear to be initiated by such shareholders in connection
with or as a result of the Agreement or the Transaction, are considered to be
assets of Target Fund that were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring Fund by
Target Fund will equal or exceed the sum of the liabilities to be assumed by
Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund at
least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use a
significant portion (in this case, at least 50%) of the historic business assets
of Target Fund, namely, Target Fund's interest in the Small Cap Growth Portfolio
of SEI Institutional Managed Trust (the "Master Fund"). Specifically, Acquiring
Fund will use such significant portion of Target Fund's historic business assets
in its business by continuing to hold at least such portion of the total assets
transferred to it by Target Fund. That is, Acquiring Fund will continue to hold
historic business assets of Target Fund, defined for purposes of this opinion as
those assets transferred to it on the Exchange Date which were either (i)
acquired by Target Fund prior to its management's decision to propose to its
Trustees that it transfer any or all of its assets to Acquiring Fund, or (ii)
acquired subsequent to such decision but not with a view to the Agreement or the
Transaction, in an amount equal to at least 50% of the assets in Target Fund's
portfolio held on the Exchange Date, as increased by
<PAGE>
-4- May 29, 1998
the amounts, if any, that Target Fund paid to its shareholders in redemption of
its shares, where such redemptions, if any, appear to have been initiated by
such shareholders in connection with or as a result of the Agreement or
Transaction. In making this determination, dispositions made in the ordinary
course of Acquiring Fund's business as an open-end investment company (I.E.,
dispositions made in the ordinary course of business and independent of the
Transaction) shall not be taken into account. In addition, following the
Transaction, Acquiring Fund will continue the historic business of Target Fund
as an open-end investment company that seeks to invest (formerly, indirectly) in
equity securities of growth companies with smaller market capitalizations.
10. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Target Fund acquired in the Transaction, except for
(i) dispositions made in the ordinary course of its business as a series of an
open-end investment company (I.E., dispositions made in the ordinary course of
business and independent of the Transaction), and (ii) dispositions made by
Acquiring Fund to realign its portfolio in order to reflect its investment
objective and conform to its investment restrictions and/or to maintain its
qualification as a "regulated investment company" for federal income tax
purposes under Section 851 of the Code ("Realignment Dispositions"), which
Realignment Dispositions shall be limited to the extent required by the above
representation relating to the continued use by Aquiring Fund of the
historic business assets of Target Fund. For purposes of this representation,
Realignment Dispositions made by Target Fund, if any, will be considered to
have been made by Aquiring Fund.
11. The liabilities of Target Fund to be assumed by Acquiring Fund were
incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of this
paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an enhanced
range of investment options, the ability to benefit from possible economies of
scale due to the Acquiring Fund's larger size relative to the Target Fund, and
increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the Reorganization will be paid by the party directly incurring such fees and
expenses, except that the costs of proxy materials and proxy solicitation,
including legal expenses, will be borne by Banc One Investment Advisors
Corporation; provided however, that such expenses will in any event be paid
by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the disqualification
of either of the Target Fund or the Acquiring Fund as a regulated investment
company under the Code. All such fees and expenses incurred and borne by any
party to the Transaction shall be solely and directly related to the Transaction
and shall be paid directly such, as the case may be, to the relevant providers
of services or other payees, in accordance with the principles set forth in
Rev. Rul. 73-54, 1973-1 C.B. 187.
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a regulated
investment company, and the provisions of Sections 851 through 855 of the Code
apply to
<PAGE>
-5- May 29, 1998
Target Fund for its current taxable year beginning October 1, 1997 and will
continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855 of
the Code apply to Acquiring Fund for its current taxable year beginning July 1,
1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any Target Fund Shares.
17. There is no intercorporate indebtedness existing between Target Fund
and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it receives in
the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
<PAGE>
-6- May 29, 1998
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
May 29, 1998
Marquis Funds
-- Marquis International Equity Fund
2 Olive Street
Boston, Massachusetts 02109
The One Group
-- The One Group International Equity Index Fund
3435 Stelzer Rd.
Columbus, Ohio 43219
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of May 18, 1998, The One Group
International Equity Index Fund ("Acquiring Fund"), a series of The One Group
(the "One Group Trust"), a Massachusetts business trust, and the Marquis
International Equity Fund ("Target Fund"), a series of the Marquis Funds (the
"Marquis Trust"), a Massachusetts business trust. The Agreement describes a
proposed transaction (the "Transaction") to occur on or about August 10, 1998
(the "Exchange Date"), pursuant to which Acquiring Fund will acquire
substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 9(g) and 10(g) of the Agreement.
Capitalized terms not defined herein are used herein as defined in the
Agreement.
Target Fund is a series of the Marquis Fund which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
-2- May 29, 1998
Acquiring Fund is a series of The One Group which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Agreement, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you have represented to us the following facts,
occurrences and information upon which you have indicated we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above):
1. Target Fund will transfer to Acquiring Fund all of its assets,
and Acquiring Fund will assume all of the liabilities of Target Fund, as of
the Exchange Date.
2. The fair market value of the Acquiring Fund Shares received by
each Target Fund shareholder will be approximately equal to the fair market
value of the Target Fund shares surrendered in exchange therefor. The Target
Fund shareholders will receive no consideration other than Acquiring Fund
Shares (which may include fractional shares) in exchange for their shares of
beneficial interest in Target Fund (the "Target Fund Shares").
3. None of the compensation received by any shareholder-employees
of Target Fund, if any, will be separate consideration for, or allocable to,
any of their Target Fund Shares; none of the Acquiring Fund Shares received
by any Target Fund shareholder-employees will be separate consideration for,
or allocable to, any employment; and the compensation paid to any Acquiring
Fund or Target Fund shareholder-employees, if any, will be for services
actually rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
4. There is no plan or intention by any Target Fund shareholder
who owns 5% or more of the total outstanding Target Fund Shares, and to the
best of the knowledge of the management of Target Fund, there is no plan or
intention on the part of the remaining Target Fund shareholders to sell,
exchange, or otherwise dispose of a number of Acquiring Fund Shares received
in the Transaction that would reduce Target Fund shareholders' ownership of
Acquiring Fund Shares to a number of Acquiring Fund Shares having a value, as
of the date of the Transaction, of less than 50 percent of the value of all
of the formerly outstanding Target Fund Shares as of the same date. For
purposes of this representation, Acquiring Fund Shares or Target Fund Shares
surrendered by Target Fund shareholders in redemption or otherwise disposed
of, where such dispositions, if any, appear to be initiated by Target Fund
shareholders in connection with or as a result of the Agreement or the
Transaction, will be treated as outstanding Target Fund Shares on the date of
the Transaction.
<PAGE>
-3- May 29, 1998
5. Acquiring Fund has no plan or intention to reacquire any of
the Acquiring Fund Shares issued in the Transaction, except for Acquiring
Fund Shares reacquired in the ordinary course of its business as an open-end
investment company.
6. Acquiring Fund will acquire at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair market
value of the gross assets held by Target Fund immediately prior to the
Transaction. For purposes of this representation, (a) amounts paid by Target
Fund, out of the assets of Target Fund, to Target Fund shareholders in
redemption of Target Fund Shares, where such redemptions, if any, appear to
be initiated by Target Fund shareholders in connection with or as a result of
the Agreement or the Transaction, (b) amounts used by Target Fund to pay
expenses of the Transaction, and (c) amounts used to effect all redemptions
and distributions (except for regular, normal dividends declared and paid in
order to ensure Target Fund's continued qualification as a regulated
investment company and to avoid fund-level tax (including for this purpose
any dividends referred to in representation 14 herein)) made by Target Fund
immediately preceding the transfer will be included as assets of Target Fund
held immediately prior to the Transaction. Further, to the best of the
knowledge of the managements of each of Acquiring Fund and Target Fund, this
representation will remain true even if the amounts, if any, that Acquiring
Fund pays after the Transaction to Acquiring Fund shareholders who are former
Target Fund shareholders in redemption of Acquiring Fund Shares received in
exchange for Target Fund Shares, where such redemptions, if any, appear to be
initiated by such shareholders in connection with or as a result of the
Agreement or the Transaction, are considered to be assets of Target Fund that
were not transferred to Acquiring Fund.
7. The fair market value of the assets transferred to Acquiring
Fund by Target Fund will equal or exceed the sum of the liabilities to be
assumed by Acquiring Fund.
8. In the Transaction Target Fund will transfer to Acquiring Fund
at least 50% of its historic business assets (see definition below).
9. Following the Transaction, Acquiring Fund will continue to use
a significant portion (in this case, at least 50%) of the historic business
assets of Target Fund, namely, Target Fund's interest in the International
Equity Portfolio of SEI Investment Trust (the "Master Fund"). Specifically,
Acquiring Fund will use such significant portion of Target Fund's historic
business assets in its business by continuing to hold at least such portion
of the total assets transferred to it by Target Fund. That is, Acquiring
Fund will continue to hold historic business assets of Target Fund, defined
for purposes of this opinion as those assets transferred to it on the Exchange
Date which were either (i) acquired by Target Fund prior to its management's
decision to propose to its Trustees that it transfer any or all of its assets to
Acquiring Fund, or (ii) acquired subsequent to such decision but not with a
view to the Agreement or the Transaction, in an amount equal to at least 50%
of the assets in Target Fund's portfolio held on the Exchange Date, as
increased by
<PAGE>
-4- May 29, 1998
the amounts, if any, that Target Fund paid to its shareholders in redemption of
its shares, where such redemptions, if any, appear to have been initiated by
such shareholders in connection with or as a result of the Agreement or
Transaction. In making this determination, dispositions made in the ordinary
course of Acquiring Fund's business as an open-end investment company (I.E.,
dispositions made in the ordinary course of business and independent of the
Transaction) shall not be taken into account. In addition, following the
Transaction, Acquiring Fund will continue to be an open-end investment company
that seeks to invest in international equity securities, as Target Fund
(indirectly) was; however, it will be an index fund rather than a managed fund.
10. Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the assets of Target Fund acquired in the Transaction,
except for (i) dispositions made in the ordinary course of its business as a
series of an open-end investment company (I.E., dispositions made in the
ordinary course of business and independent of the Transaction), and (ii)
dispositions made by Acquiring Fund to realign its portfolio in order to
reflect its investment objective and conform to its investment restrictions
and/or to maintain its qualification as a "regulated investment company" for
federal income tax purposes under Section 851 of the Code ("Realignment
Dispositions"), which Realignment Dispositions shall be limited to the extent
required by the above representation relating to the continued use by
Aquiring Fund of the historic business assets of Target Fund. For purposes
of this representation, Realignment Dispositions made by Target Fund, if any,
will be considered to have been made by Aquiring Fund.
11. The liabilities of Target Fund to be assumed by Acquiring Fund
were incurred by Target Fund in the ordinary course of its business and are
associated with the assets transferred to Acquiring Fund. For purposes of
this paragraph, expenses of the Transaction are not treated as liabilities.
12. The Transaction will offer shareholders of the Target Fund an
enhanced range of investment options, the ability to benefit from possible
economies of scale due to the Acquiring Fund's larger size relative to the
Target Fund, and increased investment leverage and market presence.
13. All fees and expenses, including accounting expenses,
portfolio transfer taxes (if any) or other similar expenses incurred in
connection with the Reorganization will be paid by the party directly
incurring such fees and expenses, except that the costs of proxy materials
and proxy solicitation, including legal expenses, will be borne by Banc One
Investment Advisors Corporation; provided however, that such expenses will in
any event be paid by the party directly incurring such expenses if and to the
extent that the payment by the other party of such expenses would result in
the disqualification of either of the Target Fund or the Acquiring Fund as a
regulated investment company under the Code. All such fees and expenses
incurred and borne by any party to the Transaction shall be solely and
directly related to the Transaction and shall be paid directly such, as the
case may be, to the relevant providers of services or other payees, in
accordance with the principles set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
Target Fund shareholders will pay their respective expenses, if any,
incurred in connection with the Transaction.
14. For federal income tax purposes, Target Fund qualifies as a
regulated investment company, and the provisions of Sections 851 through 855
of the Code apply to
<PAGE>
-5- May 29, 1998
Target Fund for its current taxable year beginning October 1, 1997 and will
continue to apply to it through the Exchange Date.
In that regard, Target Fund will declare to Target Fund shareholders of
record on or prior to the Exchange Date a dividend or dividends which together
with all previous such dividends shall have the effect of distributing all of
Target Fund's investment company taxable income (see Code Section 852) (computed
without regard to any deduction for dividends paid) and all of Target Fund's net
realized capital gain (after reduction for any capital loss carryover) in each
case for both the taxable year ending September 30, 1997 and the short taxable
period beginning on October 1, 1997 and ending on the Exchange Date. Such
dividends will be made to ensure continued qualification of Target Fund as a
regulated investment company for tax purposes and to eliminate fund-level tax.
15. For federal income tax purposes, Acquiring Fund qualifies as a
regulated investment company, and the provisions of Section 851 through 855
of the Code apply to Acquiring Fund for its current taxable year beginning
July 1, 1997 and will continue to apply to it through the Exchange Date.
16. Acquiring Fund does not own, directly or indirectly, nor has
it owned during the past five years, directly or indirectly, any Target Fund
Shares.
17. There is no intercorporate indebtedness existing between
Target Fund and Acquiring Fund.
18. Target Fund will distribute the Acquiring Fund Shares it
receives in the Transaction to its shareholders as provided in the Agreement.
19. Target Fund is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
Based on the foregoing representations and our review of the documents and
items referred to above, we are of the opinion that for federal income tax
purposes:
(i) No gain or loss will be recognized by Target Fund upon the transfer of
Target Fund's assets to Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
(ii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iii) The basis of Acquiring Fund Shares a Target Fund shareholder receives
in connection with the Transaction will be the same as the basis of
his or her Target Fund Shares exchanged therefor;
<PAGE>
-6- May 29, 1998
(iv) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he or
she held the Target Fund Shares exchanged therefor, provided that he
or she held such Target Fund Shares as capital assets;
(v) No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Target Fund in exchange for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
(vi) The basis in the hands of Acquiring Fund of the assets of Target Fund
transferred to Acquiring Fund in the Transaction will be the same as
the basis of such assets in the hands of Target Fund immediately prior
to the transfer; and
(vii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets were
held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
------------
Ropes & Gray
<PAGE>
EXHIBIT (13)(b)
RE-EXECUTED MANAGEMENT AND ADMINISTRATION AGREEMENT
DATED NOVEMBER 20, 1997
BETWEEN
REGISTRANT AND THE ONE GROUP SERVICES COMPANY
<PAGE>
MANAGEMENT AND ADMINISTRATION AGREEMENT
AGREEMENT dated December 1, 1995, as re-executed November 20, 1997, between
The One Group (the "Trust"), a Massachusetts business trust having its principal
place of business at 1111 Polaris Parkway, Columbus, Ohio 43240, and The One
Group Services Company ("Administrator"), a Delaware corporation having its
principal place of business at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment company, organized
as a Massachusetts business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Trust desires to retain Administrator to furnish management
and administration services to certain investment portfolios of the Trust and
may retain Administrator to serve in such capacity with respect to additional
investment portfolios of the Trust, all as now or hereafter may be identified in
Schedule A hereto as such Schedule may be amended from time to time
(individually referred to herein as a "Fund" and collectively referred to herein
as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICE AS MANAGER AND ADMINISTRATOR
Subject to the direction and control of the Board of Trustees of the
Trust, Administrator will assist in supervising all aspects of the operations of
the Funds except those performed by the investment adviser for the Funds under
its Investment Advisory Agreement, the custodian for the Funds under its
Custodian Agreement, the transfer agent for the Funds under its Transfer Agency
Agreement and the fund accountant for the Funds under its Fund Accounting
Agreement.
Administrator will maintain office facilities (which may be in the
offices of Administrator or an affiliate but shall be in such location as the
Trust shall reasonably determine); furnish statistical and research data,
clerical and certain bookkeeping services and stationery and office supplies;
prepare the periodic reports to the Commission on Form N-SAR or any replacement
forms therefor; compile data for, assist the Trust or its designee in the
preparation of, and file, all the Funds' federal and state tax returns and
required tax filings other than those required to be made by the Funds'
custodian and transfer agent; prepare compliance filings pursuant to state
securities laws with the advice of the Trust's counsel; assist to the extent
requested by the Trust with the Trust's preparation of its Annual and
Semi-Annual Reports to Shareholders and its Registration Statements (on Form
N-1A or any replacement therefor); compile data for and prepare for filing
Notices to the Commission required pursuant to Rule 24f-2 under the 1940 Act;
keep and maintain the financial accounts and records of the Funds, including
calculation of daily expense accruals; in the case of money market funds,
periodic review of the amount of the deviation, if any, of the current net asset
value per share (calculated using available market quotations or an appropriate
substitute that reflects current market conditions) from each money market
fund's amortized cost price per share; and generally assist in all aspects of
the operations of the Funds. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Administrator hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
Administrator further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act. Administrator may delegate some or all of its
responsibilities under this Agreement.
2. FEES; EXPENSES; EXPENSE REIMBURSEMENT
In consideration of services rendered and expenses assumed pursuant to
this Agreement, each of the Funds will pay Administrator on the first business
day of each month, or at such time(s) as Administrator shall request and the
parties hereto shall agree, a fee computed daily and paid as specified below
calculated at the applicable annual rate set forth on Schedule A hereto. The
fee for the period from the day of the month this Agreement is entered into
1
<PAGE>
until the end of that month shall be prorated according to the proportion which
such period bears to the full monthly period. Upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall be
prorated according to the proportion which such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to Administrator, the
value of the net assets of a particular Fund shall be computed in the manner
described in the Trust's Declaration of Trust or in the Prospectus or Statement
of Additional Information respecting that Fund as from time to time is in effect
for the computation of the value of such net assets in connection with the
determination of the liquidating value of the shares of such Fund.
Administrator will from time to time employ or associate with itself
such person or persons as Administrator may believe to be particularly fitted to
assist it in the performance of this Agreement. Such person or persons may be
partners, officers, or employees who are employed by both Administrator and the
Trust. The compensation of such person or persons shall be paid by
Administrator and no obligation may be incurred on behalf of the Funds in such
respect. Other expenses to be incurred in the operation of the Funds including
taxes, interest, brokerage fees and commissions, if any, fees of Trustees who
are not partners, officers, directors, shareholders or employees of
Administrator or the investment adviser or distributor for the Funds, Commission
fees and state Blue Sky qualification and renewal fees and expenses, investment
advisory fees, custodian fees, transfer and dividend disbursing agents' fees,
fund accounting fees including pricing of portfolio securities, service
organization fees, certain insurance premiums, outside and, to the extent
authorized by the Trust, inside auditing and legal fees and expenses, costs of
maintenance of corporate existence, typesetting and printing prospectuses for
regulatory purposes and for distribution to current shareholders of the Funds,
costs of shareholders' and Trustees' reports and meetings and any extraordinary
expenses will be borne by the Funds; provided, however, that the Funds will not
bear, directly or indirectly, the cost of any activity which is primarily
intended to result in the distribution of shares of the Funds.
If in any fiscal year the aggregate expenses of a particular Fund (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, Administrator will
reimburse such Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees respecting such Fund otherwise payable to
Administrator hereunder to the aggregate fees respecting such Fund otherwise
payable to Administrator hereunder and to Banc One Investment Advisors
Corporation under the Investment Advisory Agreements between Banc One Investment
Advisors Corporation and the Trust. The expense reimbursement obligation of
Administrator is limited to the amount of its fees hereunder for such fiscal
year, provided, however, that notwithstanding the foregoing, Administrator shall
reimburse a particular Fund for such proportion of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction over the
Trust so require. Such expense reimbursement, if any, will be estimated daily
and reconciled and paid on a monthly basis.
3. PROPRIETARY AND CONFIDENTIAL INFORMATION
Administrator agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and prior, present, or
potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where
Administrator may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
4. LIMITATION OF LIABILITY; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION
Administrator shall use its best efforts to ensure the accuracy of all
services performed under this Agreement but shall not be liable for any loss
suffered by the Funds in connection with the matters to which this Agreement
relates, except for a loss resulting from willful misfeasance, bad faith or
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement. Any
2
<PAGE>
person, even though also, an employee, or agent of Administrator, who may be or
become an officer, Trustee, employee or agent of the Trust or the Funds shall be
deemed, when rendering services to the Trust or the Funds, or acting on any
business of that party, to be rendering such services to or acting solely for
that party and not as a partner, employee, or agent or one under the control or
direction of Administrator even though paid by it.
The Trust agrees to indemnify and hold harmless Administrator, its
employees, agents, directors, officers and nominees from and against any and all
liabilities or expense, including but not limited to attorney fees, in
connection with any claims or regulatory actions based upon reasonable reliance
on written information or records with respect to a Fund given to Administrator
by a duly authorized representative of the Sub-Administrator, Fund Accountant,
or Distributor; provided, that this indemnification shall not apply to actions
or omissions of Administrator in cases of its own bad faith, wilful misfeasance,
negligence or from reckless disregard by it of its obligations and duties, and
further provided that prior to confessing any claims against it which may be the
subject of this indemnification, Administrator shall give the Trust written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of Administrator.
5. TERM
This Agreement shall become effective as of the date first written
above (or, if a particular Fund is not in existence on the date, on the date an
amendment to Schedule A to this Agreement relating to that Fund is executed) and
shall continue until November 30, 1996, and unless sooner terminated as provided
herein, thereafter shall be renewed automatically for successive one-year terms,
unless written notice not to renew is given by the non-renewing party to the
other party at least 60 days prior to the expiration of the then-current term;
provided that such continuance is specifically reviewed and approved at least
annually (a) by the vote of a majority of the Trust's Board of Trustees or by
the vote of a majority of the outstanding voting securities of such Fund and (b)
by the majority of the Trust's Trustees who are not parties to the Agreement or
interested persons (as defined in the 1940 Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. The scope of such review shall be whether there is any "cause" (as
defined below) that would justify terminating the Agreement. This Agreement is
terminable with respect to a particular Fund through a failure to renew at the
end of a five-year term; upon mutual agreement of the parties hereto; or for
"cause" by the party alleging "cause," in any case on not less than 60 days
written notice by the Trust's Board of Trustees or by Administrator. Written
notice not to renew may be given for any reason, with or without "cause" (as
defined below).
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith gross negligence or reckless disregard on the part of the
party to be terminated with respect to its obligations and duties set forth
herein; (b) a final, unappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated has been found guilty of criminal
or unethical behavior in the conduct of its business; (c) financial difficulties
on the part of the party to be terminated which is evidenced by the
authorization or commencement of, or involvement by way of pleading, answer,
consent, or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time is in effect, or any applicable
law, other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the rights
of creditors; or (d) any circumstance which substantially impairs the
performance of the obligations and duties of the party to be terminated, or the
ability to perform those obligations and duties, as contemplated herein.
Notwithstanding the foregoing, the absence of either or both an annual review or
ratification of this Agreement by the Board of Trustees shall not, in and of
itself, constitute "cause" as used herein.
If, for any reason other than "cause" as defined above, Administrator
is replaced as fund manager and administrator, or if a third party is added to
perform all or a part of the services provided by Administrator under this
Agreement (excluding any sub-administrator appointed by Administrator as
provided in Section 1 hereof, then the Trust shall make a one-time cash payment,
as liquidated damages, to Administrator equal to the balance due Administrator
for the remainder of the term of this Agreement, assuming for purposes of
calculation of the payment that the asset level of the Trust on the date,
Administrator is replaced, or a third party is added, will remain constant for
the balance of the contract term.
3
<PAGE>
6. USE OF SUB-ADMINISTRATOR
Administrator shall retain Banc One Investment Advisors Corporation
("BOIA") to provide sub-administration services pursuant to a sub-administration
agreement among Administrator, BOIA and the Trust dated as of the date first
written above. Such sub-administration agreement shall not be terminated during
the term of this Agreement without the specific written approval of the Trust.
7. GOVERNING LAW AND MATTERS RELATING TO THE TRUST AS A MASSACHUSETTS
BUSINESS TRUST
This Agreement shall be governed by the law of the Commonwealth of
Massachusetts. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the parses hereto caused this instrument to be executed
by their officers designated below as of the day and year first written above.
THE ONE GROUP-Registered Trademark- THE ONE GROUP SERVICES COMPANY
/s/ William Tomko /s/ Mark S. Redman
----------------- ------------------
By: William Tomko By: Mark S. Redman
Title: Treasurer Title: President
Date: 11/20/97 Date: 11/20/97
4
<PAGE>
Exhibit (14)(a)
Consent of Coopers & Lybrand
<PAGE>
Consent of Independent Accountants
We consent to the incorporation by reference in this Registration Statement on
Form N-14 (file No. 2-95973) of The One Group to our reports dated August 22,
1997 on our audits of the financial statements and financial highlights for the
Treasury Only Money Market Fund, the Government Money Market Fund, the U.S.
Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund, the Ohio Municipal Money Market Fund, the Ultra
Short-Term Bond Fund, the Limited Volatility Bond Fund, the Intermediate Bond
Fund, the Government Bond Fund, the Income Bond Fund, the Treasury & Agency
Fund, the Intermediate Tax-Free Bond Fund, the Municipal Bond Fund, the Kentucky
Municipal Bond Fund, the Ohio Municipal Bond Fund, the Louisiana Municipal Bond
Fund, the West Virginia Municipal Bond Fund, the Arizona Municipal Bond Fund,
the Asset Allocation Fund, the Income Equity Fund, the Equity Index Fund, the
Value Growth Fund, the Large Company Value Fund, the Disciplined Value Fund, the
Large Company Growth Fund, the Growth Opportunities Fund, the Gulf South Growth
Fund, the International Equity Index Fund, the Investor Growth Fund, the
Investor Growth and Income Fund, the Investor Balanced Fund, and the Investor
Conservative Growth Fund constituting The One Group as of June 30, 1997 and for
the respective period then ending. We also consent to the reference to our Firm
under the caption "Financial Statements" in the Registration Statement on Form
N-14 (file No. 2-95973).
Coopers & Lybrand, L.L.P.
Columbus, Ohio
May 29, 1998
<PAGE>
EXHIBIT (14)(b)
CONSENT OF ROPES & GRAY
<PAGE>
Consent of Counsel
We hereby consent to the use of our name and the reference to our firm
included in or made a part of the Registration Statement of The One Group on
Form N-14 under the Securities Act of 1933, as amended.
Ropes & Gray
Washington, D.C.
May 29, 1998
<PAGE>
EXHIBIT (14)(c)
CONSENT OF PRICE WATERHOUSE LLP
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by Reference in the Prospectus and
Statement of Additional Information of constituting parts of Post-Effective
Amendment No. 43 to the registration statement on Form N-1A of The One Group
(the "N-1A Registration Statement"), which registration statement constitutes
part of this registration statement on Form N-14 of The One Group (the "N-14
Registration Statement"), of our report dated January 19, 1996 relating to
the financial statements and financial highlights appearing in the November
30, 1995 Annual Report to Shareholders of the Paragon Portfolio, which report
is also incorporated by reference. We also consent to the reference to us
under the heading "Experts" in such Statement of Additional Information.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
May 29, 1998
<PAGE>
EXHIBIT (14)(d)
CONSENT OF KPMG PEAT MARWICK LLP
<PAGE>
Independent Auditors' Consent
To the Board of Trustees of
The One Group
We consent to the reference to our firm under the heading "Experts" in the
Statement of Additional Information, which is incorporated by reference in the
Form N-14 filed by The One Group.
KPMG Peat Marwick LLP
Columbus, Ohio
May 29, 1998
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated November 7, 1997
on the September 30, 1997 financial statements of Marquis Funds, incorporated
by reference in Marquis Funds Form N-1A dated January 26, 1998, and to all
references to our firm included in this Form N-14 Registration Statement.
ARTHUR ANDERSEN LLP
Philadelphia, PA
May 28, 1998
<PAGE>
EXHIBIT (16)
EXECUTED POWERS OF ATTORNEY
<PAGE>
Power of Attorney
John S. Randall, whose signature appears below, does hereby constitute and
appoint Martin E. Lybecker, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group (the "Group"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
John S. Randall
John S. Randall
<PAGE>
Power of Attorney
Peter C. Marshall, whose signature appears below, does hereby constitute
and approint Martin E. Lybecher, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group (the "Group"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
Peter C. Marshall
Peter C. Marshall
<PAGE>
Power of Attorney
Charles I. Post, whose signature appears below, does hereby constitute and
approint Martin E. Lybecher, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group (the "Group"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
Charles I. Post
Charles I. Post
<PAGE>
Power of Attorney
Frederick W. Ruebeck, whose signature appears below, does hereby constitute
and approint Martin E. Lybecher, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group (the "Group"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended (the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
Frederick W. Ruebeck
Frederick W. Ruebeck
<PAGE>
Power of Attorney
Robert A. Oden, Jr., whose signature appears below, does hereby constitute
and approint Martin E. Lybecher, Alan G. Priest, and Alyssa Albertelli, each
individually, his true and lawful attorneys and agents, with power of
substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group (the "Group"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended (the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Group, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Group any and all amendments
to the Group's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents or either of them, shall do or cause to be
done by virtue thereof.
Dated: May 21, 1998
Robert A. Oden
Robert A. Oden
<PAGE>
Power of Attorney
Mark S. Redman, whose signature appears below, does hereby constitute and
approint Martin E. Lybecher, Alan G. Priest, and Francoise M. Haan, each
individually, his true and lawful attorneys and agents, with power of
substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group (the "Trust"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended (the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Trust, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Trust any and all amendments
to the Trust's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Dated: August 23, 1996
Mark S. Redman
Mark S. Redman
<PAGE>
Power of Attorney
William Tomko, whose signature appears below, does hereby constitute and
approint Martin E. Lybecher, Alan G. Priest, and Mayellen M. Lundquist, each
individually, his true and lawful attorneys and agents, with power of
substitution and resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The One Group (the "Trust"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended (the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
instruments and/or documents pertaining to the federal registration of the
shares of the Trust, including specifically, but without limiting the generality
of the foregoing, the power and authority to sign in the name and on behalf of
the undersigned as a director and/or officer of the Trust any and all amendments
to the Trust's Registration Statement as filed with the Securities and Exchange
Commission under said Acts, and the undersigned does hereby ratify and confirm
all that said attorneys and agents or either of them, shall do or cause to be
done by virtue thereof.
Dated: February 2, 1998
William Tomko
William Tomko
<PAGE>
As filed with the Securities and Exchange Commission on August 29, 1997
Registration Nos. 2-95973 and 811-4236
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
POST EFFECTIVE AMENDMENT NO. 43 /X/
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 44 /X/
THE ONE GROUP-Registered Trademark-
(Exact Name of Registrant as Specified in Charter)
1111 Polaris Parkway
P.O. Box 710211
Columbus, Ohio 43271-0211
(Address of Principal Executive Offices)
(800) 480-4311
(Registrant's Telephone Number)
George Martinez
3435 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Service)
Copies To:
Alan G. Priest, Esquire Michael V. Wible, Esquire
Ropes & Gray Banc One Corporation
One Franklin Square 100 East Broad Street, 18th Fl.
1301 K Street, N.W., Suite 800E Columbus, Ohio 43271
Washington, D.C. 20005
It is proposed that this filing will become effective (check appropriate box)
Immediately upon filing pursuant to paragraph (b)
- ---
on (date) pursuant to paragraph (b)
- ---
X 60 days after filing pursuant to paragraph (a)(1)
- ---
<PAGE>
on (date) pursuant to paragraph (a)(J)
- ---
75 days after filing pursuant to paragraph (a)(Z)
- ---
on (date) pursuant to paragraph (a)(2) of rule 485:
- ---
If appropriate, check the following box:
- --- post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Section (a)(1) or Rule 24f-2.
Rule 24f-2 Notice for the Registrant's fiscal year ending June 30, 1997 was
filed on August 28, 1997.
<PAGE>
MARQUIS FUNDS-REGISTERED TRADEMARK-
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
- GOVERNMENT SECURITIES FUND
- LOUISIANA TAX-FREE INCOME FUND
- STRATEGIC INCOME BOND FUND
- BALANCED FUND
- VALUE EQUITY FUND
- GROWTH EQUITY FUND
- SMALL CAP EQUITY FUND
- INTERNATIONAL EQUITY FUND
MARQUIS FUNDS-Registered Trademark- (the "Trust") is a mutual fund that offers a
convenient and economical means of investing in one or more professionally
managed portfolios of securities. This Prospectus offers Class A and Class B
shares of the above funds (collectively, the "Funds" and each a "Fund"), each of
which is a separate series of the Trust.
Class A shares are sold with a front-end sales load that will be reduced or
waived in certain circumstances. Class B shares are sold subject to annual
distribution and service fees and a contingent deferred sales charge that is
eliminated five years after purchase, at which point the Class B shares
automatically convert into Class A shares.
The Small Cap Equity Fund currently seeks to achieve its objective of capital
appreciation by investing up to 100% of its assets in the Small Cap Growth
Portfolio, a separate series of SEI Institutional Managed Trust ("SIMT"), an
open-end management investment company advised by SEI Investments Management
Corporation ("SIMC"), with an investment objective identical to, and investment
policies and restrictions substantially similar to, those of the Small Cap
Equity Fund. The performance of the Small Cap Equity Fund, therefore, will
correspond directly to the performance of the Small Cap Growth Portfolio.
The International Equity Fund currently seeks to achieve its objective of
long-term capital appreciation by investing up to 100% of its assets in the
International Equity Portfolio, a separate series of SEI International Trust
("SIT"), an open-end management investment company advised by SIMC, with an
investment objective identical to, and investment policies and restrictions
substantially similar to, those of the International Equity Fund. The
performance of the International Equity Fund, therefore, will correspond
directly to the performance of the International Equity Portfolio.
This Prospectus sets forth concisely the information about the Funds and the
Trust that a prospective investor should know before investing in any of the
Funds. Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated February 1, 1998, as
supplemented from time to time, has been filed with the Securities and Exchange
Commission (the "SEC") and is available without charge by calling
1-800-471-1144. The Statement of Additional Information is incorporated into
this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, INCLUDING FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
FEBRUARY 1, 1998
<PAGE>
2
SUMMARY
MARQUIS FUNDS-REGISTERED TRADEMARK- (THE "TRUST") IS AN OPEN-END
MANAGEMENT INVESTMENT COMPANY PROVIDING A CONVENIENT WAY TO INVEST IN
PROFESSIONALLY MANAGED PORTFOLIOS OF SECURITIES. THIS SUMMARY PROVIDES BASIC
INFORMATION ABOUT THE CLASS A AND THE CLASS B SHARES OF THE TRUST'S
GOVERNMENT SECURITIES FUND, LOUISIANA TAX-FREE INCOME FUND, STRATEGIC INCOME
BOND FUND (THESE THREE, COLLECTIVELY, THE "FIXED INCOME FUNDS"), BALANCED
FUND, VALUE EQUITY FUND, GROWTH EQUITY FUND, SMALL CAP EQUITY FUND AND
INTERNATIONAL EQUITY FUND (THESE FIVE, COLLECTIVELY, THE "EQUITY FUNDS").
EACH FUND IS A SEPARATE SERIES OF THE TRUST.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF EACH FUND? The
GOVERNMENT SECURITIES FUND seeks to provide current income consistent with
relative stability of capital by investing primarily in U.S. Government
securities. The LOUISIANA TAX-FREE INCOME FUND seeks to provide a level of
current income consistent with relative stability of capital by investing
primarily in investment grade securities, the interest on which is exempt
from federal income tax and Louisiana personal income taxes and is not a
preference item for purposes of the alternative minimum tax. The STRATEGIC
INCOME BOND FUND seeks to provide current income by investing primarily in
investment grade fixed income securities. The BALANCED FUND seeks to provide
capital appreciation and current income through the regular payment of
dividends and interest by investing in a combination of equity, fixed income
and money market instruments. The VALUE EQUITY FUND seeks to provide
long-term capital appreciation by investing primarily in equity securities
which have a low current valuation relative to various measures of intrinsic
value. The GROWTH EQUITY FUND seeks to provide long-term capital
appreciation by investing primarily in companies whose sales and earnings
are expected to grow at an above average rate. The SMALL CAP EQUITY FUND
seeks to provide long-term capital appreciation by investing up to 100% of
its assets in Class A shares of the Small Cap Growth Portfolio of SIMT,
which in turn invests primarily in equity securities of smaller growth
companies (i.e., companies with equity market capitalizations of less than
$1 billion at the time of purchase). The INTERNATIONAL EQUITY FUND seeks to
provide long-term capital appreciation by investing up to 100% of its assets
in Class A shares of the International Equity Portfolio of SIT, which in
turn invests primarily in a diversified portfolio of equity securities of
non-U.S. issuers. There can be no assurance that any Fund will achieve its
investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUNDS? The
investment policies of each Fund entail certain risks and considerations of
which an investor should be aware. Values of fixed income securities and,
correspondingly, share prices of Funds invested in such securities, tend to
vary inversely with interest rates and may be affected by other market and
economic factors as well. The Louisiana Tax-Free Income Fund, which is a
non-diversified fund, will invest primarily in Louisiana municipal
securities. The Fixed Income Funds and the Balanced Fund may also invest in
securities that have speculative characteristics. The Balanced, Value Equity
and Growth Equity Funds may purchase equity securities that are volatile and
may fluctuate in value more than other types of investments. The Small Cap
Equity Fund and the International Equity Fund (together, the "Feeder Funds")
are currently "feeder" funds in separate Corporate Master-Feeder-TM-
structures. That is, the Small Cap Equity Fund and International Equity Fund
each invest in another open-end management investment company and hold, as
their only investment securities, shares of a single "master" fund, in this
case, the Small Cap Growth Portfolio and the International Equity Portfolio
(together, the "Portfolios"), respectively.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its
agencies or instrumentalities of the securities in which any Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of the security or the
yield or value of shares of that Fund. The Trust's shares are not federally
insured by the FDIC or any other government agency.
For more information about each Fund, see "Investment Objectives and
Policies," "General Investment Policies" and "Description of Permitted
Investments and Risk Factors."
<PAGE>
3
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce
in New Orleans (the "Adviser") serves as the Adviser to each Fund. With
respect to the Small Cap Equity Fund and the International Equity Fund, the
Adviser invests in a "master" fund, cash and other non-investment securities
and monitors the performance of SIMC as the manager of the Small Cap Growth
Portfolio and the International Equity Portfolio. See "Expense Summary" and
"The Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as transfer agent,
dividend disbursing agent and shareholder servicing agent for the Trust. See
"The Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the
"Distributor") serves as distributor of the Trust's shares. See "The
Distributor."
HOW DO I PURCHASE SHARES? Purchases and redemptions may be made through
the Transfer Agent or financial institutions, including the Adviser, that
provide distribution assistance or shareholder services to the Trust on any
day when the New York Stock Exchange is open for business (a "Business
Day"). A purchase order will be effective as of the Business Day received by
the Transfer Agent if the Transfer Agent receives an order and payment with
readily available funds prior to the close of regular trading on the New
York Stock Exchange (normally, 3:00 p.m., Central Time). To purchase shares
by wire, you must first call 1-800-471-1144. Redemption orders are effected
at the net asset value per share next determined after receipt of a valid
request for redemption, reduced by any applicable contingent deferred sales
charge. The Funds also offer both an Automatic Investment Plan and a
Systematic Withdrawal Plan. The purchase and redemption price for shares is
the net asset value per share determined as of the end of the day the order
is effective. The Funds offer two classes of shares to the general public:
Class A shares and Class B shares.
CLASS A SHARES are offered at net asset value per share plus a maximum
initial sales charge of 3.50%. Certain purchases of Class A shares qualify
for waived or reduced initial sales charges. Class A shares of the Funds are
generally not subject to sales charges at the time of redemption and are not
assessed any annual distribution fees.
CLASS B SHARES are offered at net asset value per share and are subject
to a maximum contingent deferred sales charge of 3.50% of redemption
proceeds during the first year, declining each year thereafter and reaching
0% after the fifth year. Class B shares of the Funds pay annual distribution
and service fees of .75% of their average daily net assets. Class B shares
convert automatically to Class A shares five years after the beginning of
the calendar month in which the shareholder's purchase order was accepted.
For more information on Class A and Class B shares, see "How to Purchase
Shares," "Alternative Sales Charge Options" and "The Distributor."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of each Fund is distributed in the form of
periodic dividends. Any net realized capital gain is distributed at least
annually. Distributions are paid in additional shares unless the shareholder
elects to take the payment in cash. See "Dividends."
<PAGE>
4
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES CLASS A
<TABLE>
<CAPTION>
ALL FUNDS
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)........................... 3.50%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)................ None
*Maximum Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)............................................................................ None
Wire Redemption Fee................................................................................... $25
Exchange Fee.......................................................................................... None
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* A redemption charge of 1.00% will be assessed against the proceeds of any
redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased. See "Alternative Sales Charge Options -- Class A Shares."
ANNUAL OPERATING EXPENSES CLASS A
(as a percentage of average net assets)
<TABLE>
<CAPTION>
GOVERNMENT LOUISIANA STRATEGIC VALUE GROWTH
SECURITIES TAX-FREE INCOME INCOME BOND BALANCED EQUITY EQUITY
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees (after fee
waivers) (1)................... .51% .35% .31% .71% .74% .72%
12b-1 Fees....................... None None None None None None
Other Expenses (after expense
reimbursements) (1)............ .19% .30% .59% .19% .26% .28%
- -----------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after
fee waivers) (2)............... .70% .65% .90% .90% 1.00% 1.00%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Adviser has voluntarily agreed to waive its fee, and the Administrator
has voluntarily agreed to reimburse Other Expenses, to the extent necessary
to keep Total Operating Expenses from exceeding .70% for the Government
Securities Fund, .65% for the Louisiana Tax-Free Income Fund, .90% for the
Strategic Income Bond Fund, .90% for the Balanced Fund, 1.00% for the Value
Equity Fund and 1.00% for the Growth Equity Fund. The Adviser and
Administrator each reserves the right to terminate its waiver or
reimbursement, respectively, at any time in its sole discretion. Absent such
waivers, Management Fees would be as follows: Government Securities Fund --
.55%; Louisiana Tax-Free Income Fund -- .35%; Strategic Income Bond Fund --
.74%; Balanced Fund -- .74%, Value Equity Fund -- .74% and Growth Equity
Fund -- .74%. Absent expense reimbursements, Other Expenses would be as
follows: Government Securities Fund -- .21%; Louisiana Tax-Free Income Fund
-- .30%; Strategic Income Bond Fund -- .69%; Balanced Fund -- .22%; Value
Equity Fund -- .26%; and Growth Equity Fund -- .30%.
(2) Absent the Adviser's voluntary fee waiver and the Administrator's voluntary
fee reimbursement, Total Operating Expenses for Class A shares would be as
follows: Government Securities Fund -- .76%; Louisiana Tax-Free Income Fund
-- .65%; Strategic Income Bond Fund -- 1.43%; Balanced Fund -- .96%; Value
Equity Fund -- 1.00%; and Growth Equity Fund -- 1.04%.
<PAGE>
5
ANNUAL OPERATING EXPENSES CLASS A
(As a percentage of average net assets)
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL
EQUITY FUND EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees (after fee waivers) (1).............................................. 1.19% 1.05%
12b-1 Fees........................................................................... None None
Other Expenses (after fee reimbursements) (1)(2)..................................... .11% .50%
- ------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (1)(3).................................. 1.30% 1.55%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Management Fees include fees at the "master" level of 1.00% and .86% for the
Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and fees at the "feeder" level of .19% and .19% for the Small
Cap Equity Fund and the International Equity Fund, respectively. The Adviser
has voluntarily agreed to waive its fee, and the Administrator has
voluntarily agreed to reimburse Other Expenses, to the extent necessary to
keep the Total Operating Expenses at the feeder level from exceeding .20%
for the Small Cap Equity Fund and .27% for the International Equity Fund.
The Adviser and the Administrator each reserves the right to terminate its
waiver or reimbursement, respectively, at any time in its sole discretion.
Absent such waiver, Management Fees at the feeder level would be .40% for
the Small Cap Equity Fund and .40% for the International Equity Fund. Absent
such reimbursements, Other Expenses at the feeder level for the Small Cap
Equity Fund and International Equity Fund would be 2.46% and 1.81%,
respectively. Absent the master fund adviser's voluntary fee waivers, which
may be terminated at any time in its sole discretion, Management Fees at the
master level would be .96% for the International Equity Portfolio.
(2) Other Expenses include expenses at the "master" level of .10% and .42% for
the Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and expenses at the "feeder" level of .01% and .08% for the
Small Cap Equity Fund and the International Equity Fund, respectively. The
Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee at the master level with respect to the
Portfolios, and the Other Expenses shown reflect this waiver. The
Distributor reserves the right to terminate its waiver at any time in its
sole discretion. Absent such waivers, Other Expenses of the Small Cap Growth
Portfolio and International Equity Portfolio at the master level would be
.32% and .42%, respectively.
(3) Absent the master fund adviser's voluntary fee waivers, the Adviser's
voluntary fee waivers and the Administrator's voluntary reimbursements,
Total Operating Expenses would be as follows: Small Cap Equity Fund --
4.18%; and International Equity Fund -- 3.59%.
The Trustees believe that, because of the resultant economies of scale and
associated decreased expenses, the aggregate per share expenses of both the
Small Cap Equity Fund and International Equity Fund together with those of the
corresponding Portfolio will be approximately equal to the expenses the
respective Fund would incur if it invested directly in securities in which the
corresponding Portfolio invests.
EXAMPLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1 YR. 3 YRS. 5 YRS. 10 YRS.
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in
Class A shares assuming (1) imposition of the maximum sales
load; (2) 5% annual return and (3) redemption at the end of
each time period:
Government Securities Fund.................................. $42 $57 $73 $119
Louisiana Tax-Free Income Fund.............................. $41 $55 $70 $113
Strategic Income Bond Fund.................................. $44 $63 N/A N/A
Balanced Fund............................................... $44 $63 $83 $142
Value Equity Fund........................................... $45 $66 $88 $153
Growth Equity Fund.......................................... $45 $66 $88 $153
Small Cap Equity Fund....................................... $48 $75 N/A N/A
International Equity Fund................................... $50 $82 N/A N/A
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. BECAUSE THE
STRATEGIC INCOME BOND, SMALL CAP EQUITY AND INTERNATIONAL EQUITY FUNDS RECENTLY
COMMENCED OPERATIONS, EXPENSES HAVE NOT BEEN ESTIMATED BEYOND THE THREE YEAR
PERIOD SHOWN.
The purpose of the foregoing table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in Class A shares of the Funds. Shareholders purchasing
shares through a financial institution may be charged additional account fees by
that institution. The information set forth in the foregoing table and example
relates only to Class A shares. Additional information may be found under "The
Adviser," "The Administrator" and "The Distributor."
The rules of the Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for reduced sales charges. See "Alternative Sales Charge Options --
Class A Shares."
<PAGE>
6
SHAREHOLDER TRANSACTION EXPENSES CLASS B
<TABLE>
<CAPTION>
ALL FUNDS
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)........................... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)................ None
Maximum Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)............................................................................ 3.50%
Wire Redemption Fee................................................................................... $25
Exchange Fee.......................................................................................... None
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES CLASS B
(as a percentage of average net assets)
<TABLE>
<CAPTION>
STRATEGIC
GOVERNMENT LOUISIANA INCOME BOND VALUE
SECURITIES TAX-FREE INCOME FUND BALANCED EQUITY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Management Fees (after
fee waivers) (1)..................... .51% .35% .31% .71% .74%
12b-1 Fees............................. .75% .75% .75% .75% .75%
Other Expenses (after expense
reimbursements) (1).................. .19% .30% .59% .19% .26%
- -----------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers) (2)......................... 1.45% 1.40% 1.65% 1.65% 1.75%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
GROWTH
EQUITY
- ---------------------------------------
<S> <C>
Management Fees (after
fee waivers) (1)..................... .72%
12b-1 Fees............................. .75%
Other Expenses (after expense
reimbursements) (1).................. .28%
- ---------------------------------------
Total Operating Expenses (after fee
waivers) (2)......................... 1.75%
- ---------------------------------------
- ---------------------------------------
</TABLE>
(1) The Adviser has voluntarily agreed to waive its fee, and the Administrator
has voluntarily agreed to reimburse Other Expenses, to the extent necessary
to keep Total Operating Expenses from exceeding 1.45% for the Government
Securities Fund, 1.40% for the Louisiana Tax-Free Income Fund, 1.65% for the
Strategic Income Bond Fund, 1.65% for the Balanced Fund, 1.75% for the Value
Equity Fund, and 1.75% for the Growth Equity Fund. The Adviser and
Administrator each reserves the right to terminate its waiver or
reimbursement, respectively, at any time in its sole discretion. Absent such
waivers, Management Fees would be as follows: Government Securities Fund --
.55%; Louisiana Tax-Free Income Fund -- .35%; Strategic Income Bond Fund --
.74%; Balanced Fund -- .74%, Value Equity Fund -- .74% and Growth Equity
Fund --.74%. Absent expense reimbursements, Other Expenses would be as
follows: Government Securities Fund -- .21%; Louisiana Tax-Free Income Fund
-- .30%; Strategic Income Bond Fund -- .69%; Balanced Fund -- .22%; Value
Equity Fund -- .26%; and Growth Equity Fund -- .30%.
(2) Absent the Adviser's voluntary fee waiver and the Administrator's voluntary
fee reimbursement, Total Operating Expenses for Class B shares would be as
follows: Government Securities Fund -- 1.51%; Louisiana Tax-Free Income Fund
-- 1.40%; Strategic Income Bond Fund -- 2.13%; Balanced Fund -- 1.71%; Value
Equity Fund -- 1.75%; and Growth Equity Fund -- 1.79%.
<PAGE>
7
ANNUAL OPERATING EXPENSES CLASS B
(as a percentage of average net assets)
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL
EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees (after fee waivers) (1).............................................. 1.19% 1.05%
12b-1 Fees........................................................................... .75% .75%
Other Expenses (after fee reimbursements) (1)(2)..................................... .11% .50%
- -----------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (1)(3).................................. 2.05% 2.30%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Management Fees include fees at the "master" level of 1.00% and .86% for the
Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and fees at the "feeder" level of .19% and .19% for the Small
Cap Equity Fund and the International Equity Fund, respectively. The Adviser
has voluntarily agreed to waive its fee, and the Administrator has
voluntarily agreed to reimburse Other Expenses, to the extent necessary to
keep the Total Operating Expenses at the feeder level from exceeding .95%
for the Small Cap Equity Fund and 1.02% for the International Equity Fund.
The Adviser and the Administrator each reserves the right to terminate its
waiver or reimbursement, respectively, at any time in its sole discretion.
Absent such waiver, Management Fees at the feeder level would be .40% for
both the Small Cap Equity Fund and the International Equity Fund. Absent
such reimbursements, Other Expenses at the feeder level for the Small Cap
Equity Fund and International Equity Fund would be 2.46% and 1.81%,
respectively. Absent the master fund adviser's voluntary fee waivers, which
may be terminated at any time in its sole discretion, Management Fees at the
master level would be .96% for the International Equity Portfolio.
(2) Other Expenses include expenses at the "master" level of .10% and .42% for
the Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and expenses at the "feeder" level of .01% and .08% for the
Small Cap Equity Fund and the International Equity Fund, respectively. The
Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee at the master level with respect to the Portfolios
and the Other Expenses shown reflect this waiver. The Distributor reserves
the right to terminate its waiver at any time in its sole discretion. Absent
such waivers, Other Expenses of the Small Cap Growth Portfolio and
International Equity Portfolio at the master level would be .32% and .42%,
respectively.
(3) Absent the master fund adviser's voluntary fee waivers, the Adviser's
voluntary fee waivers and the Administrator's voluntary reimbursements,
Total Operating Expenses would be as follows: Small Cap Equity Fund --
4.93%; and International Equity Fund -- 4.34%.
<PAGE>
8
EXAMPLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1 3 5 10
YEAR YEARS YEARS YEARS*
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Class B shares assuming (1)
deduction of the maximum contingent deferred
sales charge applicable and (2) 5% annual
return:
Government Securities Fund
Assuming a complete redemption at end of
period.................................. $50 $66 $ 84 $125
Assuming no redemptions................... $15 $46 $ 79 $125
Louisiana Tax-Free Income Fund
Assuming a complete redemption at end of
period.................................. $49 $64 $ 82 $119
Assuming no redemptions................... $14 $44 $ 77 $119
Strategic Income Bond Fund
Assuming a complete redemption at end of
period.................................. $52 $72 N/A N/A
Assuming no redemptions................... $17 $52 N/A N/A
Balanced Fund
Assuming a complete redemption at end of
period.................................. $52 $72 $ 95 $147
Assuming no redemptions................... $17 $52 $ 90 $147
Value Equity Fund
Assuming a complete redemption at end of
period.................................. $53 $75 $100 $159
Assuming no redemptions................... $18 $55 $ 95 $159
Growth Equity Fund
Assuming a complete redemption at end of
period.................................. $53 $75 $100 $159
Assuming no redemptions................... $18 $55 $ 95 $159
Small Cap Equity Fund
Assuming a complete redemption at end of
period.................................. $56 $84 N/A N/A
Assuming no redemptions................... $21 $64 N/A N/A
International Equity Fund
Assuming a complete redemption at end of
period.................................. $58 $92 N/A N/A
Assuming no redemptions................... $23 $72 N/A N/A
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. BECAUSE THE
STRATEGIC INCOME BOND, SMALL CAP EQUITY AND INTERNATIONAL EQUITY FUNDS RECENTLY
COMMENCED OPERATIONS, EXPENSES HAVE NOT BEEN ESTIMATED BEYOND THE THREE YEAR
PERIOD SHOWN.
* Class B shares automatically convert to Class A shares after 5 years.
The purpose of the foregoing table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in Class B shares of the Funds. The information set forth in
the foregoing table and example relates only to Class B shares.
Additional information may be found under "The Adviser," "The Administrator" and
"The Distributor."
Long-term Class B shareholders may eventually pay more than the economic
equivalent of the maximum front-end sales charges otherwise permitted by
National Association of Securities Dealers, Inc.'s Conduct Rules.
<PAGE>
9
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the Trust's financial statements and notes
thereto which are incorporated by reference into the Statement of Additional
Information under the heading "Financial Information." Additional performance
information is set forth in the Trust's 1997 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144.
For a Class A Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
REALIZED
AND NET
NET ASSET UNREALIZED DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET DISTRIBUTIONS VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM CAPITAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN+
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT SECURITIES FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997............................... $ 9.71 $ 0.55 $ 0.23 $ (0.55) -- $ 9.94 8.22%
1996............................... 9.87 0.55 (0.16) (0.55) -- 9.71 4.10
1995............................... 9.41 0.54 0.46 (0.54) -- 9.87 10.84
1994(1)............................ 10.00 0.43 (0.59) (0.43) -- 9.41 (1.66)
- ----------------------------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME
FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997............................... $ 9.79 $ 0.43 $ 0.32 $ (0.43) -- $10.11 7.77%
1996............................... 9.79 0.42 -- (0.42) -- 9.79 4.48
1995............................... 9.38 0.42 0.41 (0.42) -- 9.79 9.01
1994(2)............................ 10.00 0.36 (0.62) (0.36) -- 9.38 (2.68)
- ----------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997(3)............................ $ 10.00 $ 0.39 $ 0.14 $ (0.39) -- $10.14 8.26%*
- ----------------------------------------------------------------------------------------------------------------------------
BALANCED FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997............................... $ 11.31 $ 0.36 $ 2.44 $ (0.36) $ (0.50) $13.25 26.10%
1996............................... 10.87 0.38 0.59 (0.38) (0.15) 11.31 9.11
1995............................... 9.59 0.37 1.28 (0.37) -- 10.87 17.58
1994(1)............................ 10.00 0.31 (0.41) (0.31) -- 9.59 (1.02)
- ----------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997............................... $ 12.93 $ 0.19 $ 5.32 $ (0.19) $ (0.81) $17.44 45.27%
1996............................... 11.81 0.25 1.30 (0.25) (0.18) 12.93 13.38
1995............................... 9.65 0.24 2.16 (0.24) -- 11.81 25.13
1994(1)............................ 10.00 0.18 (0.35) (0.18) -- 9.65 (1.64)
- ----------------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997............................... $ 12.10 $ 0.06 $ 3.71 $ (0.06) -- $15.81 31.25%
1996(4)............................ 11.00 0.05 1.10 (0.05) -- 12.10 10.46
- ----------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997(3)............................ $ 10.00 $ (0.01) $ 2.22 -- -- $12.21 33.61%*
- ----------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
1997(3)............................ $ 10.00 $ (0.01) $ 0.99 -- -- $10.98 14.90%*
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
RATIO OF NET
EXPENSES INVESTMENT
RATIO OF RATIO OF TO INCOME TO
NET EXPENSES NET AVERAGE AVERAGE
ASSETS TO INVESTMENT NET NET
END AVERAGE INCOME TO ASSETS ASSETS PORTFOLIO AVERAGE
OF PERIOD NET AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
(000) ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE**
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT SECURITIES FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997...............................$149,022 0.70% 5.54% 0.76% 5.48% 11.88% N/A
1996............................... 160,317 0.70 5.53 0.79 5.44 22.80 N/A
1995............................... 124,404 0.70 5.63 0.84 5.49 18.33 N/A
1994(1)............................ 97,562 0.70 4.43 0.90 4.23 37.80 N/A
- -------------------------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME
FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997...............................$ 38,471 0.61% 4.35% 0.65% 4.31% 0.77% N/A
1996............................... 20,937 0.65 4.38 0.75 4.28 8.26 N/A
1995............................... 11,705 0.65 4.51 0.95 4.21 2.31 N/A
1994(2)............................ 6,971 0.65 4.10 1.72 3.03 30.31 N/A
- -------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997(3)............................$ 15,562 0.90%* 6.22%* 1.43%* 5.69%* 1.34% N/A
- -------------------------------------------------------------------------------------------------------------------------
BALANCED FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997...............................$134,941 0.90% 3.05%* 0.96% 2.99% 40.97% $ .0796
1996............................... 114,384 0.89 3.53 1.01 3.41 57.22 .0794
1995............................... 87,076 0.85 3.70 1.04 3.51 55.06 N/A
1994(1)............................ 71,379 0.85 3.18 1.14 2.89 64.09 N/A
- -------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997...............................$134,117 1.00% 1.33% 1.00% 1.33% 97.91% $ .0798
1996............................... 93,508 0.97 2.12 1.02 2.07 95.93 .0795
1995............................... 58,854 0.90 2.40 1.07 2.23 97.88 N/A
1994(1)............................ 41,922 0.90 1.95 1.17 1.68 161.42 N/A
- -------------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997...............................$ 31,608 1.00% 0.46% 1.04% 0.42% 65.12% $ .0799
1996(4)............................ 18,400 1.00* 0.73* 1.12* 0.61* 91.09* .0797
- -------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997(3)............................$ 3,616 0.20%* (0.20)%* 1.79%* (1.79)%* 29.56% N/A
- -------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997(3)............................$ 3,435 0.27%* (0.27)%* 2.21%* (2.21)%* 4.69% N/A
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Total Return does not reflect sales load on Class A shares.
* Annualized.
** Average commission rate paid for security purchases and sales during the
period. Presentation of the rate is only required for fiscal years beginning
after September 1, 1995.
(1) Commenced operations on October 22, 1993.
(2) Commenced operations on November 22, 1993.
(3) Commenced operations on January 31, 1997.
(4) Commenced operations on March 1, 1996.
<PAGE>
10
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the Trust's financial statements and notes
thereto which are incorporated by reference into the Statement of Additional
Information under the heading "Financial Information." Additional performance
information is set forth in the Trust's 1997 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144.
For a Class B Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
REALIZED
AND
NET ASSET UNREALIZED DISTRIBUTIONS
VALUE NET GAINS OR FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM CAPITAL VALUE END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT SECURITIES FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997......................................... $ 9.76 $0.47 $ 0.24 $(0.48) -- $ 9.99 7.40%
1996......................................... 9.92 0.46 (0.15) (0.47) -- 9.76 3.23
1995......................................... 9.46 0.46 0.47 (0.47) -- 9.92 10.10
1994(1)...................................... 10.04 0.31 (0.58) (0.31) -- 9.46 (2.84)*
- ---------------------------------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997......................................... $ 9.79 $0.34 $ 0.33 $(0.35) -- $10.11 6.99%
1996......................................... 9.79 0.35 -- (0.35) -- 9.79 3.60
1995......................................... 9.39 0.35 0.40 (0.35) -- 9.79 8.21
1994(2)...................................... 9.87 0.27 (0.48) (0.27) -- 9.39 (2.58)*
- ---------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997(3)...................................... $10.00 $0.33 $ 0.16 $(0.35) -- $10.14 7.57%*
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997......................................... $11.37 $0.26 $ 2.47 $(0.28) $(0.50) $13.32 25.19%
1996......................................... 10.93 0.30 0.59 (0.30) (0.15) 11.37 8.30
1995......................................... 9.64 0.30 1.29 (0.30) -- 10.93 16.75
1994(1)...................................... 10.03 0.18 (0.39) (0.18) -- 9.64 (2.24)*
- ---------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997......................................... $12.97 $0.09 $ 5.34 $(0.09) $(0.81) $17.50 44.31%
1996......................................... 11.86 0.17 1.29 (0.17) (0.18) 12.97 12.49
1995......................................... 9.70 0.15 2.17 (0.16) -- 11.86 24.17
1994(1)...................................... 9.95 0.08 (0.25) (0.08) -- 9.70 (1.82)*
- ---------------------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997......................................... $12.07 $0.03 $ 3.64 -- -- $15.74 30.41%
1996(4)...................................... 11.14 0.01 0.93 (0.01) -- 12.07 8.48
- ---------------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997(3) $10.00 $(0.02) $ 2.18 -- -- $12.16 32.85%*
- ---------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND--CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
1997(3) $10.00 $(0.03) $ 0.97 -- -- $10.94 14.30%*
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
RATIO OF NET
RATIO OF NET RATIO OF INVESTMENT
NET EXPENSES INVESTMENT EXPENSES INCOME TO
ASSETS TO INCOME TO AVERAGE AVERAGE
END OF AVERAGE TO NET ASSETS NET ASSETS PORTFOLIO AVERAGE
PERIOD NET AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
(000) ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE**
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT SECURITIES FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997......................................... $1,062 1.45% 4.81% 1.51% 4.75% 11.88% N/A
1996......................................... 523 1.45 4.81 1.54 4.72 22.80 N/A
1995......................................... 244 1.45 4.86 1.59 4.72 18.33 N/A
1994(1)...................................... 147 1.45* 3.88* 1.69* 3.64* 37.80 N/A
- --------------------------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997......................................... $1,137 1.36% 3.61% 1.40% 3.57% 0.77% N/A
1996......................................... 727 1.40 3.62 1.50 3.52 8.26 N/A
1995......................................... 567 1.40 3.77 1.70 3.47 2.31 N/A
1994(2)...................................... 601 1.40* 3.35* 2.47* 2.28* 30.31 N/A
- --------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997(3)...................................... $ 470 1.65%* 5.49%* 2.13%* 5.01%* 1.34% N/A
- --------------------------------------------------------------------------------------------------------------------------
BALANCED FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997......................................... $3,939 1.65%* 2.28% 1.71% 2.22% 40.97% $.0796
1996......................................... 1,996 1.64 2.80 1.76 2.68 57.22 .0794
1995......................................... 1,137 1.60 2.95 1.79 2.76 55.06 N/A
1994(1)...................................... 868 1.60* 2.55* 1.94* 2.21* 64.09 N/A
- --------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997......................................... $9,944 1.75% 0.55% 1.75% 0.55% 97.91% $.0798
1996......................................... 3,990 1.73 1.37 1.77 1.33 95.93 .0795
1995......................................... 1,288 1.65 1.62 1.82 1.45 97.88 N/A
1994(1)...................................... 389 1.65* 1.30* 1.93* 1.02* 161.42 N/A
- --------------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997......................................... $1,800 1.75% (0.30)% 1.79% (0.34)% 65.12% $.0799
1996(4)...................................... 152 1.75* (0.02)* 1.87* (0.14)* 91.09 .0797
- --------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997(3) $ 654 0.95%* (0.95)%* 2.61%* (2.61)%* 29.56% N/A
- --------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND--CLASS B
- --------------------------------------------------------------------------------------------------------------------------
1997(3) $ 358 1.02%* (1.02)%* 2.86%* (2.86)%* 4.69% N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Total return does not reflect contingent deferred sales charge on Class B
shares.
* Annualized.
** Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is only required for fiscal
years beginning after September 1, 1995.
(1) Commenced operations on October 22, 1993.
(2) Commenced operations on November 22, 1993.
(3) Commenced operations on January 31, 1997.
(4) Commenced operations on April 19, 1996.
<PAGE>
11
FINANCIAL HIGHLIGHTS
The following are financial highlights of the Small Cap Growth Portfolio of SIMT
for a share outstanding throughout the periods indicated. This information
should be read in conjunction with SIMT's financial statements as of, and for
the fiscal year ended, September 30, 1997 and notes thereto which have been
audited by Price Waterhouse LLP, independent accountants, which are incorporated
by reference into this Statement of Additional Information. Additional
performance information is set forth in SIMT's 1997 Annual Report to
Shareholders and is available upon request and without charge by calling
1-800-342-5734.
For a Class A Share Outstanding Throughout the Period ended September 30,
<TABLE>
<CAPTION>
NET
REALIZED
AND
NET ASSET NET UNREALIZED DIVIDENDS
VALUE INVESTMENT GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME (LOSSES ON INVESTMENT FROM NET VALUE, END TOTAL
OF PERIOD (LOSS) SECURITIES) INCOME REALIZED GAINS OF PERIOD RETURN*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SMALL CAP GROWTH PORTFOLIO--CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
1997............................... $20.51 $0.02 $2.64 $ -- $(3.85) $19.32 17.23%
1996............................... 19.88 (0.08) 4.37 -- 3.66 20.51 26.56
1995............................... 14.04 (0.14) 5.98 -- -- 19.88 41.65
1994............................... 14.67 (0.05) 0.07 -- (0.65) 14.04 0.23
1993............................... 10.65 (0.02) 4.05 (0.01) -- 14.67 37.81
1992(1)............................ 10.00 0.02 0.65 (0.02) -- 10.65 15.07
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
RATIO OF NET RATIO OF INCOME
NET EXPENSES INVESTMENT EXPENSES TO (LOSS) TO
ASSETS TO INCOME AVERAGE NET AVERAGE NET
END OF AVERAGE (LOSS) TO ASSETS ASSETS PORTFOLIO AVERAGE
PERIOD NET AVERAGE NET (EXCLUDING (EXCLUDING TURNOVER COMMISSION
(000) ASSETS ASSETS WAIVERS) WAIVERS) RATE RATE **
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SMALL CAP GROWTH PORTFOLIO--CLASS A
- ------------------------------------------------------------------------------------------------------------------------
1997...............................$561,414 1.10% (0.60)% 1.10% (0.60)% 107% $0.0723
1996............................... 380,525 1.10 (0.63) 1.11 (0.64) 167 0.0529
1995............................... 310,238 1.10 (0.60) 1.13 (0.63) 113 N/A
1994............................... 300,296 1.01 (0.51) 1.11 (0.61) 97 N/A
1993............................... 193,816 0.97 (0.25) 1.14 (0.42) 85 N/A
1992(1)............................ 36,191 0.97 0.49 1.29 0.17 33 N/A
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Sales load is not reflected in total return.
** Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is only required for fiscal years
beginning after
September 1, 1995.
(1) The Small Cap Growth Portfolio's Class A shares were offered beginning April
20, 1992. All ratios including total return for that period have been
annualized.
The following financial highlights of the International Equity Portfolio of SIT
for a share outstanding throughout the periods indicated. This information
should be read in conjunction with SIT's 1) unaudited financial statements as
of, and for the period ended, August 31, 1997 and notes thereto which are
incorporated by reference into the Statement of Additional Information and 2)
financial statements as of, and for the fiscal year ended, February 28, 1997 and
notes thereto which have been audited by Price Waterhouse LLP, independent
accountants, which are incorporated by reference into this Statement of
Additional Information. Additional performance information is set forth in SIT's
1997 Semi-Annual Report to Shareholders and is available upon request and
without charge by calling 1-800-342-5734.
For a Class A Share Outstanding Throughout each Period ended February 28 or 29,
<TABLE>
<CAPTION>
NET
REALIZED NET
NET ASSET NET AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT UNREALIZED FROM NET FROM NET VALUE
BEGINNING INCOME GAINS INVESTMENT REALIZED RETURN OF END OF TOTAL
OF PERIOD (LOSS) (LOSSES) INCOME(A) GAIN CAPITAL PERIOD RETURN
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO--CLASS A
- ----------------------------------------------------------------------------------------------------------------------------------
1997*................................... $ 9.67 $0.09 $0.31 $ -- $ -- $ -- 1$0.07 4.14%
1997.................................... 10.00 0.09 0.47 (0.07) (0.82) -- 9.67 5.70
1996.................................... 9.59 0.14 1.45 (0.19) (0.99) -- 10.00 17.30
1995.................................... 11.00 0.15 (0.97) -- (0.59) -- 9.59 (7.67)
1994.................................... 8.93 0.13 2.05 (0.11) -- -- 11.00 24.44
1993.................................... 9.09 0.16 0.04 (0.36) -- -- 8.93 2.17
1992.................................... 9.56 0.19 (0.36) (0.30) -- -- 9.09 (1.63)
1991.................................... 9.62 0.18 (0.14) -- (0.01) (0.09) 9.56 0.36
1990(1)................................. 10.00 0.04 (0.42) -- -- -- 9.62 (3.70)
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET
INVESTMENT
RATIO OF INCOME
NET RATIO OF (LOSS) TO
RATIO OF INVESTMENT EXPENSES AVERAGE
NET ASSETS EXPENSES INCOME TO AVERAGE NET
END OF TO AVERAGE (LOSS) TO NET ASSETS ASSETS PORTFOLIO AVERAGE
PERIOD NET AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
(000) ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE **
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO--CLASS A
- -------------------------------------------------------------------------------------------------------------------------
1997*...................................$ 641,419 1.25% 2.04% 1.34% 1.95% .35% $0.0172
1997....................................$ 524,062 1.28 1.11 1.42 0.97 117 N/A
1996.................................... 347,646 1.25 1.29 1.29 1.25 102 N/A
1995.................................... 328,503 1.19 1.30 1.21 1.28 64 N/A
1994.................................... 503,498 1.10 1.46 1.24 1.32 19 N/A
1993.................................... 178,287 1.10 1.80 1.53 1.37 23 N/A
1992.................................... 92,456 1.10 2.07 1.52 1.65 79 N/A
1991.................................... 35,829 1.10 3.52 1.64 2.98 14 N/A
1990(1)................................. 8,661 1.10 3.13 5.67 (1.44) -- N/A
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the six month period ended August 31, 1997 (unaudited). All ratios,
excluding total return, for that period have been annualized. Amounts
designated as "-- " are either $0 or have been rounded to $0.
** Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is only required for fiscal years
beginning after September 1, 1995.
(1) The International Equity Portfolio's Class A shares were offered beginning
December 20, 1989. All ratios for that period have been annualized.
(A) Distributions from net investment income include distributions of certain
foreign currency gains and losses.
<PAGE>
12
THE TRUST
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is an open-end management
investment company that offers units of beneficial interest ("shares") in the
Funds through two separate classes, Class A and Class B, which provide for
variations in sales charges, distribution costs, voting rights and dividends.
Except for these differences between classes, each share of each Fund represents
an undivided, proportionate interest in that Fund. Each Fund and each Portfolio
is a diversified mutual fund, except for the Louisiana Tax-Free Income Fund,
which is non-diversified. Information regarding shares of the Trust's Treasury
Securities Money Market Fund, Institutional Money Market Fund and Tax Exempt
Money Market Fund (the "Money Market Funds") is contained in separate
prospectuses that may be obtained by calling 1-800-471-1144.
INVESTMENT OBJECTIVES AND POLICIES
The GOVERNMENT SECURITIES FUND seeks to provide current income consistent with
relative stability of capital.
Under normal conditions, the Fund will invest at least 65% of its total assets
in obligations issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities ("U.S. Government securities").
The Fund may also invest in the following securities if, at the time of
purchase, the security either has the requisite rating from a nationally
recognized statistical rating organization (an "NRSRO") or is of comparable
quality as determined by First National Bank of Commerce in New Orleans (the
"Adviser"): (i) corporate bonds and debentures rated in one of the four highest
rating categories by an NRSRO; (ii) privately issued mortgage-backed securities
rated in the highest rating category by an NRSRO; (iii) asset-backed securities
rated in the highest rating category by an NRSRO; (iv) repurchase agreements
involving any of the foregoing securities (including U.S. Government
securities); and (v) money market securities (as defined in the "Description of
Permitted Investments and Risk Factors"). For a description of ratings, see
"Appendix." Normally, the Fund will maintain a dollar-weighted average portfolio
maturity of three to ten years; however, under certain circumstances this
average weighted maturity may fall below three years. In determining the
maturity of mortgage-backed securities, the Adviser will use the estimated
average life of such securities. There are no restrictions on the maturity of
any single instrument.
The LOUISIANA TAX-FREE INCOME FUND (the "Louisiana Fund") seeks to provide a
level of current income consistent with relative stability of capital.
The Fund will invest at least 80% of its net assets in fixed income securities
the interest on which, in the opinion of bond counsel for the issuer, is exempt
from federal income tax ("Municipal Securities") and is not a preference item
for purposes of the alternative minimum tax. Under normal conditions, at least
65% of the Louisiana's Fund's total assets will be invested in Municipal
Securities the interest on which is exempt from personal income taxes imposed by
the State of Louisiana ("Louisiana Municipal Securities"). The Fund may invest
up to 20% of its net assets in (i) Municipal Securities the interest on which is
a preference item for purposes of the alternative minimum tax and (ii) taxable
investments, including money market securities.
The Louisiana Fund may purchase the following types of Municipal Securities
(including Louisiana Municipal Securities) only if such securities, at the time
of purchase, either have the requisite rating from an NRSRO or are of comparable
quality as determined by the Adviser: (i) bonds and debentures rated in one of
the four highest rating categories by an NRSRO; (ii) notes and certificates of
participation rated in one of the three highest rating categories; and (iii)
commercial paper rated in one of the two highest rating categories.
Normally, the Fund will maintain a dollar-weighted average portfolio maturity of
seven to fifteen years; however, under certain circumstances this average
weighted maturity may fall below seven years. There are no restrictions on the
maturity of any single instrument.
LOUISIANA RISK FACTORS -- The Louisiana Fund is more susceptible to factors
adversely affecting issuers of Louisiana Municipal Securities than is a
comparable municipal bond fund that does not focus its investments in Louisiana
Municipal Securities. Although its economy has improved somewhat in recent
years, Louisiana experienced severe financial difficulties in the late 1980s and
continues to face the risks associated with a non-diversified economy. In
particular, the significance of
<PAGE>
13
the oil and gas industry in Louisiana's economy has resulted in financial
difficulties during unfavorable markets for oil and gas products and in
financial benefits during favorable markets. Further difficulties may result
from the uncertain state of the land-based casino industry in New Orleans.
Louisiana is working to expand economic development activities that will take
advantage of its replenishable natural resources such as timber, water for
aquaculture, fish and seafood related products and related industrial uses of
such resources. Louisiana's economy in 1995, compared to 1994, was in a period
of economic expansion. Louisiana's economy continued to experience steady growth
in 1996. The state is also pursuing further development of its transportation
capabilities by expanding port-related activities and improving its highways and
airports.
General obligations of Louisiana are currently rated A-, A3 and A, by Standard &
Poor's Corporation ("S&P"), Moody's Investor Services, Inc. ("Moody's") and
Fitch Investors Service, Inc., respectively. There can be no assurance that the
economic conditions on which these ratings are based will continue or that
particular bond issues may not be adversely affected by changes in economic,
political or other conditions. If either Louisiana or any of its local
governmental entities is unable to meet its financial obligations, the income
derived by the Fund, the Fund's net asset value, the ability to preserve or
realize appreciation of the Fund's capital or the Fund's liquidity could be
adversely affected.
NON-DIVERSIFICATION -- Investment in the Louisiana Fund, a non-diversified
mutual fund, may entail greater risk than would investment in a diversified
mutual fund. The Fund's ability to focus its investments on a fewer number of
issuers means that any economic, political or regulatory developments affecting
the value of the securities in the Fund's portfolio could have a greater impact
on the total value of the portfolio than would be the case if the portfolio were
diversified among more issuers.
The Fund intends to comply with the diversification requirements of Subchapter M
of the Internal Revenue Code of 1986, as amended.
The STRATEGIC INCOME BOND FUND seeks to provide current income.
Under normal conditions, the Fund will invest at least 65% of its net assets in
fixed income securities that are rated investment grade or higher, i.e., rated
in one of the four highest rating categories by an NRSRO, at the time of
purchase, or, if not rated, determined to be of comparable quality by the
Adviser. Emphasis in the Fund will generally be in U.S. Government securities
and investment grade corporate obligations of U.S. issuers. Additional fixed
income securities in which the Fund may invest consist of: (i) mortgage-backed
securities, (ii) obligations issued by the Canadian government, (iii)
asset-backed securities, (iv) guaranteed investment contracts ("GICs"), (v) bank
investment contracts ("BICs"), (vi) zero coupon obligations, (vii) floating or
variable rate instruments, (viii) money market securities; (ix) convertible
securities, (x) restricted securities, and (xi) other investment companies. The
Fund may enter into repurchase agreements with respect to any of the foregoing
and purchase securities subject to swaps, caps, floors and collars.
Normally, the Fund will maintain a dollar-weighted average portfolio maturity of
greater than 10 years; however, under certain circumstances, this average
weighted maturity may fall below 10 years. There are no restrictions on the
maturity of any single instrument.
The BALANCED FUND seeks to provide capital appreciation and current income
through regular payments of dividends and interest.
Under normal conditions, the Fund will invest between 30% and 75% of its total
assets in common stocks, warrants, rights to purchase common stocks, debt
securities convertible into common stocks and preferred stocks of established
companies with equity market capitalizations in excess of $300 million
(together, "equity securities"). The Fund may also invest in equity securities
of foreign issuers traded in the United States, including American Depositary
Receipts ("ADRs"). The Fund will purchase only those common stocks that are
traded on registered exchanges or actively traded in the over-the-counter
market.
Under normal conditions, the Fund will invest between 25% and 70% of its total
assets in fixed income securities (other than money market securities)
consisting of the following, but only if, at the time of purchase, such
securities either have the
<PAGE>
14
requisite rating from an NRSRO or are of comparable quality as determined by the
Adviser: (i) U.S. Government securities; (ii) privately issued mortgage-backed
securities rated in the highest rating category; (iii) asset-backed securities
rated in the highest rating category; or (iv) corporate bonds and notes and bank
obligations rated in one of the four highest rating categories. The Fund will
maintain at least 25% of its assets in fixed income senior securities. The Fund
is not subject to any maturity restrictions on its investments in non-money
market securities.
The Fund may also invest in money market securities.
In making allocation decisions, the Adviser will evaluate projections of risk,
market and economic conditions, volatility, yields and expected return. Because
the Fund in part seeks capital appreciation, the Adviser does not intend to make
frequent changes in asset allocation.
The VALUE EQUITY FUND seeks to provide long-term capital appreciation by
investing primarily in equity securities which have a low current valuation
relative to various measures of intrinsic value.
The Fund will be as fully invested as practicable (at least 65% of its total
assets under normal conditions) in common stocks, warrants, rights to purchase
common stocks, debt securities convertible to common stocks and preferred stocks
(together, "equity securities"). The Fund will invest primarily in equity
securities of established companies with equity market capitalizations in excess
of $300 million that the Adviser believes to have potential for capital
appreciation based on the soundness of the issuer and the company's relative
value based on an analysis of various fundamental financial characteristics,
including earnings yield, book value, cash flow, anticipated future growth of
dividends and earnings estimates. Although capital appreciation is the primary
purpose for investing in a security, the Fund will focus on companies that pay
current dividends. The Fund may invest in equity securities of foreign issuers
traded in the United States, including ADRs. The Fund may also invest in money
market securities for liquidity purposes.
The GROWTH EQUITY FUND seeks to provide long-term capital appreciation by
investing primarily in companies whose sales and earnings are expected to grow
at an above average rate.
The Fund will be as fully invested as practicable (at least 65% of its total
assets under normal conditions) in common stocks, warrants, rights to purchase
common stocks, debt securities convertible to common stocks and preferred stocks
(together, "equity securities"). The Fund will primarily invest in equity
securities of established companies with equity market capitalizations in excess
of $300 million that the Adviser believes to have potential for long-term
capital appreciation and growth. The Adviser initiates purchase and sale
decisions based on such growth and profitability measures as return on equity,
earnings growth, sales growth and expected return. Capital appreciation is the
primary purpose of the Fund. Current dividend income is a secondary
consideration. The Fund may invest in equity securities of foreign issuers
traded in the United States, including ADRs. The Fund may also invest in money
market securities for liquidity purposes.
The SMALL CAP EQUITY FUND seeks to provide long-term capital appreciation. It
currently pursues this objective by investing up to 100% of its assets in the
Small Cap Growth Portfolio of SIMT, which has an identical objective.
Under normal market conditions, the Small Cap Growth Portfolio will invest at
least 65% of its total assets in the equity securities of smaller growth
companies (i.e., companies with equity market capitalizations less than $1
billion) which, in the opinion of the Portfolio's sub-advisors (the "Money
Managers"), are in an early stage or transitional point in their development and
have demonstrated or have the potential for above average capital growth. The
Money Managers will select companies that have the potential to gain market
share in their industry, achieve and maintain high and consistent profitability
or produce increases in earnings. The Money Managers also seek companies with
strong company management and superior fundamental strength. Small
capitalization companies have the potential to show earnings growth over time
that is well above the growth rate of the overall economy. Any remaining assets
may be invested in the equity securities of more established companies that the
Money Managers believe may offer strong capital appreciation potential due to
their relative market position, anticipated earnings growth, changes in
<PAGE>
15
management or other similar opportunities. Equity securities include common
stock, preferred stock, warrants and rights to subscribe to common stock and, in
general, any security that is convertible into or exchangeable for common stock.
The Portfolio may also invest in equity securities of foreign issuers traded in
the United States, including ADRs.
The Small Cap Growth Portfolio's investment policies also permit the Portfolio
to purchase investment company securities, and purchase or write options,
futures and options on futures.
In order to meet liquidity needs, or for temporary defensive purposes, the
Portfolio may invest all or a portion of its assets in common stocks of larger,
more established companies, investment grade fixed income securities, cash or
money market securities.
The Small Cap Growth Portfolio's annual turnover rate may exceed 100%. Such a
turnover rate may result in higher transaction costs and may result in
additional taxes for shareholders. See "Taxes."
For a more detailed description of the Small Cap Growth Portfolio's investment
objective and policies, see the Portfolio's Prospectus.
The INTERNATIONAL EQUITY FUND seeks to provide long-term capital appreciation.
It currently pursues this objective by investing up to 100% of its assets in the
International Equity Portfolio of SIT, which has an identical objective. Under
normal circumstances, at least 65% of the International Equity Portfolio's
assets will be invested in equity securities of at least three countries other
than the United States.
Securities of non-U.S. issuers purchased by the International Equity Portfolio
will typically be listed on recognized foreign exchanges but also may be
purchased in over-the-counter markets, on U.S. registered exchanges, or in the
form of sponsored or unsponsored ADRs traded on registered exchanges or NASDAQ,
or sponsored or unsponsored European Depositary Receipts ("EDRs"), Continental
Depositary Receipts ("CDRs") or Global Depositary Receipts ("GDRs"). The
Portfolio expects its investments to emphasize large, intermediate and small
capitalization companies.
The International Equity Portfolio may enter into forward foreign currency
contracts as a hedge against possible variations in foreign exchange rates. The
Portfolio may enter into forward foreign currency contracts to manage its
foreign currency exposure, to hedge a specific security transaction or to hedge
a portfolio position. These contracts may be bought or sold to protect the
Portfolio, to some degree, against a possible loss resulting from an adverse
change in the relationship between foreign currencies and the U.S. dollar. The
Portfolio also may invest in foreign currency futures and in options on
currencies.
The International Equity Portfolio expects to be fully invested in its primary
investments, described above, but may invest up to 35% of its total assets in
U.S. or non-U.S. cash reserves: money market instruments; swaps; options on
securities and non-U.S. Indices; futures contracts, including stock index
futures contracts; and options on futures contracts.
The Portfolio is permitted to acquire floating and variable rate securities,
purchase securities on a when-issued or delayed delivery basis, and invest up to
15% of its total assets in illiquid securities. Although permitted to do so, the
Portfolio does not currently intend to invest in securities issued by passive
foreign investment companies or to engage in securities lending.
For a more detailed description of the International Equity Portfolio's
investment objectives and policies, see the Portfolio's Prospectus.
<PAGE>
16
GENERAL INVESTMENT POLICIES
For temporary defensive purposes when the Adviser or, with respect to the Small
Cap Growth Portfolio, SIMC or the Money Managers determine that market
conditions warrant, each Fund and the Small Cap Growth Portfolio may invest up
to 100% of its assets in money market securities and cash. For temporary
defensive purposes, when SIMC and the Money Managers determine that market
conditions warrant, the International Equity Portfolio may invest up to 50% of
its assets in money market securities and in other U.S. and non-U.S. long- and
short-term debt instruments which are rated BBB or higher by S&P or Baa or
higher by Moody's at the time of purchase, or which are determined by the Money
Managers to be of comparable quality; invest a portion of such assets in cash;
and invest such assets in securities of supranational entities which are rated A
or higher by S&P or Moody's at the time of purchase or which are determined by
the Money Managers to be of comparable quality. Additionally, with respect to
the Small Cap Equity Fund or International Equity Fund, for temporary defensive
purposes or to maintain the respective Fund's status as a regulated investment
company under the Internal Revenue Code, the Adviser may invest up to 100% of
such Fund's assets in cash and other non-investment securities. To the extent a
Fund or Portfolio is investing for temporary defensive purposes, the Fund or
Portfolio will not be pursuing its investment objective. Each Fund except the
Value Equity Fund, Growth Equity Fund, and the International Equity Portfolio,
may purchase securities on a when-issued or delayed delivery basis.
In order to generate additional income, each Fund or Portfolio may lend the
securities which it owns. The International Equity Portfolio does not currently
intend to engage in securities lending. All Funds and Portfolios may invest in
repurchase agreements.
Debt rated in the fourth highest ratings category such as BBB by S&P or Baa by
Moody's is regarded as having an adequate capacity to pay interest and repay
principal. Such securities are considered to have speculative characteristics.
For additional information regarding risks and permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to the Funds without the
consent of the holders of a majority of the Fund's outstanding shares. The
Portfolios have adopted fundamental policies that are similar to these policies.
A Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer or more than 10% of
the outstanding voting securities of such issuer would be owned by the Fund.
This restriction applies to 75% of the Fund's assets. This restriction does not
apply to the Louisiana Tax-Free Income Fund.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities; and (ii) tax-exempt securities
issued by governments or political subdivisions of governments. For purposes of
this limitation (i) utility companies will be divided according to their
services, for example, gas, gas transmission, electric and telephone will each
be considered a separate industry; (ii) financial service companies will be
classified according to the end users of their services, for example, automobile
finance, bank finance and diversified finance will each be considered a separate
industry; (iii) supranational entities will be considered to be a separate
industry; and (iv) asset-backed securities secured by distinct types of assets,
such as truck and auto loan leases, credit card receivables and home equity
loans, will each be considered a separate industry.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
<PAGE>
17
For purposes of the industry concentration limitations discussed above, the
following definitions apply to the International Equity Portfolio; these
definitions form part of the fundamental limitation: (i) utility companies will
be divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (ii)
financial service companies will be classified according to end users of their
services, for example, automobile finance, bank finance and diversified finance
will each be considered a separate industry; (iii) supranational agencies will
be deemed to be issuers conducting their principal business activities in the
same industry; and (iv) governmental issuers within a particular country will be
deemed to be conducting their principal business in the same industry.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
HOW TO PURCHASE SHARES
Class A shares and Class B shares of the Funds may be purchased directly from
the shareholder servicing and transfer agent, DST Systems, Inc., or an
authorized sub-transfer agent (collectively, the "Transfer Agent") by mail, by
wire or through an automatic investment plan ("AIP"). Shares may also be
purchased through broker-dealers, including Marquis Investments, LLC, that have
established a dealer agreement with SEI Investments Distribution Co., the
Trust's distributor (the "Distributor"). Shares of the Fund are sold on a
continuous basis.
HOW TO PURCHASE BY MAIL
You may purchase Class A or Class B shares of a Fund by completing and signing
an Account Application form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "Marquis Funds (Fund
Name)", to Marquis Funds at P.O. Box 419316, Kansas City, MO 64141-6316. Third
party checks, credit cards, credit card checks and cash will not be accepted.
When purchases are made by check, redemption proceeds will not be forwarded
until the investment being redeemed has been in the account for 15 days. You may
purchase additional shares at any time by mailing payment to the Transfer Agent.
Orders placed by mail will be executed on receipt of your payment. If your check
does not clear, your purchase will be cancelled and you could be liable for any
losses or fees incurred.
You may obtain Account Application forms by calling 1-800-471-1144.
HOW TO PURCHASE BY WIRE
You may purchase shares by wiring Federal funds, provided that your Account
Application has been previously received. You must wire funds to the Transfer
Agent and the wire instructions must include your account number. You must call
1-800-471-1144 before wiring any funds. An order to purchase shares by Federal
funds wire will be deemed to have been received by the Fund on the Business Day
(defined below) of the wire; provided that the shareholder notifies the Transfer
Agent prior to the time the Funds calculate their net asset value, normally 3:00
p.m., Central Time. If the Transfer Agent does not receive notice by the time
the Funds calculate their net asset value, normally 3:00 p.m., Central Time, on
the Business Day of the wire, the order will be executed on the next Business
Day.
HOW TO PURCHASE THROUGH AN AUTOMATIC INVESTMENT PLAN ("AIP")
You may open an account in a Fund and/or arrange for periodic additional
investments in the Funds through automatic deductions.
ACCOUNTS OPENED THROUGH MARQUIS INVESTMENTS, LLC
You may open an AIP account with as little as $100 per month. You may obtain an
application form by calling 1-800-801-1594 or speaking with your Investment
Consultant.
ACCOUNT OPENED THROUGH THE FCC EMPLOYEE PAYROLL INVESTMENT PLAN
Officers, directors or trustees, employees and retirees (their spouses and
immediate family members) of First Commerce Corporation and its subsidiaries and
affiliates ("employees") may open an account in a Fund through automatic payroll
deductions with as little as $20 per pay period. All sales charges are waived.
You may obtain an Employee Payroll Investment Plan Application by calling
1-800-471-1144.
<PAGE>
18
ALL OTHER ACCOUNTS
You may open an account in a Fund and/or arrange for periodic additional
investments in the Funds through automatic deductions by Automated Clearing
House ("ACH") from a checking account by completing an AIP Application Form.
The minimum pre-authorized investment amount is $50 per month. You may obtain an
AIP application form by calling 1-800-471-1144.
GENERAL INFORMATION
You may purchase Class A shares and Class B shares of the Funds on any day the
New York Stock Exchange is open for business ("Business Days"). However, shares
of the Funds cannot be purchased by Federal Reserve wire on Federal holidays
restricting wire transfers. The minimum initial investment in either class of
any Fund is $2,500 ($500 minimum for Individual Retirement Accounts and
employees of the Adviser or its affiliates); however, the Distributor may waive
the minimum investment at its discretion. Subsequent purchases of shares must be
at least $100 except for purchases through the AIP and payroll deductions, which
must be at least $50.
A purchase order for shares will be effective as of the Business Day received by
the Transfer Agent if the Transfer Agent receives the order and payment before
3:00 p.m., Central Time. The purchase price of Class A shares of a Fund is the
net asset value next determined after the purchase order is effective plus the
applicable sales load, if any. The purchase price of Class B shares is the net
asset value next determined after the purchase order is effective.
The net asset value will be determined as of the close of regular trading on the
New York Stock Exchange (normally, 3:00 p.m., Central Time). Purchase or
redemption orders received by a Fund after the net asset value has been
determined will be priced at the next Business Day's net asset value.
The net asset value per share of any Fund is determined on each Business Day by
dividing the total market value of that Fund's investments and other assets,
less any liabilities, by the total outstanding shares of the Fund. Purchases
will be made in full and fractional shares calculated to three decimal places.
Pursuant to guidelines adopted and monitored by the Trustees of the Trust, each
Fund may use a pricing service to provide market quotations or fair market
valuations. A pricing service may derive such valuations through the use of a
matrix system to value fixed income securities which considers factors such as
securities prices, yield features, ratings, and developments related to a
specific security. Although the methodology and procedures for determining net
asset value are identical for both classes of a Fund, the net asset value per
share of such classes may differ because of the distribution expenses charged to
Class B shares.
The Trust reserves the right to reject a purchase order for shares when the
Adviser determines that it is not in the best interest of the Trust and/or its
shareholders to accept such order.
Shareholders who own their shares of record and who desire to transfer
registration of their shares should call 1-800-471-1144.
HOW TO PURCHASE THROUGH FINANCIAL INSTITUTIONS
Shares may also be purchased through financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust. Shares purchased by persons ("Customers") through financial institutions
may be held of record by the financial institution. Financial institutions may
impose an earlier cut-off time for receipt of purchase orders directed through
them to allow for processing and transmittal of these orders to the Transfer
Agent for effectiveness the same day. Customers should contact their financial
institution for information as to that institution's procedures for transmitting
purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish the transfer.
Depending upon the terms of a particular Customer account, a financial
institution may charge a Customer account fees. Information concerning these
services and any charges will be provided to the Customer by the financial
institution. Certain of these financial institutions may be required under state
law to register as broker/dealers.
ALTERNATIVE SALES CHARGE OPTIONS
THE TWO ALTERNATIVES: OVERVIEW
You may purchase shares of the Funds at a price equal to their net asset value
per share plus a sales
<PAGE>
19
charge which, at your election, may be imposed either (i) at the time of the
purchase (Class A "initial sales charge alternative"), or (ii) on a contingent
deferred basis (the Class B "deferred sales charge alternative"). Each class
represents a Fund's interest in the portfolio of investments. The classes have
the same rights and are identical in all respects except that (i) Class B shares
bear the expenses of the deferred sales arrangement and distribution and service
fees resulting from such sales arrangement, (ii) each class has exclusive voting
rights with respect to approvals of any Rule 12b-1 distribution plan related to
that specific class (although Class B shareholders may vote on any distribution
fees imposed on Class A shares so long as Class B shares convert into Class A
shares), (iii) only Class B shares carry a conversion feature and (iv) each
class has different exchange privileges. See "Exchanges." Sales personnel of
broker-dealers distributing the Funds' shares, and other persons entitled to
receive compensation for selling such shares, may receive differing compensation
for selling Class A or Class B shares.
The alternative purchase arrangement permits you to choose the method of
purchasing shares that is more beneficial to you. The amount of your purchase,
the length of time you expect to hold the shares, and whether you wish to
receive dividends in cash or in additional shares will all be factors in
determining which sales charge option is best for you. You should consider
whether, over the time you expect to maintain your investment, the accumulated
distribution and service fees and contingent deferred sales charges on Class B
shares prior to conversion would be less than the initial sales charge on Class
A shares, and to what extent such differential would be offset by the expected
higher yield of Class A shares. Class A shares will normally be more beneficial
to you if you qualify for reduced sales charges as described below.
The Trustees of the Trust have determined that currently no conflict of interest
exists between the Class A and Class B shares. On an ongoing basis, the Trustees
of the Trust, pursuant to their fiduciary duties under the Investment Company
Act of 1940, as amended (the "1940 Act") and state laws, will seek to ensure
that no such conflict arises.
CLASS A SHARES
SALES CHARGE
The following table shows the regular sales charge on Class A shares to a
"single purchaser" (defined below) together with the sales charge that is
reallowed to certain financial intermediaries (the "reallowance").
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE
AS AS REALLOWANCE
PERCENTAGE OF PERCENTAGE AS PERCENTAGE
OFFERING OF NET OF OFFERING
PRICE PER AMOUNT PRICE PER
AMOUNT OF PURCHASE SHARE INVESTED SHARE
- ----------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
Less than $100,000..... 3.50% 3.63% 3.50%
$100,000 but less than
$250,000.............. 2.50% 2.56% 2.50%
$250,000 but less than
$500,000.............. 2.00% 2.04% 2.00%
$500,000 but less than
$1,000,000............ 1.50% 1.52% 1.50%
*$1,000,000 and
above................. none none none
</TABLE>
* A redemption charge of 1.00% will be assessed against the proceeds of any
redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such redemption
request is made within 1 year of the date the shares were purchased. The
charge will be based on the lesser of: (i) the net asset value of your
redeemed Class A shares at the time of redemption, or (ii) the net asset
value of your redeemed shares at the time of purchase. The redemption charge
does not apply to shares acquired through the reinvestment of dividends. This
charge is payable to the Distributor.
The sales charge shown in the foregoing table is the maximum sales charge that
applies to sales through financial intermediaries. With respect to purchases of
Class A shares of $1,000,000 or more, payment equal to as much as 1.00% of the
purchase price may be paid to financial intermediaries through which sales are
made. The Distributor may, from time to time in its sole discretion, institute
one or more promotional incentive programs, which will be paid by the
Distributor from the sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide promotional
incentives, in the form of cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, to dealers selling shares of the
Funds. Such promotional incentives will be predicated upon the amount of shares
of the Funds sold by the dealer. The amount of the entire sales charge will be
paid to financial institutions. Financial institutions that receive more than
90% of the sales charge may be considered "underwriters" under the Securities
Act of 1933. Commission rates may vary among the Funds.
<PAGE>
20
REDUCED SALES CHARGE: RIGHTS OF ACCUMULATION
In calculating the sales charge rates applicable to current purchases of Class A
shares, a "single purchaser" is entitled to cumulate current purchases with the
current market value of previously purchased Class A shares of the Funds sold
subject to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Funds for their own account or for trust or
custodial accounts for their minor children, and (iii) a fiduciary purchasing
for any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 or 457 of the Internal Revenue Code of 1986, as
amended (the "Code") including related plans of the same employer.
To exercise your right of accumulation based upon shares you already own, you
must ask the Distributor for this reduced sales charge at the time of your
additional purchase and provide the account number(s) of the investor, as
applicable, the investor and spouse, and their minor children. The Funds may
amend or terminate this right of accumulation at any time as to subsequent
purchases.
REDUCED SALES CHARGE: LETTER OF INTENT
By submitting a Letter of Intent (the "Letter") to the Distributor, a "single
purchaser" may purchase shares of the Funds during a 13-month period at the
reduced sales charge rates applying to the aggregate amount of the intended
purchases stated in the Letter. The Letter may apply to purchases made up to 90
days before the date of the Letter. To receive credit for such prior purchases
and later purchases benefitting from the Letter, you must notify the Transfer
Agent at the time the Letter is submitted that there are prior purchases that
may apply, and notify the Transfer Agent again at the time of later purchases
that such purchases are applicable under the Letter.
If the intended investment is not completed, the purchaser will be asked to pay
an amount equal to the difference between the sales charge on the shares
purchased at the reduced rate and the sales charge otherwise applicable to the
total shares purchased. If such payment is not made within 20 days following the
expiration of the 13-month period, the Administrator will surrender an
appropriate number of the escrowed shares for redemption in order to realize the
difference. Such purchasers may include the value (at offering price at the
level designated in their Letter) of all their shares of the Fixed Income Funds
and the Equity Funds previously purchased and still held as of the date of their
Letter toward the completion of such Letter.
WAIVER OF SALES CHARGE
No sales charge is imposed on shares of the Funds: (i) issued as dividends and
capital gain distributions; (ii) acquired through the exercise of exchange
privileges for Class A shares as described below or at the time of any exchanges
of Class B shares; (iii) sold to officers, directors or trustees, employees and
retirees (and their spouses and immediate family members) of the Trust, First
Commerce Corporation and its subsidiaries, affiliates, and correspondents, and
the Distributor and its subsidiaries and affiliates; (iv) sold to certain
accounts for which the Adviser or subsidiaries, affiliates and correspondents of
First Commerce Corporation serve in a fiduciary, agency or custodial capacity;
(v) issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Trust is a party; (vi) purchased with the proceeds
of employee benefit plan distributions for which the Adviser and its affiliates
act in a fiduciary capacity; (vii) purchased within thirty days of a redemption
of Class A shares of such Funds (only to the amount of such redemption); (viii)
sold to purchasers of Class A shares of the Value Equity Fund that are sponsors
of other investment companies which are unit investment trusts for deposit by
such sponsors into such unit investment trusts, and purchasers of Class A shares
of the Value Equity Fund that are holders of such unit investment trusts that
invest distributions from such unit investment trusts in Class A shares of the
Value Equity Fund; (ix) purchased within thirty days of a redemption of Class B
shares of such Funds for which the contingent deferred sales charge was paid
(only to the amount of such redemption); or (x) sold to clients who have
enrolled in asset allocation programs sponsored or operated by the Adviser or
subsidiaries, affiliates and correspondents of First Commerce Corporation. In
addition, if you acquire Class A shares of a Fund through an exchange of shares
of a Money Market Fund, you will not be charged a sales load on any portion of
your investment which was previously subject to the
<PAGE>
21
Funds' sales charges. You must notify the Distributor at the time of your
purchase if you are eligible for a waiver of the sales load.
CLASS B SHARES
CONTINGENT DEFERRED SALES CHARGE
If you redeem your Class B shares within five years of purchase, you will pay a
contingent deferred sales charge at the rates set forth below. You will not be
required to pay the contingent deferred sales charge on exchange of your Class B
shares of any Fund for Class B shares of any other Fund. See "Exchanges." The
charge is assessed on an amount equal to the lesser of the then-current market
value or the cost of the shares being redeemed. Accordingly, no sales charge is
imposed on increases in net asset value above the initial purchase price. In
addition, no charge is assessed on shares derived from reinvestment of dividends
or capital gain distributions.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF DOLLAR
AMOUNT SUBJECT TO
YEAR SINCE PURCHASE CHARGE
- ---------------------------------------- ----------------------
<S> <C>
First................................... 3.50%
Second.................................. 2.75%
Third................................... 2.00%
Fourth.................................. 1.25%
Fifth................................... 0.50%
</TABLE>
In determining whether a particular redemption is subject to a contingent
deferred sales charge, it is assumed that the redemption is first of any Class A
shares in the shareholder's Fund account, second of Class B shares held for over
five years or Class B shares acquired pursuant to reinvestment of dividends or
other distributions and third of Class B shares held longest during the
five-year period. This method should result in the lowest possible sales charge.
The contingent deferred sales charge is waived on redemption of shares (i)
following the death or disability (as defined in the Code) of a shareholder, or
(ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70 1/2. A shareholder, or his or her
representative, must notify the Transfer Agent prior to the time of redemption
if such circumstances exist and the shareholder is eligible for this waiver.
CONVERSION FEATURE. At the end of the period ending five years after the
beginning of the month in which the shares were issued, Class B shares will
automatically convert to Class A shares and will no longer be subject to the
distribution and service fees. Such conversion will be on the basis of the
relative net asset values of the two classes.
EXCHANGES
Exchanges are generally made at net asset value. You may exchange Class A or
Class B shares of any Fund for Class A or Class B shares, respectively, of any
other Fund without paying any additional sales charge. You may exchange an
investment in Class A shares of any Fund for Retail shares of the Treasury
Securities Money Market Fund and Tax Exempt Money Market Fund, and move your
investment back into Class A shares of any Fund, without paying any additional
sales charge.
For purposes of calculating the Class B shares' five year conversion period or
contingent deferred sales charge payable upon redemption, the holding period of
Class B shares of the "old" Fund and the holding period for Class B shares of
the "new" Fund are aggregated.
You must have received a current prospectus of the Fund into which you wish to
move your investment before the exchange will be effected. Exchanges will be
made only after instructions in writing or by telephone (an "Exchange Request")
are received by the Transfer Agent. If an Exchange Request in good order is
received by the Transfer Agent by 3:00 p.m. Central time, on any Business Day,
the exchange will occur on that day. The exchange privilege may be exercised
only in those states where the class or shares of the "new" Fund may legally be
sold.
Customers who beneficially own shares held of record by a financial institution
should contact that institution if they wish to exchange shares. The institution
will contact the Transfer Agent and effect the exchange on behalf of the
Customer.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon 60 days' notice.
<PAGE>
22
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $25 charge for wiring redemption proceeds. Shares may be redeemed by
mail, by telephone or through a systematic withdrawal plan. Investors who own
shares held of record by a financial institution should contact that institution
for information on how to redeem shares.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid redemption request.
If the redemption request exceeds $5,000, or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, the Transfer Agent may require that the signature on the written
redemption request be guaranteed. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union, securities exchange or
association, clearing agency or savings association. A notary public cannot
guarantee signatures.
BY TELEPHONE
You may redeem your shares by telephone if you have elected that option on the
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption. You
may have the proceeds mailed to your address or wired to a commercial bank
account previously designated on your Account Application. There is no charge
for having redemption proceeds mailed to you, but there is a $25 charge for
wiring redemption proceeds.
You may request a wire redemption for redemptions in excess of $500 by calling
1-800-471-1144, however a wire charge of $25 will be deducted from the amount of
the wire redemption. Shares cannot be redeemed by Federal Reserve wire on
Federal holidays restricting wire transfers.
Neither the Transfer Agent nor the Trust will be responsible for any loss,
liability, cost or expense for acting upon wire or telephone instructions that
it reasonably believes to be genuine. The Trust and the Transfer Agent will each
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, including requiring a form of personal identification
prior to acting upon instructions received by telephone and recording telephone
instructions. When market conditions are extremely busy, it is possible that you
may experience difficulties placing redemption orders by telephone, and may wish
to place them by mail.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Funds offer a Systematic Withdrawal Plan ("SWP"), which you may use to
receive regular distributions from your account. Upon commencement of the SWP,
your account must have a current value of $5,000 or more. You may elect to
receive automatic payments via check or ACH of $100 or more on a monthly,
quarterly, semi-annual or annual basis. You may obtain an SWP Application Form
by calling 1-800-471-1144.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the frequency and amounts of the withdrawal payments and/or any
fluctuations in the net asset value per share, your original investment could be
exhausted entirely. You may change or cancel the SWP at any time on written
notice to the Transfer Agent.
It is generally not in your best interest to participate in the SWP if you
purchase additional shares at the same time and you have to pay a sales load in
connection with such purchases. Because automatic withdrawals of Class B shares
will be subject to the contingent deferred sales charge, it may not be in the
best interest of Class B shareholders to participate in the SWP.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption, reduced by any
applicable contingent deferred sales charge for Class B shares. Net asset value
per share is determined as of the close of regular trading on the New York Stock
Exchange (normally, 3:00 p.m., Central Time), on each Business Day.
<PAGE>
23
Payment to shareholders for shares redeemed will be made within 7 days after the
Transfer Agent receives the valid redemption request. At various times, however,
a Fund may be requested to redeem shares for which it has not yet received good
payment. When purchases are made by check, redemption proceeds will not be
forwarded until the investment being redeemed has been in the account for
fifteen days.
Due to the relatively high costs of handling small investments, each Fund
reserves the right to redeem your shares at net asset value, less any applicable
contingent deferred sales charge, if, because of redemptions, your account in
any Fund has a value of less than the minimum initial purchase amount (normally
$2,500; $500 for Individual Retirement Accounts and employees of the Adviser or
its affiliates). Accordingly, if you purchase shares of any Fund in only the
minimum investment amount, you may be subject to involuntary redemption if you
redeem any shares. Before any Fund exercises its right to redeem such shares,
you will be given notice that the value of the shares in your account is less
than the minimum amount and will be allowed 60 days to make an additional
investment in such Fund in an amount which will increase the value of the
account to at least the minimum amount.
THE ADVISER
First National Bank of Commerce in New Orleans ("First NBC" or the "Adviser"),
201 St. Charles Avenue, New Orleans, Louisiana 70170, serves as each Fund's
investment adviser under an advisory agreement (the "Advisory Agreement") with
the Trust. The Adviser, through its Trust Group, makes the investment decisions
for the assets of the Funds and continuously reviews, supervises and administers
the investment programs of the Funds, subject to the supervision of, and
policies established by, the Trustees of the Trust. With respect to the Small
Cap Equity Fund and International Equity Fund, the Adviser invests in a "master"
fund, cash and other non-investment securities and monitors the performance of
SIMC, the manager of both the Small Cap Growth Portfolio and the International
Equity Portfolio, and has authority to recommend to the Trustees changes in the
underlying master fund. Should the Funds withdraw from the Corporate
Master-Feeder-TM- structure, the Adviser may manage the assets of the Small Cap
Equity Fund and International Equity Fund directly as it deems appropriate after
consultation with the Trustees of the Trust. See "Small Cap Growth and
International Equity Portfolios" below.
As of September 30, 1997, the Adviser's Trust Group managed approximately $3.2
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Adviser has provided investment management services since 1933.
The Glass-Steagall Act restricts the securities activities of national banks
such as First NBC but the Comptroller of the Currency permits national banks to
provide investment advisory and other services to mutual funds. Should the
Comptroller's position be challenged successfully in court or reversed by
legislation, the Trust might have to make other investment advisory
arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce Corporation
and are not insured by the FDIC or issued or guaranteed by the U.S. Government
or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .55% of the average daily net assets of the Government
Securities Fund, .74% of the average daily net assets of each of the Strategic
Income Bond Fund, Balanced Fund, Value Equity Fund and Growth Equity Fund, .35%
of the average daily net assets of the Louisiana Fund, .40% of the average daily
net assets of each of the Small Cap Equity Fund and International Equity Fund.
Each Feeder Fund's shareholders will bear their pro rata portion of the
respective Portfolio's advisory fees. The Adviser may voluntarily waive a
portion of its fees in order to limit the total operating expenses of the Funds.
The Adviser reserves the right, in its sole discretion, to terminate these
voluntary fee waivers at any time. Should the Adviser determine that the Small
Cap Equity Fund and/or the International Equity Fund should no longer remain in
a Corporate Master-Feeder-TM- structure, the Adviser will manage all of the
investments for such Fund(s). At that time, the Adviser would be entitled to a
fee, calculated daily
<PAGE>
24
and paid monthly, at an annual rate of .90% of the average daily net assets of
the Small Cap Equity Fund and/or 1.10% of the average daily net assets of the
International Equity Fund.
For the fiscal year ended September 30, 1997, the Adviser was paid an advisory
fee of .51% of the Government Securities Fund, .35% of the Louisiana Tax-Free
Income Fund, .71% of the Balanced Fund, .74% of the Value Equity Fund, .72% of
the Growth Equity Fund, .31% of the Strategic Income Bond Fund, .19% of the
Small Cap Equity Fund and .19% of the International Equity Fund, based on each
Fund's average net assets.
John C. Portwood, CFA, Senior Vice President of the Adviser, shares oversight
responsibility of the portfolio managers of all the Funds since the Funds'
inception. He has served as portfolio manager of the Growth Equity Fund since
its inception in 1996 and as co-manager of the Value Equity Fund since its
inception in 1993. Mr. Portwood is the Chief Investment Strategist of the
Adviser's Trust Group, with over 29 years of investment management experience
and the past nine with the Adviser.
Kevin P. Reed, Senior Vice President of the Adviser and Manager of the Trust
Investment Division, shares oversight responsibility of the portfolio managers
of all the Funds and has been the portfolio manager for the Government
Securities Fund, the Louisiana Tax-Free Income Fund, and co-manager of the
Balanced Fund since their inception in 1993. For the past thirteen years, Mr.
Reed has been a portfolio manager with the Adviser's Trust Investment Division.
Gerald S. Dugal, Vice President of the Adviser, has been the portfolio manager
of the Treasury Securities Money Market Fund, since its inception in 1994,
Institutional Money Market Fund, since its inception in 1995, and Strategic
Income Bond Fund, since its inception in 1993. Mr. Dugal is currently a senior
portfolio manager and Manager of Fixed Income and Trading. Mr. Dugal has over 12
years of experience in portfolio management, investment trading and research,
the past seven with the Adviser. He is licensed as a general securities
principal and a municipal securities principal.
Gregory W. Hodlewsky, Vice President of the Adviser, serves as co-manager of the
Value Equity Fund and the Balanced Fund. Mr. Hodlewsky is a senior portfolio
manager and Manager of Equities and Quantitative Research with the Adviser. Mr.
Hodlewsky has 11 years of experience in portfolio management, investment trading
and research. Mr. Hodlewsky joined the Adviser in 1994 and from 1992 to 1994,
was an analyst with NationsBank.
The Adviser also receives custodian fees from the Trust for providing
safekeeping services. See "General Information--Custodians" below.
SMALL CAP GROWTH AND INTERNATIONAL EQUITY PORTFOLIOS
SIMC serves as the Manager of the Small Cap Growth Portfolio and International
Equity Portfolio. SIMC is a wholly-owned subsidiary of SEI Investments Company
("SEI Investments"), a financial services company located in Oaks, Pennsylvania.
The principal business address of SIMC is Oaks, Pennsylvania, 19456. SEI
Investments was founded in 1968, and is a leading provider of investment
solutions to banks, institutional investors, investment advisers and insurance
companies. Affiliates of SIMC have provided consulting advice to institutional
investors for more than 20 years, including advice regarding selection and
evaluation of money managers. SIMC currently serves as manager or administrator
to more than 40 investment companies, including more than 290 funds, with more
than $68 billion in assets as of September 30, 1997.
SIMC operates as a "manager of managers" with respect to the Small Cap Growth
Portfolio, a separate series of SIMT, and the International Equity Portfolio, a
separate series of SIT, and SIMC oversees the investment advisory services
provided to each Portfolio and manages the cash portion of each Portfolio's
assets. Pursuant to separate sub-advisory agreements with SIMC, and under the
supervision of SIMC and the respective Board of Trustees, the Money Managers are
responsible for the day-to-day investment management of all or a discrete
portion of the respective assets of the Small Cap Growth Portfolio and the
International Equity Portfolio. Money Managers are selected based primarily upon
the research and recommendations of SIMC, which evaluates quantitatively and
qualitatively a Money Manager's skills and investment results in managing assets
for specific asset classes, investment styles and strategies.
<PAGE>
25
SIMT's Board of Trustees is responsible for overseeing the operation of SIMT,
including reviewing and approving SIMT's contracts with SIMC and the Money
Managers. Likewise, SIT's Board of Trustees is responsible for overseeing the
operation of SIT, including reviewing and approving SIT's contracts with SIMC
and the Money Managers. The same individuals currently serve as the Trustees of
SIMT and SIT. Subject to review by the appropriate Board, SIMC allocates and,
when appropriate, reallocates a Portfolio's assets among Money Managers,
monitors and evaluates Money Manager performance, and oversees Money Manager
compliance with the Funds' investment objectives, policies and restrictions.
SIMC has ultimate responsibility for the investment performance of the
Portfolios due to its responsibility to oversee Money Managers and recommend
their hiring, termination and replacement. The Securities and Exchange
Commission has issued an exemptive order (the "Order") that permits both SIMT
and SIT to retain Money Managers unaffiliated with SIMC without submitting the
Money Manager's contract with SIMC to a vote of shareholders. The Order also
permits the non-disclosure of amounts payable by SIMC under all such contracts.
For its management services, SIMC is entitled to a fee, which is calculated
daily and paid monthly, at the rates (shown as a percentage of the average daily
net assets) of .65% for the Small Cap Growth Portfolio and .505% for the
International Equity Portfolio. SIMC pays each Money Manager for its services
from the management fees SIMC receives from the Portfolios.
As of the date of this prospectus, the assets of the Small Cap Growth Portfolio
are being managed by the following Money Managers: First of America Investment
Corporation; Nicholas-Applegate Capital Management Inc.; Furman Selz Capital
Management LLC; and Wall Street Associates.
As of the date of this prospectus, the assets of the International Equity
Portfolio are being managed by the following Money Managers: Acadian Asset
Management, Inc.; Farrell Wako Global Investment Management, Inc.; Lazard London
International Investment Management Limited; Seligman Henderson Co.; and
jointly, Yamaichi Capital Management Inc. and Yamaichi Capital Management
(Singapore) Limited.
The Distributor serves as the Portfolios' distributor pursuant to distribution
agreements with both SIMT and SIT. No compensation is paid to the Distributor
for distribution services for the shares of the Portfolios. The principal
business address for the Distributor is Oaks, Pennsylvania 19456. DST serves as
SIMT's transfer agent and Corestates Bank, N.A., Broad and Chestnut Streets,
P.O. Box 7618, Philadelphia, Pennsylvania 19101, acts as wire agent of SIT's
assets.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania, 19456. The Administrator and
the Trust are parties to an Administration Agreement (the "Administration
Agreement"). Under the terms of the Administration Agreement, the Administrator
provides the Trust with administrative services, other than investment advisory
services, including all regulatory reporting, necessary office space, equipment,
personnel and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of the average daily net assets of the Funds.
The Administrator has voluntarily agreed to waive all or a portion of its fees
and/or reimburse other expenses for the Small Cap Equity Fund and the
International Equity Fund in order to limit total operating expenses at the
feeder level of each Fund. The Administrator reserves the right to terminate its
waivers or reimbursements, respectively, at any time in its sole discretion.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a transfer agent agreement.
THE DISTRIBUTOR
Class A shares of the Funds are sold with a front-end sales load. Class B shares
of the Funds have a Rule 12b-1 distribution plan (the "Class B Plan"). SEI
Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456, a
wholly-owned subsidiary of SEI, and the Trust are parties to a distribution
agreement (the "Distribution
<PAGE>
26
Agreement"). As provided in the Distribution Agreement and the Class B Plan, the
Trust pays the Distributor a fee at an annual rate of up to .75% of the average
daily net assets of the Class B shares of the Funds. This fee will be calculated
and paid each month based on average daily net assets for that month. Out of
this fee, the Distributor pays .25% of the average daily net assets of the Class
B shares to financial institutions and intermediaries such as banks (including
the Adviser and its affiliates), savings and loan associations, insurance
companies, and investment counselors, broker-dealers, and the Distributor's
affiliates (collectively, "financial intermediaries") as compensation for
providing shareholder services. The Distributor may use the balance of the fee
received from the Funds to make payments to financial intermediaries as
compensation for services or as reimbursement of distribution assistance or
shareholder service expenses incurred by the Distributor. The Class B Plan is
characterized as a compensation plan since the distribution fee is paid to the
Distributor without regard to the distribution assistance or shareholder service
expenses incurred by the Distributor or the amount of payments made to financial
intermediaries.
If the Distributor's expenses are less than its fees, the Trust will still pay
the full fee and the Distributor will realize a profit, but the Trust will not
be obligated to pay in excess of the full fee, even if the Distributor's actual
expenses are higher.
The Funds may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
SMALL CAP GROWTH AND INTERNATIONAL EQUITY PORTFOLIOS
The Small Cap Growth and International Equity Portfolios have each adopted a
shareholder service plan (individually, a "Plan") for its Class A shares, the
class in which the Small Cap Equity Fund and International Equity Fund each
invests. Under each Plan, firms, including the Distributor, that provide
shareholder and administrative services may receive compensation therefore.
Under such arrangements, the Distributor may retain as profit any difference
between the fee it receives and the amount it pays to any third parties. Under
each Plan, a Portfolio may pay the Distributor a shareholder servicing fee at a
negotiated annual rate of up to .25% of the average daily net assets of the
Portfolio attributable to Class A shares that are subject to the arrangement in
return for provision of a broad range of shareholder and administrative
services.
PERFORMANCE
From time to time, the Funds may advertise yield and total return. These figures
will be based on historical earnings and are not intended to indicate future
performance. The yield of a Fund refers to the annualized income generated by an
investment in the Fund over a specified 30-day period. The yield is calculated
by assuming that the same amount of income generated by the investment during
that period is generated in each 30-day period over one year and is shown as a
percentage of the investment. The Louisiana Fund may also advertise a
"tax-equivalent yield," which is calculated by determining the rate of return
that would have to be achieved on a fully taxable investment to produce the
after-tax equivalent of this Fund's yield, assuming certain tax brackets for the
shareholder.
The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment, net of any sales charge imposed on Class A shares or
including the contingent deferred sales charge imposed on Class B shares
redeemed at the end of the specified period covered by the total return figure,
for designated time periods (including but not limited to, the period from which
the Fund commenced operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and assuming the
reinvestment of all dividend and capital gain distributions. The total return of
a Fund may also be quoted as a dollar amount or on an aggregate basis, an actual
basis, without inclusion of any front-end or contingent sales charges, or with a
reduced sales charge in advertisements distributed to investors entitled to a
reduced sales charge.
Each Feeder Fund may advertise the performance of its corresponding Portfolio
adjusted to reflect applicable sales loads and operating expenses, other than
12b-1 fees. The data for the Small Cap Growth Portfolio and the International
Equity Portfolio will be adjusted to reflect Fund operating
<PAGE>
27
expenses at the feeder level of .20% and .27%, respectively, and (i) with
respect to the Class A Shares, to take into account a 3.50% sales load; and (ii)
with respect to Class B Shares, to take into account the applicable contingent
deferred sales charge. Investment performance reflects voluntary fee waivers and
reimbursements currently in effect. In the absence or reduction of current fee
waivers or reimbursements, or if current Rule 12b-1 fees applicable to Class B
Shares were reflected, Total Return would be reduced.
A Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical), financial
and business publications and periodicals, of broad groups of comparable mutual
funds, unmanaged indices which may assume investment of dividends but generally
do not reflect deductions for administrative and management costs or to other
investment alternatives. The Fund may quote Morningstar, Inc., a service that
ranks mutual funds on the basis of risk-adjusted performance. The Fund may quote
Ibbotson Associates of Chicago, Illinois, which provides historical returns of
the capital markets in the U.S. The Fund may use long term performance of these
capital markets to demonstrate general long-term risk versus reward scenarios
and could include the value of a hypothetical investment in any of the capital
markets. The Fund may also quote financial and business publications and
periodicals as they relate to fund management, investment philosophy and
investment techniques.
The Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
The performance of Class A and Class B shares of a Fund will differ because of
the different sales charge structures of the classes and because of the
distribution fees charged to Class B shares.
The total return of the Government Securities and Value Equity Funds may also be
calculated for periods beginning prior to each Fund's commencement of
operations, based, in each case, on the historical performance of predecessor
collective trust funds managed by the Adviser.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of a Fund or its shareholders. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. State and local tax
consequences on an investment in a Fund may differ from the federal income tax
consequences described below. Additional information concerning taxes is set
forth in the Statement of Additional Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other Funds. Each Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), so
as to be relieved of federal income tax on that part of its net investment
company taxable income, and net capital gain (the excess of net long-term
capital gains over net short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from a Fund's net
investment company taxable income will be taxable to shareholders as ordinary
income whether received in cash or in additional shares, to the extent of the
Fund's earnings and profits. Dividends paid by the Fixed Income Funds to
corporate shareholders will not qualify for the dividends-received deduction,
while dividends from the Equity Funds will qualify for the dividends-received
deduction to the extent attributable to dividends received by the Equity Funds
from domestic corporations (including, with respect to the Feeder
<PAGE>
28
Funds, a pro rata portion of such dividends received by the corresponding
Portfolio). Net capital gains will be distributed at least annually and will be
taxed to shareholders as a 20% rate gain distribution (taxed at a rate of 20%)
or a 28% rate gain distribution (taxed at a rate of 28%), depending upon the
designation by the Fund (such designation being dependent upon the Fund's
holding period in the underlying asset generating the net capital gain),
regardless of how long the shareholder has held shares and regardless of whether
the distributions are received in cash or in additional shares. If no
designation is made regarding a capital gain dividend, it will be classified as
a 28% rate gain distribution, and, thus, taxed at a rate of 28%. Distributions
from net capital gains do not qualify for the dividends-received deduction. Each
Fund will provide annual reports to shareholders of the federal income tax
status of all distributions, including the amount of dividends eligible for the
dividends-received deduction.
Certain securities purchased by a Fund (such as STRIPS, TRs, TIGRs and CATS,
defined in "Description of Permitted Investments and Risk Factors") are sold
with original issue discount and thus do not make periodic cash interest
payments. Each Fund will be required to include as part of its current income
the imputed interest on such obligations even though the Fund has not received
any interest payments on such obligations during that period. Because each Fund
distributes all of its net investment income to its shareholders, a Fund may
have to sell portfolio securities to distribute such imputed income, which may
occur at a time when the Adviser would not have chosen to sell such securities
and which may result in a taxable gain or loss.
Dividends declared by a Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of the year declared, if paid by the Fund at any time during the
following January.
Investment income received directly by a Fund on direct U.S. Government
obligations is exempt from income tax at the state level and may be exempt,
depending on the state, when received by a shareholder as income dividends
provided certain state-specific conditions are satisfied. Each Fund will inform
shareholders annually of the percentage of income and distributions derived from
direct U.S. Government obligations. Shareholders should consult their tax
advisers to determine whether any portion of the income dividends received from
a Fund is considered tax exempt in their particular state.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for the federal excise tax applicable to
regulated investment companies.
A sale, exchange or redemption of a Fund's shares is a taxable event to the
shareholder.
The Louisiana Tax-Free Income Fund will distribute all of its net investment
income (including net short-term capital gain) to shareholders. If, at the close
of each quarter of its taxable year, at least 50% of the value of the Fund's
assets consist of obligations the interest on which is excludable from gross
income for federal tax purposes, the Fund may pay "exempt-interest dividends" to
its shareholders. Those dividends constitute the portion of the aggregate
dividends as designated by the Fund equal to the excess of the excludable
interest over certain amounts disallowed as deductions. Exempt-interest
dividends are excludable from a shareholder's gross income for regular federal
income tax purposes, but may have certain collateral federal income tax
consequences, including alternative minimum tax. See the Statement of Additional
Information.
Current federal law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Louisiana Tax-Free Income Fund to purchase sufficient amounts of
tax-exempt securities to satisfy the Code's requirements for the payment of
"exempt-interest dividends."
To the extent the International Equity Fund derives any foreign tax credits with
respect to its investments, such foreign tax credits are not permitted to be
passed through to the shareholders of the International Equity Fund.
STATE TAXES
The Trust has obtained a ruling from the Louisiana Department of Revenue and
Taxation to the effect the distributions to shareholders of the Louisiana Fund
who are Louisiana residents, which are derived from interest on tax-exempt
obligations of the State of Louisiana or its political subdivisions
<PAGE>
29
and certain obligations of the United States or its territories, will not be
subject to Louisiana income tax. Distributions derived from long-term or short-
term capital gains on such obligations, or from dividends on capital gains on
other types of obligations will be subject to Louisiana individual and corporate
income taxes. A Louisiana resident will also be required to take into account
for Louisiana individual and corporate income tax purposes capital gains or
losses realized from a redemption, sale or exchange of shares of the Louisiana
Fund. To the extent distributions from the Louisiana Fund are included in the
capital of corporate shareholders otherwise subject to the Louisiana corporate
franchise tax, such investments or distributions will be subject to Louisiana
franchise tax. Shareholders should consult their own tax advisers with respect
to the state, local and foreign tax consequences of investing in the Funds.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated June 29, 1993. The Declaration of Trust permits the Trust to offer
separate series of shares or "funds" and different classes of each fund. In
addition to the Funds, the Trust offers a Treasury Securities Money Market Fund,
an Institutional Money Market Fund, and a Tax Exempt Money Market Fund. All
consideration received by the Trust for shares of any fund and all assets of
such fund belong to that fund and would be subject to liabilities related
thereto. The Trust reserves the right to create and issue shares of additional
funds.
Each Fund pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management,
administrative and shareholder services to the Trust. A discussion of SIMT's
Trustees and officers appears in SIMT's Statement of Additional Information. A
discussion of SIT's Trustees and officers appears in SIT's Statement of
Additional Information.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class
(although Class B shareholders may vote on any distribution fees imposed on
Class A shares so long as Class B shares convert into Class A shares). As a
Massachusetts business trust, the Trust is not required to hold annual meetings
of shareholders but meetings of shareholders will be held from time to time to
seek approval for certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances. In addition, a Trustee may be
removed by the remaining Trustees or by shareholders at a special meeting called
upon written request of shareholders owning at least 10% of the outstanding
shares of the Trust. In the event that such a meeting is requested, the Trust
will provide appropriate assistance and information to the shareholders
requesting the meeting.
In the case of the Small Cap Equity Fund or International Equity Fund, whenever
a vote is requested on matters pertaining to the Small Cap Growth Portfolio or
International Equity Portfolio, respectively, the Trust will either (a) seek
instructions from the appropriate Fund's shareholders with regard to the voting
of the proxies and vote such proxies only in accordance with such instructions;
or (b) vote the shares held by it in the same proportion as the vote of all the
other shareholders of the particular Portfolio. In the second alternative, other
investors in a Portfolio could control the results of voting at the Portfolio
level.
SIMT, SIT AND THE PORTFOLIOS
Both SIMT and SIT are organized as Massachusetts business trusts. The Trustees
believe that neither the Small Cap Equity Fund or the International Equity Fund
will be adversely affected by reason of investing in the corresponding
Portfolio.
<PAGE>
30
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316, or by calling 1-800-471-1144.
DIVIDENDS
Substantially all net investment income (not including capital gains) is
declared and paid monthly for each Fixed Income Fund and declared and paid
quarterly for each Equity Fund. Shareholders who own shares at the close of
business on the record date will be entitled to receive the dividend. Each Fund
intends to pay such dividends on the first business day of the month following
the month the dividend was declared. Currently, capital gains of the Funds, if
any, will be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares at the net asset value next determined
following the record date, unless the shareholder has elected to take such
payment in cash. Shareholders may change their election by providing written
notice to the Administrator at least 15 days prior to the distribution.
Dividends and other distributions of the Funds are paid on a per-share basis.
The value of each share will be reduced by the amount of the payment. If shares
are purchased shortly before the record date for a dividend or the distribution
of capital gains, a shareholder will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or other
distribution. The amount of dividends payable on Class A shares will be more
than the dividends payable on the Class B shares because of the distribution and
service fees paid by Class B shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIANS
First National Bank of Commerce in New Orleans ("First NBC") acts as Custodian
of the Trust. First NBC is entitled to a custodian fee, calculated daily and
paid monthly, at an annual rate of up to 0.04% of the average daily net assets
of each Fund. It is anticipated that the Trust will pay the Custodian 0.04% of
the average daily net assets of each Fund during the fiscal year ending
September 30, 1998. CoreStates Bank, N.A. has custody of the Small Cap Growth
Portfolio's assets and State Street Bank and Trust Company acts as custodian for
the assets of the International Equity Portfolio. The Custodians hold cash,
securities and other assets of the Trust and the Portfolios as required by the
1940 Act.
RISK FACTORS RELATING TO THE FEEDER FUNDS AND THE PORTFOLIOS
Unlike other mutual funds which directly acquire and manage their own portfolio
securities, each Feeder Fund seeks to achieve its investment objective by
investing up to 100% of its assets in the corresponding Portfolio, which is a
separate registered investment company with identical investment objectives. The
investment objective of a Feeder Fund or a Portfolio may not be changed without
shareholder approval. In addition to selling beneficial interests to the Feeder
Funds, the Portfolios may sell beneficial interests to other mutual funds or
institutional investors. Such investors will invest in the Portfolios on the
same terms and conditions and will pay a proportionate share of the respective
Portfolio's expenses. However, other investors investing in the Portfolios are
not required to buy their shares at the same public offering prices as the
Feeder Funds. Investors in the Feeder Funds should be aware that because of
these differences, other investors in the other funds that invest in the
Portfolios may obtain different returns. Such differences in returns are also
present in other mutual fund structures.
Certain changes in a Portfolio's investment objective, policies or restrictions
may require the corresponding Feeder Fund to redeem its
<PAGE>
31
investment. Any such withdrawal could result in a distribution-in-kind of
portfolio securities (as opposed to a cash distribution from the Portfolio). The
Feeder Fund could incur brokerage fees or other transaction costs in converting
such securities to cash. The distribution-in-kind may also result in a less
diversified portfolio of investments or adversely affect the liquidity of the
Feeder Fund. In addition, the investment of a Feeder Fund may be withdrawn from
the corresponding Portfolio at any time if the Adviser determines that it is in
the best interest of that Feeder Fund to do so. Upon any such withdrawal, the
Adviser and Trustees of the Trust would consider what action might be taken,
including the investment of all of the assets of such Feeder Fund in another
pooled investment entity having the same investment objective as the Feeder Fund
or retaining an investment adviser to manage the Feeder Fund's assets in
accordance with its investment policies. The performance of a Feeder Fund might
be adversely impacted under such circumstances and such Feeder Fund may not be
able to achieve its objective.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the various Funds (and the Portfolios), and associated risk
factors. Unless otherwise indicated, policies that relate to "a Fund," "all
Funds," or "Equity Funds" also relate to the Portfolios. Similarly, descriptions
of activities by the "Adviser" also relate to SIMC and the Money Managers.
Further discussion is contained in the Statement of Additional Information.
AMERICAN DEPOSITARY RECEIPTS, CONTINENTAL DEPOSITARY RECEIPTS, EUROPEAN
DEPOSITARY RECEIPTS AND GLOBAL DEPOSITARY RECEIPTS -- ADRs are securities
typically issued by a U.S. financial institution. ADRs evidence ownership
interests in a pool of securities issued by a foreign issuer and deposited with
the depositary. EDRs, which are sometimes referred to as CDRs are securities,
typically issued by a non-U.S. financial institution, that evidence ownership
interests in a security or a pool of securities issued by either a U.S. or
foreign issuer. GDRs are issued globally and evidence a similar ownership
arrangement. Generally, ADRs are designed for trading in the U.S. securities
market. EDRs are designed for trading in European Securities Markets and GDRs
are designed for trading in non-U.S. Securities Markets. ADRs, EDRs, CDRs and
GDRs may be available for investment through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary, whereas an unsponsored
facility may be established by a depositary without participation by the issuer
of the underlying security. Holders of unsponsored depositary receipts generally
bear all the costs of the unsponsored facility. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities. The Equity Funds may invest in sponsored and unsponsored
ADRs.
ASSET-BACKED SECURITIES -- Asset-backed securities are securities secured by
non-mortgage assets such as company receivables, truck and auto loans, leases,
and credit card receivables. Such securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pools of assets. Such securities also may be debt
instruments, which are also known as collateralized obligations and are
generally issued as the debt of a special purpose entity, such as a trust,
organized solely for purpose of owning such assets and issuing such debt.
Asset-backed securities are not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and for a
certain period by a letter of credit issued by a financial institution (such as
a bank or insurance company) unaffiliated with the issuers of such securities.
The purchase of asset-backed securities raises risk considerations peculiar to
the financing of the instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in the obligations
superior to that of the holders of the asset-backed securities. There also is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. Asset-backed
securities entail prepayment risk, which may vary depending on the type of
asset, but is generally less
<PAGE>
32
than the prepayment risk associated with mortgage-backed securities. In
addition, credit card receivables are unsecured obligations of the card holder.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities. The Government Securities Fund, the Balanced Fund and Strategic
Income Bond Fund may invest in these and in other asset-backed securities that
may be created in the future if the Adviser determines they are suitable.
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. Bankers' acceptances are used
by corporations to finance the shipment and storage of goods and to furnish
dollar exchange. Maturities are generally six months or less. All Funds are
permitted to invest in bankers' acceptances.
BANK INVESTMENT CONTRACTS ("BICs") -- BICs are contracts issued by U.S. banks
and savings and loan institutions. Pursuant to such contracts, a Fund makes cash
contributions to a deposit fund of the general account of the bank or savings
and loan institution. The bank or savings and loan institution then credits to
the Fund on a monthly basis guaranteed interest at either a fixed, variable or
floating rate. A BIC provides that this guaranteed interest will not be less
than a certain minimum rate. A BIC is a general obligation of the issuing bank
or savings and loan institution and not a separate account. The purchase price
paid for a BIC becomes part of the general assets of the issuer, and the
contract is paid at maturity from the general assets of the issuer.
BICs are generally not assignable or transferable without the permission of the
issuing bank or savings and loan institution. For this reason, an active
secondary market in BICs currently does not exist. Therefore, BICs are
considered to be illiquid investments.
CERTIFICATES OF DEPOSIT -- Certificates of deposit are interest bearing
instruments with a specific short-term maturity. They are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market prior to maturity. Certificates of deposit
with penalties for early withdrawal will be considered illiquid. All Funds are
permitted to invest in certificates of deposit.
COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few to 270 days. All Funds are permitted
to invest in commercial paper.
CONVERTIBLE SECURITIES -- Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics of both fixed income and
equity securities. Because of the conversion feature, the market value of
convertible securities tends to move together with the market value of the
underlying stock. The value of convertible securities is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions. The Equity Funds are permitted to invest in convertible securities.
EQUITY SECURITIES -- Equity securities include common stocks, preferred stocks,
warrants to acquire common stock, and securities convertible into common stock.
Investments in equity securities are subject to market risks that may cause
their prices to fluctuate over time. Changes in the value of portfolio
securities will not necessarily affect cash income derived from these securities
but will affect a Fund's net asset value.
FIXED INCOME SECURITIES -- Fixed income securities include bonds, notes,
debentures and other interest-bearing securities that represent indebtedness.
The market value of the fixed income investments in which the Funds invest will
change in response to interest rate changes and other factors. During periods of
falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of these securities will not necessarily
<PAGE>
33
affect cash income derived from these securities but will affect a Fund's net
asset value.
FORWARD FOREIGN CURRENCY CONTRACT -- A forward contract involves an obligation
to purchase or sell a specific currency amount at a future date, agreed upon by
the parties, at a price set at the time of the contract. A Fund may also enter
into a contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or all
of the Fund's securities denominated in such foreign currency.
At the maturity of a forward contract, a Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader,
obligating it to purchase, on the same maturity date, the same amont of the
foreign currency. A Fund may realize a gain or loss from currency transactions.
FUTURES AND OPTIONS ON FUTURES -- Each of the Funds may invest in futures and
options on futures to a limited extent. Specifically, a Fund may enter into
futures contracts and options on futures contracts traded on an exchange
regulated by the Commodities Futures Trading Commission ("CFTC") if, to the
extent that such futures and options are not for "bona fide hedging purposes"
(as defined by the CFTC), the aggregate initial margin and premiums on such
positions (excluding the amount by which options are in the money) do not exceed
5% of that Fund's net assets. In addition, a Fund may enter into futures
contracts and options on futures only to the extent that obligations under such
contracts or transactions, together with options on securities, represent not
more than 25% of the Fund's assets. The foregoing 25% limitation does not apply
to the International Equity Fund or the International Equity Portfolio.
The Funds may buy and sell futures contracts and related options to manage their
exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, reduce a
Fund's exposure to price fluctuations. Other strategies, including buying
futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Funds may invest in
futures and related options based on any type of security or index traded on
U.S. or foreign exchanges or over-the-counter, as long as the underlying
security, or securities represented by an index, are permitted investments of
the Funds.
Options and futures can be volatile instruments, and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower a Fund's return. A Fund
could also experience losses if the prices of its options and futures positions
were poorly correlated with its other instruments, or if it could not close out
its positions because of an illiquid secondary market.
In order to cover any obligations it may have under options or futures
contracts, the Fund will either own the underlying asset, have a contract to
acquire such an asset without additional cost or set aside, in a segregated
account, high quality liquid assets in an amount at least equal in value to such
obligations.
GUARANTEED INVESTMENT CONTRACTS ("GICs") -- GICs are contracts issued by U.S.
insurance companies. Pursuant to such contracts, a Fund makes cash contributions
to a deposit fund of the insurance company's general account. The insurance
company then credits to the Fund on a monthly basis guaranteed interest at
either a fixed, variable or floating rate. A GIC provides that this guaranteed
interest will not be less than a certain minimum rate. A GIC is a general
obligation of the issuing insurance company and not a separate account. The
purchase price paid for a GIC becomes part of the general assets of the issuer,
and the contract is paid at maturity from the general assets of the issuer.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance company. For this reason, an active secondary market in GICs
does not currently exist and GICs are considered to be illiquid investments.
ILLIQUID SECURITIES -- Illiquid securities are securities which cannot be
disposed of within seven business days at approximately the price at which they
are being carried on a Fund's books. An illiquid
<PAGE>
34
security includes a demand instrument with a demand notice period exceeding
seven days, if there is no secondary market for such security and repurchase
agreements of over 7 days in length. Each Fund will not invest more than 15% of
its net assets in such instruments.
INVESTMENT COMPANIES -- Because of restrictions on direct investment by U.S.
entities in certain countries, investment in other investment companies may be
the most practical or only manner in which an international and global fund can
invest in the securities markets of those countries. The International Equity
Portfolio does not intend to invest in other investment companies unless, in the
judgment of its Money Managers, the potential benefits of such investments
exceed the associated costs relative to the benefits and costs associated with
direct investments in the underlying securities.
Investments in closed-end investment companies may involve the payment of
substantial premiums above the net asset value of such issuer's portfolio
securities and are subject to limitations under the 1940 Act. The International
Equity Portfolio also may incur tax liability to the extent it invests in the
stock of a foreign issuer that constitutes a "passive foreign investment
company."
As a shareholder in an investment company, the International Equity Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. In accordance with applicable state
regulatory provisions, the Portfolio's advisers have agreed to waive their
management fee with respect to the portion of this Portfolio's assets invested
in shares of other open-ended investment companies. The Portfolio continues to
pay its own management fees and other expenses with respect to their investments
in shares of closed-end investment companies.
MONEY MARKET SECURITIES -- Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government; (iii) high quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a maturity of one year or less
issued by corporations with outstanding high-quality commercial paper; and (v)
repurchase agreements involving any of the foregoing obligations entered into
with highly-rated banks and broker-dealers.
With respect to the International Equity Portfolio, money market securities are
considered to include securities issued or guaranteed by the United States
Government, its agencies or instrumentalities; securities issued or guaranteed
by non-U.S. governments, which are rated at time of purchase A or higher by S&P
or Moody's, or are determined by the advisers to be of comparable quality;
repurchase agreements, certificates of deposit and bankers' acceptances issued
by banks or savings and loan associations having net assets of at least $500
million as of the end of their most recent fiscal year; high-grade commercial
paper, and other long-and short-term debt instruments which are rated at the
time of purchase A or higher by S&P or Moody's, and which, with respect to such
long-term debt instruments, are within 397 days of their maturity.
MORTGAGE-BACKED SECURITIES -- Mortgage-backed securities are instruments which
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional thirty-year fixed rate mortgages, graduated payment
mortgages and adjustable rate mortgages. During periods of declining interest
rates, prepayment of mortgages underlying mortgage-backed securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield of a particular issue.
GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), Fannie Mae
and the Federal Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC
obligations are not backed by the full faith and credit of the U.S. Government
as GNMA
<PAGE>
35
certificates are, but Fannie Mae and FHLMC securities are supported by the
instrumentalities' right to borrow from the United States Treasury. Each of
GNMA, Fannie Mae and FHLMC guarantees timely distributions of interest to
certificate holders. Each of GNMA and Fannie Mae also guarantees timely
distributions of scheduled principal. FHLMC has in the past guaranteed only the
ultimate collection of principal of the underlying mortgage loan; however, FHLMC
now issues Mortgage-Backed Securities (FHLMC Gold PCs) which also guarantees
timely payment of monthly principal reduction. Government and private guarantees
do not extend to the securities' value, which is likely to vary inversely with
fluctuations in interest rates.
PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities issued by
a non-governmental entity such as a trust, which securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs"), that are rated in one of the top two rating categories.
While they are generally structured with one or more types of credit
enhancement, Private Pass-Through Securities typically lack a guarantee by an
entity having the credit status of a governmental agency or instrumentality.
CMOS: CMOs are debt obligations or multiclass pass-through certificates issued
by agencies or instrumentalities of the U.S. Government or by private
originators or investors in mortgage loans. In a CMO, series of bonds or
certificates are annually issued in multiple classes. Principal and interest
paid on the underlying mortgage assets may be allocated among the several
classes of a series of a CMO in a variety of ways. Each class of a CMO, often
referred to as a "tranche" is issued with a specific fixed or floating coupon
rate and has a stated maturity or final distribution date. Principal payments on
the underlying mortgage assets may cause CMOs to be retired substantially
earlier than their stated maturities or final distribution dates, resulting in a
loss of all or part of any premium paid.
REMICS: A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and invests in certain mortgages principally secured by
interests in real property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or "residual" interests.
Guaranteed REMIC pass-through certificates ("REMIC Certificates") issued by
Fannie Mae or FHLMC represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed
mortgage pass-through certificates. For FHLMC REMIC Certificates, FHLMC
guarantees the timely payment of interest, and also guarantees the payment of
principal as payments are required to be made on the underlying mortgage
participation certificates. Fannie Mae REMIC Certificates are issued and
guaranteed as to timely distribution of principal and interest by Fannie Mae.
GNMA REMIC Certificates are supported by the full faith and credit of the U.S.
Treasury.
STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments and is thus termed an interest-only class ("IO"), while
the other class may receive all of the principal payments and is thus termed the
principal-only class ("PO"). The value of IOs tends to increase as rates rise
and decrease as rates fall; the opposite is true of POs. SMBs are extremely
sensitive to changes in interest rates because of the impact thereon of
prepayment of principal on the underlying mortgage securities. The market for
SMBs is not as fully developed as other markets; SMBs therefore may be illiquid.
ESTIMATED AVERAGE LIFE: Due to the possibility of prepayments of the underlying
mortgage instruments, mortgage-backed securities generally do not have a known
maturity. In the absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate is a function of an
assumption regarding anticipated prepayment patterns, based upon current
interest rates, current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus different market
participants can produce different average life estimates with regard to the
same security. There can be no assurance that estimated average life will be a
security's actual average life.
MUNICIPAL SECURITIES -- Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
operating expenses, and for
<PAGE>
36
lending such funds to other public institutions and facilities, and (ii) certain
private activity and industrial development bonds issued by or on behalf of
public authorities to obtain funds to provide for the construction, equipment,
repair, or improvement of privately operated facilities. General obligation
bonds are backed by the taxing power of the issuing municipality. Revenue bonds
are backed by the revenues of a project or facility; tolls from a toll bridge
for example. Certificates of participation represent an interest in an
underlying obligation or commitment such as an obligation issued in connection
with a leasing arrangement. The payment of principal and interest on private
activity and industrial development bonds generally is dependent solely on the
ability of the facility's user to meet its financial obligations and the pledge,
if any, of real and personal property so financed as security for such payment.
Municipal securities include general obligation notes, tax anticipation notes,
revenue anticipation notes, bond anticipation notes, certificates of
indebtedness, demand notes, and construction loan notes. Municipal bonds include
general obligation bonds, revenue or special obligation bonds, private activity
and industrial development bonds.
The Louisiana Fund currently contemplates that it will not invest more than 25%
of its total assets (at market value at the time of purchase) in: (a)
securities, the interest of which is paid from revenues of projects with similar
characteristics; or (b) industrial development bonds.
OBLIGATIONS OF SUPRANATIONAL ENTITIES -- Supranational entities are entities
established through the joint participation of several governments, including
the Asian Development Bank, the Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and the Nordic Investment
Bank. The governmental members, or "stock holders," usually make initial capital
contributions to the supranational entity and, in many cases, are committed to
make additional capital contributions if the supranational entity is unable to
repay its borrowings.
OPTIONS -- Put and call options for various securities and indices are traded on
national securities exchanges. Options may be used by a Fund from time to time
as the Adviser deems to be appropriate. Options will generally be used for
hedging purposes.
A put option gives the purchaser of the option the right to sell, and the writer
the obligation to buy, the underlying security at any time during the option
period. A call option gives the purchaser of the option the right to buy, and
the writer of the option the obligation to sell, the underlying security at any
time during the option period. The premium paid to the writer is the
consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, a Fund may enter into a "closing
transaction" -- the sale (purchase) of an option contract on the same security
with the same exercise price and expiration date as the option contract
originally opened.
Although a Fund will engage in option transactions as hedging transactions,
there are risks associated with such investments including the following: (i)
the success of a hedging strategy may depend on the ability of the Adviser to
predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be an imperfect or no
correlation between the changes in market value of the securities held by a Fund
and the prices of options; (iii) there may not be a liquid secondary market for
options; and (iv) while a Fund will receive a premium when it writes covered
call options, it may not participate fully in a rise in the market value of the
underlying security. Each Fund is permitted to engage in option transactions
with respect to securities that are permitted investments and related indices.
Any Fund that writes call options will write only covered call options.
The aggregate value of option positions may not exceed 10% of a Fund's net
assets as of the time such options are entered into by a Fund.
PRIVATIZATIONS -- Privatizations are foreign government programs for selling all
or part of the interests in government owned or controlled enterprises. The
ability of a U.S. entity to participate in privatizations in certain foreign
countries may be limited by local law, or the terms on which a Fund may be
permitted to participate may be less advantageous than those applicable for
local
<PAGE>
37
investors. There can be no assurance that foreign governments will continue to
sell their interests in companies currently owned or controlled by them or that
privatization programs will be successful.
RECEIPTS -- TRs, TIGRs and CATS -- interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury obligations into
a special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts include
"Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"),
and "Certificates of Accrual on Treasury Securities" ("CATS"). Each Fund other
than the Louisiana Fund is permitted to invest in receipts.
STRIPS, TRs, TIGRs and CATS are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face value at their
maturity date without interim cash payments of interest or principal. The amount
of this discount is accrued over the life of the security and constitutes the
income earned on the security for both accounting and tax purposes. Because of
these features, receipts may be subject to greater price volatility than
interest paying U.S. Treasury Obligations. See also "Taxes."
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. Repurchase agreements must be fully collateralized at
all times. A Fund bears a risk of loss in the event the other party defaults on
its obligations and the Fund is delayed or prevented from its right to dispose
of the collateral. A Fund will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of bankruptcy during the
term of the agreement based on established guidelines. Repurchase agreements are
considered loans under the 1940 Act.
RESTRICTED SECURITIES -- Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933
or an exemption from registration.
SECURITIES LENDING -- All Funds are permitted to engage in securities lending,
under which securities are loaned pursuant to agreements requiring that the loan
be continuously secured by collateral consisting of cash or securities of the
U.S. Government equal to at least 100% of the market value of the securities
lent. A Fund will continue to receive interest on the securities lent while
simultaneously earning interest on the investment of cash collateral. Collateral
is marked to market daily to provide a level of collateral at least equal to the
value of the securities lent. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially or become insolvent.
SECURITIES OF FOREIGN ISSUERS -- There are certain risks connected with
investing in foreign securities. These include risks of adverse political and
economic developments (including possible governmental seizure or
nationalization of assets), the possible imposition of exchange controls or
other governmental restrictions, less uniformity in accounting and reporting
requirements, the possibility that there will be less information on such
securities and their issuers available to the public, the difficulty of
obtaining or enforcing court judgments abroad, restrictions on foreign
investments in other jurisdictions, difficulties in effecting repatriation of
capital invested abroad and difficulties in transaction settlements and the
effect of delay on shareholder equity. Foreign securities may be subject to
foreign taxes, and may be less marketable than comparable U.S. securities. The
value of a Fund's investments denominated in foreign currencies will depend on
the relative strengths of those currencies and the U.S. dollars, and a Fund may
be affected favorably or unfavorably by changes in the exchange rates or
exchange control regulations between foreign currencies and the U.S. dollar.
Changes in foreign currency exchange rates also may affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains if any, to be distributed to
shareholders by a Fund. Furthermore, emerging market countries may have less
stable political environments than more developed countries. Also it may be more
difficult to obtain a judgement in a court outside the United States.
<PAGE>
38
SHORT SALES -- A short sale is "against the box" if at all times during which
the short position is open, a Fund owns at least an equal amount of the
securities or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities that are sold
short.
SWAPS, CAPS, FLOORS AND COLLARS -- Interest rate swaps, mortgage swaps, currency
swaps and other types of swap agreements such as caps, floors and collars are
designed to permit the purchaser to preserve a return or spread on a particular
investment or portion of its portfolio, and to protect against any increase in
the price of securities, a Fund anticipates purchasing at a later date. In a
typical interest rate swap, one party agrees to make regular payments equal to a
floating interest rate times a "notional principal amount" in return for
payments equal to a fixed rate times the same amount for a specific period of
time. Swaps may also depend on other prices or rates such as the value of an
index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party.
Swap agreements will tend to shift a Fund's investment exposure from one type of
investment to another. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a Fund's investment and its share
price and yield.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or that
mature in more than seven days are considered to be illiquid securities. All
Funds are permitted to invest in time deposits.
U.S. GOVERNMENT AGENCY OBLIGATIONS -- Obligations issued or guaranteed by
agencies of the United States Government, including, among others, the Federal
Farm Credit Bank, the Federal Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by instrumentalities of the
United States Government, including, among others, FHLMC, the Federal Land Banks
and the United States Postal Service. Some of these securities are supported by
the full faith and credit of the United States Treasury, others are supported by
the right of the issuer to borrow from the Treasury, while still others are
supported only by the credit of the instrumentality. Guarantees of principal by
agencies or instrumentalities of the United States Government may be a guarantee
of payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing on
the obligation prior to maturity. Guarantees as to the timely payment of
principal and interest do not extend to the value or yield of these securities
nor to the value of the Fund's shares.
U.S. GOVERNMENT SECURITIES -- Any guaranty by the U.S. Government of the
securities in which any Fund invests guarantees only the payment of principal
and interest on the guaranteed security and does not guarantee the yield or
value of that security or the yield or value of shares of that Fund.
U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). All Funds are permitted to invest in U.S.
Treasury Obligations.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain of the obligations purchased
by the Funds may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. Such instruments bear interest at rates which are not
fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or some
other reset period, and may have a floor or ceiling on interest rate changes.
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such securities. All Funds are permitted to invest in
variable and floating rate instruments.
<PAGE>
39
WARRANTS -- instruments giving holders the right, but not the obligation, to buy
shares of a company at a given price during a specified period. The Equity Funds
are permitted to invest in warrants.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
To the extent required by the 1940 Act, a Fund will maintain with the custodian
a separate account with liquid high grade debt securities or cash in an amount
at least equal to these commitments. The interest rate realized on these
securities is fixed as of the purchase date and no interest accrues to the Fund
before settlement. These securities are subject to market fluctuation due to
changes in market interest rates and it is possible that the market value at the
time of settlement could be higher or lower than the purchase price if the
general level of interest rates has changed. Although a Fund generally purchases
securities on a when-issued or forward commitment basis with the intention of
actually acquiring securities for its portfolio, a Fund may dispose of a
when-issued security or forward commitment prior to settlement if deems it
appropriate.
<PAGE>
40
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary................................................................... 2
Expense Summary........................................................... 4
Financial Highlights...................................................... 9
The Trust................................................................. 12
Investment Objectives and Policies........................................ 12
General Investment Policies............................................... 16
Investment Limitations.................................................... 16
How to Purchase Shares.................................................... 17
Alternative Sales Charge Options.......................................... 18
Exchanges................................................................. 21
Redemption of Shares...................................................... 22
The Adviser............................................................... 23
Small Cap Growth and International Equity Portfolios.................... 24
The Administrator......................................................... 25
The Shareholder Servicing Agent and Transfer Agent........................ 25
The Distributor........................................................... 25
Small Cap Growth and International Equity Portfolios.................... 26
Performance............................................................... 26
Taxes..................................................................... 27
General Information....................................................... 29
Risk Factors Relating to the Feeder Funds and the Portfolios.............. 30
Description of Permitted Investments and Risk Factors..................... 31
</TABLE>
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
MARQUIS FUNDS-REGISTERED TRADEMARK-
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
INSTITUTIONAL MONEY MARKET FUND
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is a mutual fund that offers a
convenient and economical means of investing in one or more professionally
managed portfolios of securities. This Prospectus offers shares of the
INSTITUTIONAL MONEY MARKET FUND (the "Fund"), a separate series of the Trust.
This Prospectus sets forth concisely the information about the Fund and the
Trust that a prospective investor should know before investing in the Fund.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated February 1, 1998, as
supplemented from time to time, has been filed with the Securities and Exchange
Commission (the "SEC") and is available without charge by calling
1-800-471-1144. The Statement of Additional Information is incorporated into
this Prospectus by reference.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, INCLUDING FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
FEBRUARY 1, 1998
MRQ-F-021-02
<PAGE>
2
SUMMARY
MARQUIS FUNDS-REGISTERED TRADEMARK- (THE "TRUST") IS AN OPEN-END
MANAGEMENT INVESTMENT COMPANY PROVIDING A CONVENIENT WAY TO INVEST IN
PROFESSIONALLY MANAGED PORTFOLIOS OF SECURITIES. THIS SUMMARY PROVIDES BASIC
INFORMATION ABOUT THE TRUST'S INSTITUTIONAL MONEY MARKET FUND (THE "FUND").
THE FUND IS A SEPARATE SERIES OF THE TRUST.
WHAT ARE THE INVESTMENT OBJECTIVE AND POLICIES OF THE FUND? The Fund
seeks to preserve principal value and maintain a high degree of liquidity
while providing current income by investing exclusively in obligations
issued by the U.S. Treasury and in repurchase agreements involving such
obligations. There can be no assurance that the Fund will achieve its
investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? While the
Fund seeks to maintain a net asset value of $1.00 per share, there can be no
assurance that the Fund will be able to do this on a continuous basis. There
may be other risks involved in the ownership of money market mutual funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its
agencies or instrumentalities of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of the Fund. The Trust's shares are not federally
insured by the FDIC or any other government agency.
For more information about the Fund, see "Investment Objective and
Policies" and "Description of Permitted Investments and Risk Factors."
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce
in New Orleans serves as the investment adviser of the Fund. See "Expense
Summary" and "The Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder
servicing agent, transfer agent and dividend disbursing agent for the Trust.
See "The Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. serves as
distributor of the Trust's shares. See "The Distributor."
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be
made through the Transfer Agent or an authorized sub-transfer agent on any
day when the New York Stock Exchange and the Federal Reserve wire system are
open for business (a "Business Day"). A purchase order will be effective as
of the Business Day received by the Transfer Agent if the Transfer Agent
receives an order and payment with readily available funds prior to the time
the Fund calculates its net asset value, normally 11:00 a.m., Central Time.
To purchase shares by wire, you must first call 1-800-471-1144. Redemption
orders placed with the Transfer Agent prior to 11:00 a.m., Central Time on
any Business Day will be effective that day. The purchase and redemption
price for shares is the net asset value per share determined as of the end
of the day the order is effective. See "Purchase of Shares" and "Redemption
of Shares."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of
monthly dividends. Any capital gain is distributed at least annually.
Dividends are paid in additional shares unless the shareholder elects to
take payment in cash on the first Business Day of each month. See
"Dividends."
<PAGE>
3
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES INSTITUTIONAL MONEY MARKET FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases.................................................. None
Maximum Sales Load Imposed on Reinvested Dividends....................................... None
Maximum Contingent Deferred Sales Charge................................................. None
Wire Redemption Fee...................................................................... None
Exchange Fee............................................................................. None
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES INSTITUTIONAL MONEY MARKET FUND
(as a percentage of average net assets)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
<S> <C>
Management Fees (after fee waivers) (1).................................................. .04%
12b-1 Fees............................................................................... None
Other Expenses........................................................................... .21%
- ------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (1)......................................... .25%
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Adviser has voluntarily agreed to waive its advisory fee or reimburse
expenses to the extent necessary to keep "Total Operating Expenses" for the
Fund from exceeding .25%. The Adviser reserves the right to terminate its
waiver at any time in its sole discretion. Absent such waiver, Management
Fees for the Fund would be .15% and Total Operating Expenses for the Fund
would be .36%.
EXAMPLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1 3 5 10
YEAR YEARS YEARS YEARS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment in shares of the Fund assuming: (1) 5% annual return
and (2) redemption at the end of each time period........................ $ 3 $ 8 $14 $ 32
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in the
Fund. Shareholders purchasing shares through a financial institution may be
charged additional account fees by that institution. Additional information may
be found under "The Adviser," "The Administrator" and "The Distributor."
<PAGE>
4
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the Trust's financial statements and notes
thereto which are incorporated by reference into the Statement of Additional
Information under the heading "Financial Information." Additional performance
information is set forth in the Trust's 1997 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144.
For a Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
NET REALIZED
ASSET AND
VALUE UNREALIZED DISTRIBUTIONS NET ASSET
BEGINNING NET GAINS FROM NET VALUE
OF INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL
PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------
1997.................................... $1.00 $0.05 $ -- $(0.05) $1.00 5.29%
1996.................................... 1.00 0.05 -- (0.05) 1.00 5.33
1995(1)................................. 1.00 0.01 -- (0.01) 1.00 5.55*
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF RATIO OF RATIO OF
RATIO OF NET EXPENSES NET INCOME
NET ASSETS EXPENSES INVESTMENT TO AVERAGE TO AVERAGE
END OF TO INCOME TO NET ASSETS NET ASSETS
PERIOD AVERAGE AVERAGE NET (EXCLUDING (EXCLUDING
(000) NET ASSETS ASSETS WAIVERS) WAIVERS)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------
1997.................................... $58,516 0.25% 5.19% 0.36% 5.08%
1996.................................... 28,004 0.25 5.19 0.34 5.10
1995(1)................................. 31,314 0.25* 5.56* 0.60* 5.21*
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(1) Commenced operations on August 10, 1995.
<PAGE>
5
THE TRUST
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is an open-end management
investment company that offers units of beneficial interest ("shares"). This
prospectus relates to the Institutional Money Market Fund (the "Fund"), a
diversified mutual fund. Each share of the Fund represents an undivided,
proportionate interest in the Fund. Information regarding the Trust's other
funds is contained in separate prospectuses that may be obtained by calling
1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to preserve principal value and maintain a
high degree of liquidity while providing current income. There can be no
assurance that the Fund will be able to achieve its investment objective.
The Fund complies with regulations of the Securities and Exchange Commission
applicable to money market funds. These regulations impose certain quality,
maturity and diversification restraints on investments by the Fund. Under these
regulations, the Fund will maintain a dollar-weighted average portfolio maturity
of 90 days or less, and will acquire only obligations maturing in 397 days or
less. The Fund will attempt to maintain a net asset value of $1.00 per share,
although there can be no assurance that it will be able to do so.
The Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit, and in
repurchase agreements involving such obligations.
For additional information regarding permitted investments, investment practices
and risks, see "Description of Permitted Investments and Risk Factors."
INVESTMENT LIMITATIONS
The following investment limitation is a fundamental policy of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in the obligations issued or guaranteed
by the U.S. Government or its agencies and instrumentalities, and repurchase
agreements involving such securities.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; and (ii) enter into
repurchase agreements.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase shares of the Fund directly from the Trust's shareholder
servicing and transfer agent, DST Systems, Inc., or an authorized sub-transfer
agent (collectively, the "Transfer Agent"), by wire. Shares of the Fund are sold
to investors on a continuous basis.
To open an account, an investor must first return a completed and signed Account
Application, along with a check (or other negotiable bank instrument or money
order payable to "Marquis Funds (Institutional Money Market Fund)", to Marquis
Funds, P.O. Box 419316, Kansas City, MO 64141-6316. Third party checks, credit
cards, credit card checks and cash will not be accepted. When purchases are made
by check, redemption proceeds will not be forwarded until the investment being
redeemed has been in the account for 15 days. You may purchase additional shares
at any time by mailing payment to the Transfer Agent. Orders placed by mail will
be executed on receipt of your payment. If your check does not clear, your
purchase will be canceled and you could be liable for any losses or fees
incurred. Account Application forms are available by calling 1-800-471-1144.
<PAGE>
6
WIRE
A shareholder whose Account Application has been received by the Transfer Agent
may purchase shares of the Fund by wiring Federal funds. The shareholder must
wire funds to the Transfer Agent and the wire instructions must include the
shareholder's account number. The shareholder must call 1-800-471-1144 before
wiring any funds. An order to purchase shares by Federal funds wire will be
deemed to have been received by the Fund on the Business Day of the wire,
provided that the shareholder notifies the Transfer Agent prior to the time the
Fund calculates its net asset value, normally 11:00 a.m., Central Time. If the
Transfer Agent does not receive notice by the time the Fund calculates its net
asset value, normally 11:00 a.m., Central Time, on the Business Day of the wire,
the order will be executed on the next Business Day.
GENERAL INFORMATION REGARDING PURCHASES
Purchases of shares of the Fund may be made on any day the New York Stock
Exchange and the Federal Reserve wire system are open for business ("Business
Days"). The minimum initial investment in the Fund is $10,000,000; however, the
Trust's distributor, SEI Investments Distribution Co. (the "Distributor"), may
waive the minimum investment at its discretion.
A purchase order for shares will be effective, and eligible to receive dividends
declared that same day, on the Business Day received by the Transfer Agent, if
it receives the order and payment before the time the Fund calculates its net
asset value, normally 11:00 a.m., Central Time. A purchase order received (with
payment) after this time will be effective on the next Business Day. The
purchase price of shares of the Fund is the net asset value per share next
computed after the order is received and accepted by the Trust. The Fund expects
to maintain its net asset value per share constant at $1.00.
Net asset value per share will be determined as of the earlier of 11:00 a.m.
(Central Time) or the close of regular trading on the New York Stock Exchange
(normally, 3:00 p.m., Central Time). The net asset value per share of the Fund
is determined by dividing the total value of its investments and other assets,
less any liabilities, by its total outstanding shares. The Fund's net asset
value per share is calculated each Business Day and is based on the amortized
cost method described in the Statement of Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Adviser determines that it is not in the best interest of the Trust and/or its
shareholders to accept such order.
Shareholders who desire to transfer the registration of their shares should call
1-800-471-1144.
Certain financial institutions through which shares may be purchased may be
required under state law to register as broker dealers.
EXCHANGES
Shares of the Fund may be exchanged for Class A shares of other funds of the
Trust. Investors exchanging shares of the Fund acquired with cash for Class A
shares of another fund of the Trust will be subject to the applicable sales
charge. Shares of the Fund acquired through an exchange of Class A shares of
another fund of the Trust may be exchanged back, with no sales charge, into
Class A shares of any other fund of the Trust.
An investor must have received a current prospectus of the Trust's other fund
into which the exchange is to be made (the "new" fund) before the exchange will
be effected. Exchanges will be made only after instructions in writing or by
telephone (an "Exchange Request") are received by the Transfer Agent. If an
Exchange Request in good order is received by the Transfer Agent by 3:00 p.m.
Central Time, on any Business Day, the exchange will occur on that day. The
exchange privilege may be exercised only in those states where the class or
shares of the new fund may legally be sold.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon 60 days' notice.
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any Business Day. Shares
may be redeemed by mail or by telephone. Shares of the Funds cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
<PAGE>
7
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, the Transfer Agent may require that the signature on the written
redemption request be guaranteed. Signature guarantees can be obtained from
banks, brokers, dealers, credit unions, securities exchanges or associations,
clearing agencies or savings associations. A notary public cannot guarantee
signatures.
BY TELEPHONE
Shares may be redeemed by telephone if the shareholder has elected that option
on the Account Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of a valid request for
redemption. The shareholder may have the proceeds mailed to his or her address
of record or wired to a commercial bank account previously designated on the
Account Application. Shareholders may request a wire redemption for redemptions
in excess of $500 by calling 1-800-471-1144.
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central Time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per share
is determined as of the earlier of 11:00 a.m. (Central Time) or the close of
regular trading on the New York Stock Exchange (normally, 3:00 p.m., Central
Time), on each Business Day. Redeemed shares are not entitled to dividends
declared on the day the redemption order is effective.
Payment to shareholders for shares redeemed will be made within 7 days after the
Transfer Agent receives the valid redemption request.
See "Purchase and Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may be suspended.
THE ADVISER
First National Bank of Commerce in New Orleans ("First NBC" or the "Adviser"),
201 St. Charles Avenue, New Orleans, Louisiana 70170, serves as the Fund's
investment adviser under an advisory agreement (the "Advisory Agreement") with
the Trust. The Adviser, through its Trust Group, makes the investment decisions
for the assets of the Fund and continuously reviews, supervises, and administers
the investment programs of the Fund, subject to the supervision of, and policies
established by, the Trustees of the Trust.
As of September 30, 1997, the Adviser's Trust Group managed approximately $3.2
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market portfolios for the past eight years.
The Glass-Steagall Act restricts the securities activities of national banks
such as First NBC but the Comptroller of the Currency permits national banks to
provide investment advisory and other services to mutual funds. Should the
Comptroller's position be challenged successfully in court or reversed by
legislation, the Trust might have to make other investment advisory
arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce Corporation
and are not insured by the Federal Deposit Insurance Corporation or issued or
guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .15% of the Fund's average daily net assets. The Adviser may
voluntarily waive a portion of its fee in order to limit the total operating
expenses of the Fund. The Adviser reserves the right, in its sole discretion, to
terminate such a voluntary fee waiver at any time.
<PAGE>
8
For the fiscal year ended September 30, 1997, the Adviser was paid an advisory
fee of 0.04% of the Fund's average net assets.
Gerald S. Dugal, Vice President of the Adviser, is the portfolio manager of the
Fund as well as the Trust's Treasury Securities Money Market Fund and Strategic
Income Bond Fund. Mr. Dugal is currently a senior portfolio manager and Manager
of Fixed Income and Trading. Mr. Dugal has over 12 years of experience in
portfolio management, investment trading and research, the past seven with the
Adviser. He is licensed as a general securities principal and a municipal
securities principal.
First NBC has also entered into a custodian agreement with the Trust under which
it provides all safekeeping services as required by the Investment Company Act
of 1940 (the "1940 Act"). First NBC is entitled to a custodian fee, calculated
daily and paid monthly, at an annual rate of up to 0.04% of the average daily
net assets of the Fund. It is anticipated that the Trust will pay the Custodian
0.04% of the average daily net assets of the Fund during the fiscal year ending
September 30, 1998.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator are parties to an Administration Agreement (the "Administration
Agreement"). Under the terms of the Administration Agreement, the Administrator
provides the Trust with administrative services, other than investment advisory
services, including all regulatory reporting, necessary office space, equipment,
personnel and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .10% of the Fund's average daily net assets.
The Administrator may voluntarily waive a portion of its fees in order to limit
the total operating expenses of the Fund.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a transfer agent agreement.
THE DISTRIBUTOR
Shares of the Fund are offered without distribution fees.
SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456,
a wholly-owned subsidiary of SEI Investments Company, and the Trust are parties
to a distribution agreement ("Distribution Agreement").
The Fund may execute brokerage or other agency transactions through an affiliate
of the Adviser or through the Distributor, for which the affiliate or the
Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise the Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of the Fund refers to the income generated by an investment over a
seven-day period which is then "annualized." That is, the amount of income
generated by an investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment is assumed to be reinvested. The "effective yield" will
be slightly higher than the "current yield" because of the compounding effect of
this assumed reinvestment.
In addition, the Trust may from time to time compare performance of the Fund to
that of other mutual funds tracked by mutual fund rating services, financial and
business publications and periodicals, broad groups of comparable mutual funds
or unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs or to other
investment alternatives.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action.
<PAGE>
9
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders. In
addition, state and local tax consequences of an investment in the Fund may
differ from the federal income tax consequences described below. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended, so as to be
relieved of federal income tax on that part of its net of investment company
taxable income, and net of capital gain (the excess of net long-term capital
gains over net short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from net investment company
taxable income are taxable to shareholders as ordinary income (whether received
in cash or in additional shares) to the extent of the Fund's earnings and
profits. Net capital gains will be distributed at least annually and will be
taxed to shareholders as a 20% rate gain distribution (taxed at a rate of 20%)
or a 28% rate gain distribution (taxed at a rate of 28%), depending upon the
designation by the Fund (such designation being dependent upon the Fund's
holding period in the underlying asset generating the net capital gain),
regardless of how long the shareholders have held their shares and regardless of
whether the distributions are received in cash or in additional shares. If no
designation is made regarding a capital gain dividend, it will be classified as
a 28% rate gain distribution, and, thus, taxed at a rate of 28%. Dividends and
distributions of capital gains paid by the Fund do not qualify for the dividends
received deduction for corporate shareholders. The Fund will provide annual
reports to shareholders of the federal income tax status of all distributions.
Dividends declared by the Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of the year declared, if paid by the Fund at any time during the
following January.
With respect to investments in U.S. Treasury STRIPS, which are sold with
original issue discount and do not make periodic cash interest payments. The
Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
all of its net investment income to its shareholders, the Fund may have to sell
portfolio securities to distribute such imputed income, which may occur at a
time when the Adviser would not have chosen to sell such securities and which
may result in a taxable gain or loss.
Investment income received directly by the Fund on Treasury Obligations is
exempt from income tax at the state level and may be exempt, depending on the
state, when received by a shareholder as income dividends from the Fund provided
certain state specific conditions are satisfied. Interest received on repurchase
agreements collateralized by Treasury Obligations normally is not exempt from
state taxation. The Fund will inform shareholders annually of the percentage of
income and distributions derived from Treasury Obligations. Shareholders should
consult their tax advisers to determine whether any portion of the income
dividends received from the Fund is considered tax exempt in their particular
states.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated June 29, 1993. The Declaration of Trust permits the Trust to offer
separate series of shares or "funds" and different classes of each fund. In
addition to the Fund, the Trust offers the following funds: Treasury Securities
Money Market Fund, Tax Exempt Money Market Fund, Government Securities Fund,
Louisiana Tax-Free Income Fund, Strategic Income
<PAGE>
10
Bond Fund, Balanced Fund, Value Equity Fund, Growth Equity Fund, Small Cap
Equity Fund and International Equity Fund. All consideration received by the
Trust for shares of any fund and all assets of such fund belong to that fund and
would be subject to liabilities related thereto. The Trust reserves the right to
create and issue shares of additional funds.
The Fund pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management,
administrative and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee may
be removed by the remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of the Fund is
determined and declared on each Business Day as a dividend for shareholders of
record as of the close of business on that day. Shareholders who own shares at
the close of business on the record date will be entitled to receive the
dividend. Currently, capital gains of the Fund, if any, will be distributed at
least annually. Dividends are paid by the Fund in Federal funds or in additional
shares at the discretion of the shareholder on the first business day of each
month.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Fund and associated risk factors. Further discussion is
contained in the Statement of Additional Information.
U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Fund does not expect to trade STRIPS
actively.
Any guaranty by the U.S. Treasury of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed security
and does not guarantee the yield or value of that security or the yield or value
of shares of the Fund.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements must be fully collateralized at all times. The Fund bears a risk of
loss in the event the other party defaults on its obligations and the Fund is
delayed or prevented from its right to dispose of the collateral. The Fund will
enter into repurchase agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered loans under the
1940 Act.
<PAGE>
11
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary................................................................... 2
Expense Summary........................................................... 3
Financial Highlights...................................................... 4
The Trust................................................................. 5
Investment Objective and Policies......................................... 5
Investment Limitations.................................................... 5
Purchase of Shares........................................................ 5
Exchanges................................................................. 6
Redemption of Shares...................................................... 6
The Adviser............................................................... 7
The Administrator......................................................... 8
The Shareholder Servicing Agent and Transfer Agent........................ 8
The Distributor........................................................... 8
Performance............................................................... 8
Taxes..................................................................... 8
General Information....................................................... 9
Description of Permitted Investments and Risk Factors..................... 10
</TABLE>
<PAGE>
MARQUIS FUNDS-REGISTERED TRADEMARK-
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
TREASURY SECURITIES MONEY MARKET FUND
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is a mutual fund that offers a
convenient and economical means of investing in one or more professionally
managed portfolios of securities. This Prospectus offers the TRUST CLASS shares
of the TREASURY SECURITIES MONEY MARKET FUND (the "Fund"), a separate series of
the Trust.
This Prospectus sets forth concisely the information about the Fund and the
Trust that a prospective investor should know before investing in the Fund.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated February 1, 1998, as
supplemented from time to time, has been filed with the Securities and Exchange
Commission (the "SEC") and is available without charge by calling
1-800-471-1144. The Statement of Additional Information is incorporated into
this Prospectus by reference.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, INCLUDING FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
FEBRUARY 1, 1998
<PAGE>
2
SUMMARY
MARQUIS FUNDS-REGISTERED TRADEMARK- (THE "TRUST") IS AN OPEN-END
MANAGEMENT INVESTMENT COMPANY PROVIDING A CONVENIENT WAY TO INVEST IN
PROFESSIONALLY MANAGED PORTFOLIOS OF SECURITIES. THIS SUMMARY PROVIDES BASIC
INFORMATION ABOUT THE TRUST CLASS SHARES OF THE TRUST'S TREASURY SECURITIES
MONEY MARKET FUND (THE "FUND"). THE FUND IS A SEPARATE SERIES OF THE TRUST.
WHAT ARE THE INVESTMENT OBJECTIVE AND POLICIES OF THE FUND? The Fund
seeks to preserve principal value and maintain a high degree of liquidity
while providing current income by investing exclusively in obligations
issued by the U.S. Treasury and in repurchase agreements involving such
obligations. There can be no assurance that the Fund will achieve its
investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? While the
Fund seeks to maintain a net asset value of $1.00 per share, there can be no
assurance that the Fund will be able to do this on a continuous basis. There
may be other risks involved in the ownership of money market mutual funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its
agencies or instrumentalities of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of the Fund. The Trust's shares are not federally
insured by the FDIC or any other government agency.
For more information about the Fund, see "Investment Objective and
Policies" and "Description of Permitted Investments and Risk Factors."
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce
in New Orleans serves as the investment adviser of the Fund. See "Expense
Summary" and "The Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder
servicing agent, transfer agent and dividend disbursing agent for the Trust.
See "The Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. serves as
distributor of the Trust's shares. See "The Distributor."
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be
made through the Transfer Agent or an authorized sub-transfer agent on any
day when the New York Stock Exchange and Federal Reserve wire system are
open for business (a "Business Day"). A purchase order will be effective as
of the Business Day received by the Transfer Agent if the Transfer Agent
receives an order and payment with readily available funds prior to the time
the Fund calculates its net asset value, normally 11:00 a.m., Central Time.
To purchase shares by wire, you must first call 1-800-471-1144. Redemption
orders placed with the Transfer Agent prior to 11:00 a.m., Central Time on
any Business Day will be effective that day. The purchase and redemption
price for shares is the net asset value per share determined as of the end
of the day the order is effective. See "Purchase of Shares" and "Redemption
of Shares."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of
monthly dividends. Any capital gain is distributed at least annually.
Dividends are paid in additional shares unless the shareholder elects to
take payment in cash on the first Business Day of each month. See
"Dividends."
<PAGE>
3
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES TRUST CLASS
<TABLE>
<CAPTION>
TREASURY
SECURITIES
MONEY MARKET
FUND
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases..................... None
Maximum Sales Load Imposed on Reinvested Dividends.......... None
Maximum Contingent Deferred Sales Charge.................... None
Wire Redemption Fee......................................... None
Exchange Fee................................................ None
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
TREASURY
SECURITIES
MONEY MARKET
FUND
- ----------------------------------------------------------------------------
<S> <C>
Management Fees............................................. .30%
12b-1 Fees.................................................. None
Other Expenses.............................................. .20%
- ----------------------------------------------------------------------------
Total Operating Expenses.................................... .50%
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
3 5
1 YEAR YEARS YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment in Trust Class shares of the Fund assuming: (1)
5% annual return and (2) redemption at the end of each
time period............................................... $ 5 $ 16 $ 28 $ 63
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Trust Class shares of the Fund. Shareholders purchasing shares through a
financial institution may be charged additional account fees by that
institution. Additional information may be found under "The Adviser," "The
Administrator" and "The Distributor."
<PAGE>
4
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the Trust's financial statements and notes
thereto which are incorporated by reference into the Statement of Additional
Information under the heading "Financial Information." Additional performance
information is set forth in the Trust's 1997 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144.
For a Trust Class Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
REALIZED
AND
UNREALIZED NET
NET ASSET GAINS OR DISTRIBUTIONS ASSET
VALUE NET (LOSSES) FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT END OF TOTAL
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
TREASURY SECURITIES MONEY MARKET FUND--TRUST CLASS
- ------------------------------------------------------------------------------------------------------------
1997.......................... $1.00 $0.05 $ -- $(0.05) $1.00 5.04%
1996.......................... 1.00 0.05 -- (0.05) 1.00 5.06
1995.......................... 1.00 0.05 -- (0.05) 1.00 5.33
1994(1)....................... 1.00 0.03 -- (0.03) 1.00 3.22
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
RATIO OF EXPENSES INVESTMENT
NET RATIO OF NET TO INCOME TO
ASSETS EXPENSES INVESTMENT AVERAGE AVERAGE
END OF TO INCOME TO NET ASSETS NET ASSETS
PERIOD AVERAGE AVERAGE (EXCLUDING (EXCLUDING
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
<S> <C> <C> <C> <C> <C>
- ------------------------------ ------------------------------------------------------------
TREASURY SECURITIES MONEY MARK
- ------------------------------ ------------------------------------------------------------
1997.......................... $556,957 0.50% 4.92% 0.50% 4.92%
1996.......................... 637,819 0.50 4.92 0.53 4.89
1995.......................... 521,270 0.50 5.23 0.57 5.16
1994(1)....................... 403,778 0.50 3.15 0.60 3.05
- ------------------------------ ------------------------------------------------------------
- ------------------------------ ------------------------------------------------------------
</TABLE>
(1) Commenced operations on October 19, 1993.
<PAGE>
5
THE TRUST
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is an open-end management
investment company that offers units of beneficial interest ("shares") in its
Treasury Securities Money Market Fund (the "Fund"), a diversified mutual fund,
through three separate classes: Trust Class, Retail Class and Cash Sweep Class,
which provide for variations in distribution costs, voting rights and dividends.
Except for these differences between classes, each share of the Fund represents
an undivided, proportionate interest in the Fund. This Prospectus relates to the
Trust Class shares of the Fund. Information regarding the Retail Class and Cash
Sweep Class shares of the Fund and the Trust's other funds is contained in
separate prospectuses that may be obtained by calling 1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to preserve principal value and maintain a
high degree of liquidity while providing current income. There can be no
assurance that the Fund will be able to achieve its investment objective.
The Fund complies with regulations of the Securities and Exchange Commission
applicable to money market funds. These regulations impose certain quality,
maturity and diversification restraints on investments by the Fund. Under these
regulations, the Fund will maintain a dollar-weighted average portfolio maturity
of 90 days or less, and will acquire only obligations maturing in 397 days or
less. The Fund will attempt to maintain a net asset value of $1.00 per share,
although there can be no assurance that it will be able to do so.
The Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit, and in
repurchase agreements involving such obligations.
For additional information regarding permitted investments, investment practices
and risks, see "Description of Permitted Investments and Risk Factors."
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in the obligations issued or guaranteed
by the U.S. Government or its agencies and instrumentalities, and repurchase
agreements involving such securities.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; and (ii) enter into
repurchase agreements.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase Trust Class shares of the Fund directly from the Trust's
shareholder servicing and transfer agent, DST Systems, Inc., or an authorized
sub-transfer agent (collectively, the "Transfer Agent"), by wire. Trust Class
shares of the Fund are sold on a continuous basis.
To open an account, an investor must first return a completed and signed Account
Application, along with a check (or other negotiable bank instrument or money
order payable to "Marquis Funds (Treasury Securities Money Market Fund)," to
Marquis Funds, P.O. Box 419316, Kansas City, MO 64141-6316. Third party checks,
credit cards, credit card checks and cash will not be accepted. When purchases
are made by check, redemption proceeds will not be forwarded until the
investment being redeemed has been in the account for 15 days. You may purchase
additional shares at any time by mailing payment to the Transfer Agent. Orders
placed by mail will be executed on receipt of your payment. If your check
<PAGE>
6
does not clear, your purchase will be canceled and you could be liable for any
losses or fees incurred. Account Application forms are available by calling
1-800-471-1144.
WIRE
A shareholder whose Account Application has been received by the Transfer Agent
may purchase Trust Class shares of the Fund by wiring Federal funds. The
shareholder must wire funds to the Transfer Agent and the wire instructions must
include the shareholder's account number. The shareholder must call
1-800-471-1144 before wiring any funds. An order to purchase shares by Federal
funds wire will be deemed to have been received by the Fund on the Business Day
of the wire, provided that the shareholder notifies the Transfer Agent prior to
the time the Fund calculates its net asset value, normally 11:00 a.m., Central
Time. If the Transfer Agent does not receive notice by the time the Fund
calculates its net asset value, normally 11:00 a.m., Central Time, on the
Business Day (defined below) of the wire, the order will be executed on the next
Business Day.
GENERAL INFORMATION REGARDING PURCHASES
Purchases of Trust Class shares of the Fund may be made on any day the New York
Stock Exchange and Federal Reserve wire system are open for business ("Business
Days").
The minimum initial investment in Trust Class shares of the Fund is $1,000,000;
however, the Trust's distributor, SEI Investments Distribution Co. (the
"Distributor"), may waive the minimum investment at its discretion.
A purchase order for shares will be effective, and eligible to receive dividends
declared that same day, on the Business Day received by the Transfer Agent, if
it receives the order and payment before the time the Fund calculates its net
asset value, normally 11:00 a.m., Central Time. A purchase order received (with
payment) after this time will be effective on the next Business Day. The
purchase price of Trust Class shares of the Fund is the net asset value per
share next computed after the order is received and accepted by the Trust. The
Fund expects to maintain its net asset value per share constant at $1.00.
The net asset value will be determined as of the earlier of 11:00 a.m. (Central
Time) or the close of regular trading on the New York Stock Exchange (normally,
3:00 p.m., Central Time). The net asset value per share of the Fund is
determined by dividing the total value of its investments and other assets, less
any liabilities, by its total outstanding shares. The Fund's net asset value per
share is calculated each Business Day and is based on the amortized cost method
described in the Statement of Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders of record who desire to transfer the registration of their shares
should call 1-800-471-1144.
Certain financial institutions through which shares may be purchased may be
required under state law to register as broker dealers.
EXCHANGES
Shares of the Fund may be exchanged for Class A shares of other funds of the
Trust. Investors exchanging shares of the Fund acquired with cash for Class A
shares of another fund of the Trust will be subject to the applicable sales
charge. Shares of the Fund acquired through an exchange of Class A shares of
another fund of the Trust may be exchanged back, with no sales charge, into
Class A shares of any other fund of the Trust.
An investor must have received a current prospectus of the Trust's other fund
into which the exchange is to be made (the "new" fund) before the exchange will
be effected. Exchanges will be made only after instructions in writing or by
telephone (an "Exchange Request ") are received by the Transfer Agent. If an
Exchange Request in good order is received by the Transfer Agent by 3:00 p.m.
Central Time, on any Business Day, the exchange will occur on that day. The
exchange privilege may be exercised only in those states where the class or
shares of the new fund may legally be sold.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon 60 days' notice.
<PAGE>
7
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any Business Day. Shares
may be redeemed by mail or by telephone. Shares of the Funds cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, the Transfer Agent may require that the signature on the written
redemption request be guaranteed. Signature guarantees can be obtained from
banks, brokers, dealers, credit unions, securities exchanges or associations,
clearing agencies or savings associations. A notary public cannot guarantee
signatures.
BY TELEPHONE
Shares may be redeemed by telephone if the shareholder has elected that option
on the Account Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of a valid request for
redemption. The shareholder may have the proceeds mailed to his or her address
of record or wired to a commercial bank account previously designated on the
Account Application. Shareholders may request a wire redemption for redemptions
in excess of $500 by calling 1-800-471-1144.
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central Time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per share
is determined as of the earlier of 11:00 a.m. (Central Time) or the close of
regular trading on the New York Stock Exchange (normally, 3:00 p.m., Central
Time), on each Business Day. Redeemed shares are not entitled to dividends
declared on the day the redemption order is effective.
Payment to shareholders for shares redeemed will be made within 7 days after the
Transfer Agent receives the valid redemption request.
See "Purchase and Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may be suspended.
THE ADVISER
First National Bank of Commerce in New Orleans ("First NBC" or the "Adviser"),
201 St. Charles Avenue, New Orleans, Louisiana 70170, serves as the Fund's
investment adviser under an advisory agreement (the "Advisory Agreement") with
the Trust. The Adviser, through its Trust Group, makes the investment decisions
for the assets of the Fund and continuously reviews, supervises and administers
the investment programs of the Fund, subject to the supervision of, and policies
established by, the Trustees of the Trust.
As of September 30, 1997, the Adviser's Trust Group managed approximately $3.2
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market portfolios for the past nine years.
The Glass-Steagall Act restricts the securities activities of national banks
such as First NBC but the Comptroller of the Currency permits national banks to
provide investment advisory and other services to mutual funds. Should the
Comptroller's position be challenged successfully in court or
<PAGE>
8
reversed by legislation, the Trust might have to make other investment advisory
arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce Corporation
and are not insured by the Federal Deposit Insurance Corporation or issued or
guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .30% of the Fund's average daily net assets. The Adviser may
voluntarily waive a portion of its fee in order to limit the total operating
expenses of Trust Class shares of the Fund. The Adviser reserves the right, in
its sole discretion, to terminate such a voluntary fee waiver at any time. For
the fiscal year ended September 30, 1997, the Adviser was paid an advisory fee
of .30% of the Fund's average net assets.
Gerald S. Dugal, Vice President of the Adviser, is the portfolio manager of the
Fund as well as the Trust's Institutional Money Market Fund and Strategic Income
Bond Fund. Mr. Dugal is currently a senior portfolio manager and Manager of
Fixed Income and Trading. Mr. Dugal has over 12 years of experience in portfolio
management, investment trading and research, the past seven with the Adviser. He
is licensed as a general securities principal and a municipal securities
principal.
First NBC has also entered into a custodian agreement with the Trust under which
it provides all safekeeping services as required by the Investment Company Act
of 1940 (the "1940 Act"). First NBC is entitled to a custodian fee, calculated
daily and paid monthly, at an annual rate of up to 0.04% of the average daily
net assets of the Fund. It is anticipated that the Trust will pay the Custodian
0.04% of the average daily net assets of the Fund during the fiscal year ending
September 30, 1998.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator") has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator are parties to an Administration Agreement (the "Administration
Agreement"). Under the terms of the Administration Agreement, the Administrator
provides the Trust with administrative services, other than investment advisory
services, including all regulatory reporting, necessary office space, equipment,
personnel and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of the Fund's average daily net assets.
The Administrator may voluntarily waive a portion of its fees in order to limit
the total operating expenses of the Fund.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a Transfer Agent Agreement.
THE DISTRIBUTOR
The Trust Class shares of the Funds are offered without distribution fees.
SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456,
a wholly-owned subsidiary of SEI Investments Company, and the Trust are parties
to a distribution agreement ("Distribution Agreement").
The Fund may execute brokerage or other agency transactions through an affiliate
of the Adviser or through the Distributor, for which the affiliate or the
Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise the Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of the Fund refers to the income generated by an investment over a
seven-day period which is then "annualized." That is, the amount of income
generated by an investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the investment. The
"effective yield"
<PAGE>
9
is calculated similarly but, when annualized, the income earned by an investment
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment.
In addition, the Trust may from time to time compare performance of the Fund to
that of other mutual funds tracked by mutual fund rating services, financial and
business publications and periodicals, broad groups of comparable mutual funds
or unmanaged indices which may assume investment of dividends but generally do
not reflect deductions for administrative and management costs or to other
investment alternatives.
The performance of Trust Class shares will be higher than that of Cash Sweep
Class and Retail Class shares because of the distribution fees charged to Cash
Sweep Class and Retail Class shares.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders. In
addition, state and local tax consequences of an investment in the Fund may
differ from the federal income tax consequences described below. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended, so as to be
relieved of federal income tax on that part of its net investment company
taxable income, and net capital gain (the excess of net long-term capital gains
over net short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from net investment company
taxable income are taxable to shareholders as ordinary income (whether received
in cash or in additional shares) to the extent of the Fund's earnings and
profits. Net capital gains will be distributed at least annually and will be
taxed to shareholders as a 20% rate gain distribution (taxed at a rate of 20%)
or a 28% rate gain distribution (taxed at a rate of 28%), depending upon the
designation by the Fund (such designation being dependent upon the Fund's
holding period in the underlying asset generating the net capital gain),
regardless of how long the shareholders have held their shares and regardless of
whether the distributions are received in cash or additional shares. If no
designation is made regarding a capital gain dividend, it will be classified as
a 28% rate gain distribution, and, thus, taxed at a rate of 28%. Dividends and
distributions of capital gains paid by the Fund do not qualify for the dividends
received deduction for corporate shareholders. The Fund will provide annual
reports to shareholders of the federal income tax status of all distributions.
Dividends declared by the Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of the year declared, if paid by the Fund at any time during the
following January.
With respect to investments in U.S. Treasury STRIPS, which are sold with
original issue discount and do not make periodic cash interest payments, the
Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
all of its net investment income to its shareholders, the Fund may have to sell
portfolio securities to distribute such imputed income, which may occur at a
time when the Adviser would not have chosen to sell such securities and which
may result in a taxable gain or loss.
<PAGE>
10
Investment income received directly by the Fund on Treasury Obligations is
exempt from income tax at the state level and may be exempt, depending on the
state, when received by a shareholder as income dividends from the Fund provided
certain state-specific conditions are satisfied. Interest received on repurchase
agreements collateralized by Treasury Obligations normally is not exempt from
state taxation. The Fund will inform shareholders annually of the percentage of
income and distributions derived from Treasury Obligations. Shareholders should
consult their tax advisers to determine whether any portion of the income
dividends received from the Fund is considered tax exempt in their particular
states.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated June 29, 1993. The Declaration of Trust permits the Trust to offer
separate series of shares or "funds" and different classes of each fund. In
addition to the Fund, the Trust offers the following funds: Institutional Money
Market Fund, Tax Exempt Money Market Fund, Government Securities Fund, Louisiana
Tax-Free Income Fund, Strategic Income Bond Fund, Balanced Fund, Value Equity
Fund, Growth Equity Fund, Small Cap Equity Fund and International Equity Fund.
All consideration received by the Trust for shares of any fund and all assets of
such fund belong to that fund and would be subject to liabilities related
thereto. The Trust reserves the right to create and issue shares of additional
funds.
The Fund pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management,
administrative and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee may
be removed by the remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of the Fund is
determined and declared on each Business Day as a dividend for shareholders of
record as of the close of business on that day. Shareholders who own shares at
the close of
<PAGE>
11
business on the record date will be entitled to receive the dividend. Currently,
capital gains of the Fund, if any, will be distributed at least annually.
Dividends are paid by the Fund in Federal funds or in additional shares at the
discretion of the shareholder on the first business day of each month.
The amount of dividends payable on Trust Class shares will be more than the
dividends payable on Retail Class and Cash Sweep shares because of the
distribution fees paid by Retail Class and Cash Sweep shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Fund and associated risk factors. Further discussion is
contained in the Statement of Additional Information.
U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Fund does not expect to trade STRIPS
actively.
Any guaranty by the U.S. Treasury of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed security
and does not guarantee the yield or value of that security or the yield or value
of shares of the Fund.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements must be fully collateralized at all times. The Fund bears a risk of
loss in the event the other party defaults on its obligations and the Fund is
delayed or prevented from its right to dispose of the collateral. The Fund will
enter into repurchase agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered loans under the
1940 Act.
<PAGE>
12
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary................................................................... 2
Expense Summary........................................................... 3
Financial Highlights...................................................... 4
The Trust................................................................. 5
Investment Objective and Policies......................................... 5
Investment Limitations.................................................... 5
Purchase of Shares........................................................ 5
Exchanges................................................................. 6
Redemption of Shares...................................................... 7
The Adviser............................................................... 7
The Administrator......................................................... 8
The Shareholder Servicing Agent and Transfer Agent........................ 8
The Distributor........................................................... 8
Performance............................................................... 8
Taxes..................................................................... 9
General Information....................................................... 10
Description of Permitted Investments and Risk Factors..................... 11
</TABLE>
<PAGE>
MARQUIS FUNDS-REGISTERED TRADEMARK-
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
- TREASURY SECURITIES MONEY MARKET FUND
- TAX EXEMPT MONEY MARKET FUND
MARQUIS FUNDS-Registered Trademark- (the "Trust") is a mutual fund that offers a
convenient and economical means of investing in one or more professionally
managed portfolios of securities. This Prospectus offers the CASH SWEEP CLASS
shares of the TREASURY SECURITIES MONEY MARKET FUND and TAX EXEMPT MONEY MARKET
FUND (the "Funds"), each a separate series of the Trust.
This Prospectus sets forth concisely the information about the Funds and the
Trust that a prospective investor should know before investing in the Funds.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated February 1, 1998, as
supplemented from time to time, has been filed with the Securities and Exchange
Commission (the "SEC") and is available without charge by calling
1-800-471-1144. The Statement of Additional Information is incorporated into
this Prospectus by reference.
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, INCLUDING FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
FEBRUARY 1, 1998
MRQ-F-019-02
<PAGE>
2
SUMMARY
Marquis Funds-Registered Trademark- (the "Trust") is an open-end
management investment company providing a convenient way to invest in
professionally managed portfolios of securities. This Summary provides basic
information about the Cash Sweep Class shares of the Trust's Treasury
Securities Money Market Fund (the "Treasury Fund") and Tax Exempt Money
Market Fund (the "Tax Exempt Fund") (together, the "Funds"). Each Fund is a
separate series of the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS? The
TREASURY FUND seeks to preserve principal value and maintain a high degree
of liquidity while providing current income by investing exclusively in
obligations issued by the U.S. Treasury and in repurchase agreements
involving such obligations. The TAX EXEMPT FUND seeks to preserve principal
value and maintain a high degree of liquidity while providing current income
exempt from Federal income taxes by investing, under normal market
conditions, at least 80% of its net assets in eligible securities issued by
or on behalf of the states, territories, and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies, and instrumentalities, the interest on which is exempt from
Federal income tax. There can be no assurance that either Fund will achieve
its investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUNDS? While each
Fund seeks to maintain a net asset value of $1.00 per share, there can be no
assurance that either Fund will be able to do this on a continuous basis.
There may be other risks involved in the ownership of money market mutual
funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its
agencies or instrumentalities of the securities in which either Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of that Fund. The Trust's shares are not federally
insured by the FDIC or any other government agency.
For more information about each Fund, see "Investment Objective and
Policies," "General Investment Policies" and "Description of Permitted
Investments and Risk Factors."
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce
in New Orleans serves as the investment adviser of each Fund. Additionally,
Weiss, Peck & Greer, L.L.C. serves as investment sub-adviser (the
"sub-adviser") to the Tax Exempt Fund. See "Expense Summary," "The Adviser"
and "The Sub-Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder
servicing agent, transfer agent and dividend disbursing agent for the Trust.
See "The Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. serves as
distributor of the Trust's shares. See "The Distributor."
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be
made through the Transfer Agent or financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust on any day when the New York Stock Exchange and Federal Reserve wire
system are open for business (a "Business Day"). A purchase order will be
effective as of the Business Day received by the Transfer Agent if the
Transfer Agent receives an order and payment with readily available funds
prior to the time the Funds calculate their net asset value, normally 11:00
a.m., Central Time. To purchase shares by wire, you must first call
1-800-471-1144. Redemption orders placed with the Transfer Agent prior to
11:00 a.m., Central Time on any Business Day will be effective that day. The
Funds also offer both an Automatic Investment Plan and a Systematic
Withdrawal Plan. The purchase and redemption price for shares is the net
asset value per share determined as of the end of the day the order is
effective. Cash Sweep Class shares of the Treasury Fund and Tax Exempt Fund,
absent any fee waivers, are subject to annual distribution fees of .75% of
their respective average daily net assets. See "Purchase of Shares" and
"Redemption of Shares."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of each Fund is distributed in the form of
monthly dividends. Any capital gain is distributed at least annually.
Dividends are paid in additional shares unless the shareholder elects to
take payment in cash on the first Business Day of each month. See
"Dividends."
<PAGE>
3
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES CASH SWEEP CLASS
<TABLE>
<CAPTION>
TREASURY TAX EXEMPT
MONEY MARKET MONEY MARKET
FUND FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases..................... None None
Maximum Sales Load Imposed on Reinvested Dividends.......... None None
Maximum Contingent Deferred Sales Charge.................... None None
Wire Redemption Fee......................................... $ 25 $ 25
Exchange Fee................................................ None None
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
TREASURY TAX EXEMPT
MONEY MARKET MONEY MARKET
FUND FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees (after fee waivers) (1)..................... .30% .44%
12b-1 Fees (after fee waivers) (1).......................... .50% .60%
Other Expenses (after fee waivers) (1)...................... .20% .21%
- --------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (2)............ 1.00% 1.25%
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) The Adviser and the Administrator have voluntarily agreed to waive their
fees and the Distributor has voluntarily agreed to waive 12b-1 fees to the
extent necessary to keep "Total Operating Expenses" for the Cash Sweep Class
shares of the Treasury Fund and Tax Exempt Fund from exceeding 1.00% and
1.25%, respectively. The Adviser, Administrator and the Distributor reserve
the right to terminate their waivers at any time in their sole discretion.
Absent such waivers, the Management Fees for the Tax Exempt Fund would be
.45%, Other Expenses for the Tax Exempt Fund would be .25% and the 12b-1 fee
for the Cash Sweep Class shares of the Funds would be .75%.
(2) Absent the Adviser's, the Administrator's and the Distributor's voluntary
fee waivers, Total Operating Expenses for Cash Sweep Class shares of the
Treasury Fund and Tax Exempt Fund would be 1.25% and 1.45%, respectively.
<PAGE>
4
EXAMPLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
10
1 YR. 3 YRS. 5 YRS. YRS.
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
in Cash Sweep Class shares assuming (1) 5% annual return
and (2) redemption at the end of each time period:
Treasury Securities Money Market Fund................... $ 10 $ 32 $ 55 $122
Tax Exempt Money Market Fund............................ $ 13 $ 40 $ 69 $151
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in Cash
Sweep Class shares of the Funds. The information set forth in the foregoing
table and example relates only to Cash Sweep Class shares. Shareholders
purchasing shares through a financial institution may be charged additional
account fees by that institution. Additional information may be found under "The
Adviser," "The Administrator" and "The Distributor."
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the Trust's financial statements and notes
thereto which are incorporated by reference into the Statement of Additional
Information under the heading "Financial Information." Additional performance
information is set forth in the Trust's 1997 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144. Because
the Cash Sweep Class Shares of the Tax Exempt Money Market Fund had not been
introduced as of September 30, 1997, no financial highlights are presented for
the Fund's Cash Sweep Class Shares.
For a Cash Sweep Class Share Outstanding Throughout the Period ended September
30, 1997
<TABLE>
<CAPTION>
REALIZED
AND NET
NET ASSET UNREALIZED DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TREASURY SECURITIES MONEY MARKET FUND--CASH SWEEP CLASS
- -------------------------------------------------------------------------------------------------------------
1997 (1)...................... $1.00 $0.03 -- $(0.03) $1.00 4.46%*
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET NET EXPENSES TO INCOME TO
ASSETS RATIO OF INVESTMENT AVERAGE AVERAGE
END OF EXPENSES TO INCOME TO NET ASSETS NET ASSETS
PERIOD AVERAGE AVERAGE (EXCLUDING (EXCLUDING
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TREASURY SECURITIES MONEY MARKET FUND--CASH SWEEP CLASS
- ----------------------------------------------------------------------------------------------
1997 (1)......................$202,212 1.00%* 4.57%* 1.25%* 4.32%*
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(1) Commenced operations on February 26, 1997.
<PAGE>
5
THE TRUST
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is an open-end management
investment company that offers units of beneficial interest ("shares") in the
Funds. Each of the Funds offered by this Prospectus is a diversified fund. There
are three separate classes of shares: Trust Class (Treasury Fund only), Retail
Class and Cash Sweep Class which provide for variations in distribution costs,
voting rights and dividends. Except for these differences between classes, each
share of each Fund represents an undivided, proportionate interest in that Fund.
This Prospectus relates to the Cash Sweep Class shares of the Funds. Information
regarding the Trust Class shares of the Treasury Fund, Retail Class shares of
both Funds and the Trust's other funds is contained in separate prospectuses
that may be obtained by calling 1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TREASURY FUND
The TREASURY FUND seeks to preserve principal value and maintain a high degree
of liquidity while providing current income. There can be no assurance that the
Fund will be able to achieve its investment objective.
The Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit, and in
repurchase agreements involving such obligations.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TAX EXEMPT FUND
The TAX EXEMPT FUND seeks to preserve principal value and maintain a high degree
of liquidity while providing current income exempt from Federal income taxes.
There can be no assurance that the Fund will be able to achieve its investment
objective.
Under normal market conditions, the Fund will invest at least 80% of its net
assets in eligible securities issued by or on behalf of the states, territories
and possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest on which is
exempt from Federal income tax (collectively, "Municipal Securities"). The Fund
will invest at least 80% of its assets in Municipal Securities the interest on
which is not treated as a preference item for purposes of the federal
alternative minimum tax. This investment policy is a fundamental policy of the
Fund. The Fund will purchase municipal bonds, municipal notes, municipal lease
obligations, tax-exempt money market mutual funds, and tax-exempt commercial
paper rated in the two highest short-term rating categories by a nationally
recognized statistical rating organization (an "NRSRO") in accordance with
Securities and Exchange Commission ("SEC") regulations at the time of investment
or, if not rated, determined by the Adviser to be of comparable quality. Since
the Fund often purchases securities supported by credit enhancements from banks
and other financial institutions, changes in the credit quality of these
institutions could cause losses to the Fund and affect its share price.
The Adviser will not invest more than 25% of Fund assets in Municipal Securities
(a) whose issuers are located in the same state or (b) the interest on which is
derived from revenues of similar type projects. This restriction does not apply
to Municipal Securities in any of the following categories: public housing
authorities; general obligations of states and localities; state and local
housing finance authorities; or municipal utilities systems.
The Tax Exempt Fund may purchase municipal obligations with demand features,
including variable and floating rate obligations. In addition, the Fund may
invest in commitments to purchase securities on a "when issued" basis and
purchase securities subject to a standby commitment.
The Tax Exempt Fund may purchase securities on a when-issued or delayed basis
only when settlement takes place within 15 days of the purchase of such
securities.
The Tax Exempt Fund may invest up to 20% of the Fund's net assets in the
aggregate in taxable money market instruments, taxable money market mutual
funds, and securities subject to the alternative minimum tax. Taxable money
market instruments in which the Fund may invest consist of (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks, (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government, including STRIPs; (iii) high quality commercial paper
issued by U.S. and foreign corporations; (iv) debt obligations with a maturity
of one year or less issued by corporations with
<PAGE>
6
outstanding high-quality commercial paper; (v) receipts and (vi) repurchase
agreements involving any of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
The Tax Exempt Fund may engage in securities lending and may also borrow money
in amounts up to 33 1/3% of its net assets.
GENERAL INVESTMENT POLICIES
Each Fund complies with regulations of the SEC applicable to money market funds.
These regulations impose certain quality, maturity and diversification
restraints on investments by a Fund. Under these regulations, each Fund will
maintain a dollar-weighted average portfolio maturity of 90 days or less, and
will acquire only obligations with remaining maturities of 397 days or less.
Each Fund will attempt to maintain a net asset value of $1.00 per share,
although there can be no assurance that it will be able to do so.
For additional information regarding permitted investments, investment practices
and risks, see "Description of Permitted Investments and Risk Factors."
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to a Fund without the
consent of the holders of a majority of that Fund's outstanding shares.
A Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer. This restriction
applies to 75% of the Tax Exempt Fund's assets.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities; and, with respect to the Tax
Exempt Fund, (ii) tax-exempt securities issued by governments or political
subdivisions of governments.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and, with respect to the Tax Exempt Fund, (iii) engage in
securities lending as described in this Prospectus and in the Statement of
Additional Information.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase Cash Sweep Class shares of a Fund directly from the
Trust's shareholder servicing and transfer agent, DST Systems, Inc., or an
authorized sub-transfer agent (collectively, the "Transfer Agent"), by mail, by
wire, or through an automatic investment plan. Shares may also be purchased
through broker-dealers, including Marquis Investments, LLC, that have
established a dealer agreement with SEI Investments Distribution Co., the
Trust's distributor (the "Distributor"). Cash Sweep Class shares of the Funds
are sold on a continuous basis.
BY MAIL
You may purchase Cash Sweep Class shares of a Fund by completing and signing an
Account Application form and mailing it, along with a check (or other negotiable
bank instrument or money order) payable to "Marquis Funds (Fund Name)," to
Marquis Funds at P.O. Box 419316, Kansas City, MO 64141-6316. You may purchase
additional shares at any time by mailing payment to the Transfer Agent. Orders
placed by mail will be executed on receipt of your payment. If your check does
not clear, your purchase will be cancelled and you could be liable for any
losses or fees incurred.
Third party checks, credit cards, credit card checks and cash will not be
accepted. When purchases are made by check, redemption proceeds will not be
forwarded until the investment being redeemed has been in the account for 15
days.
You may obtain Account Application forms by calling 1-800-471-1144.
<PAGE>
7
BY WIRE
You may purchase Cash Sweep Class shares of a Fund by wiring Federal funds,
provided that your Account Application has been previously received. You must
wire funds to the Transfer Agent and the wire instructions must include your
account number. You must call 1-800-471-1144 before wiring any funds. An order
to purchase shares by Federal funds wire will be deemed to have been received by
the Fund on the Business Day (defined below) of the wire, provided that the
shareholder notifies the Transfer Agent prior to the time the Funds calculate
their net asset value, normally 11:00 a.m., Central Time. If the Transfer Agent
does not receive notice by the time the Funds calculate their net asset value,
normally 11:00 a.m., Central Time, on the Business Day of the wire, the order
will be executed on the next Business Day.
AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in a Fund through automatic
deductions by Automated Clearing House ("ACH") from a checking account by
completing an AIP Application Form. The minimum pre-authorized investment amount
is $50 per month. An AIP Application Form may be obtained by calling
1-800-471-1144. The AIP is available only for additional investments for an
existing account.
GENERAL INFORMATION REGARDING PURCHASES
You may purchase Cash Sweep Class shares of a Fund on any day the New York Stock
Exchange and the Federal Reserve wire system are open for business ("Business
Days").
The minimum initial investment in Cash Sweep Class shares of a Fund is $2,500
($500 minimum for individual retirement accounts and employees of the Adviser or
its affiliates); however, the Distributor may waive the minimum investment at
its discretion. Subsequent purchases of shares must be at least $100, except for
purchases through the AIP and payroll deductions, which must be at least $50.
A purchase order for shares will be effective, and eligible to receive dividends
declared that same day, on the Business Day the order is received by the
Transfer Agent if it receives the order and payment before the time the Funds
calculate their net asset value, normally 11:00 a.m., Central Time. A purchase
order received (with payment) after this time will be effective on the next
Business Day. The purchase price of Cash Sweep Class shares of a Fund is the net
asset value per share next computed after the order is received and accepted by
the Trust. Each Fund expects to maintain its net asset value per share constant
at $1.00. The net asset value will be determined as of the earlier of 11:00 a.m.
(Central Time) or the close of regular trading on the New York Stock Exchange
(normally, 3:00 p.m., Central Time). The net asset value per share of a Fund is
determined by dividing the total value of its investments and other assets, less
any liabilities, by its total outstanding shares. Each Fund's net asset value
per share is calculated as of each Business Day and is based on the amortized
cost method described in the Statement of Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders of record who desire to transfer registration of their shares
should call 1-800-471-1144.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
Shares may also be purchased through financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust. Shares purchased by persons ("Customers") through financial institutions
may be held of record by the financial institution. Financial institutions may
impose an earlier cut-off time for receipt of purchase orders directed through
them to allow for processing and transmittal of these orders to the Transfer
Agent for effectiveness the same day. Customers should contact their financial
institution for information as to that institution's procedures for transmitting
purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish the transfer. Certain financial institutions may be
required under state law to register as broker/dealers.
Depending upon the terms of a particular Customer account, a financial
institution may charge Customer account fees. Information concerning these
services
<PAGE>
8
and any charges will be provided to the Customer by the financial institution.
EXCHANGES
You may exchange your shares for Class A or Class B shares of other funds of the
Trust. You will be subject to the applicable sales charge on exchange unless you
qualify for a sales load waiver.
You must have received a current prospectus of the Trust's other fund into which
you wish to move your investment (the "new" fund) before the exchange will be
effected. Exchanges will be made only after instructions in writing or by
telephone (an "Exchange Request") are received by the Transfer Agent. If an
Exchange Request in good order is received by DST by 3:00 p.m. Central Time, on
any Business Day, the exchange will occur on that day. The exchange privilege
may be exercised only in those states where the class or shares of the new fund
may legally be sold.
Customers who beneficially own shares held of record by a financial institution
should contact that institution if they wish to exchange shares. The institution
will contact the Transfer Agent and effect the exchange on behalf of the
Customer.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon 60 days' notice.
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $25 charge for wiring redemption proceeds. Shares may be redeemed by
mail, by telephone or through a systematic withdrawal plan. Investors who own
shares held of record by a financial institution should contact that financial
institution for information on how to redeem shares. Shares cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, the Transfer Agent may require that the signature on the written
redemption request be guaranteed. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union, securities exchange or
association, clearing agency or savings association. A notary public cannot
guarantee signatures.
BY TELEPHONE
You may redeem your shares by telephone if you have elected that option on your
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption. You
may have the proceeds mailed to your address of record or wired to a commercial
bank account previously designated on your Account Application. There is no
charge for having redemption proceeds mailed to you or to a designated bank
account, but there is a charge for wiring redemption proceeds.
You may request a wire redemption for redemptions in excess of $500 by calling
1-800-471-1144, however a wire charge of $25 will be deducted from the amount of
the wire redemption.
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions. When market conditions are
extremely busy, it is possible that you may experience difficulties placing
redemption orders by telephone, and may wish to place them by mail.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Trust offers a Systematic Withdrawal Plan which you may use to receive
regular distributions from your account. Upon commencement of the SWP, your
account must have a current value of $5,000 or more. You may elect to receive
automatic payments via check or ACH of $100 or more on a monthly, quarterly,
semi-annual or annual basis. You may obtain a SWP Application Form by calling
1-800-471-1144.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the
<PAGE>
9
frequency and amounts of the withdrawal payments and/or any fluctuations in the
net asset value per share, your original investment could be exhausted entirely.
You may change or cancel the SWP at any time on written notice to the Transfer
Agent.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central Time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per share
is determined as of the earlier of 11:00 a.m. (Central Time) or the close of
regular trading on the New York Stock Exchange (normally 3:00 p.m., Central
Time), on each Business Day. Redeemed shares are not entitled to dividends
declared on the day the redemption order is effective.
Payment to shareholders for shares redeemed will be made within 7 days after the
Transfer Agent receives the valid redemption request. At various times, however,
a Fund may be requested to redeem shares for which it has not yet received good
payment. When purchases are made by check, redemption proceeds will not be
forwarded until the investment being redeemed has been in the account for
fifteen days.
Due to the relatively high costs of handling small investments, each Fund
reserves the right to redeem your shares at their net asset value if, because of
redemptions, your account in that Fund has a value of less than the minimum
initial purchase amount (normally $2,500; $500 for individual retirement
accounts and for employees of the Adviser or its affiliates). Accordingly, if
you purchase shares of a Fund in only the minimum investment amount, you may be
subject to involuntary redemption if you redeem any shares. Before a Fund
exercises its right to redeem your shares, you will be given notice that the
value of the shares in your account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least the minimum amount.
THE ADVISER
First National Bank of Commerce in New Orleans ("First NBC" or the "Adviser"),
201 St. Charles Avenue, New Orleans, Louisiana 70170, acts as each Fund's
investment adviser under an advisory agreement (the "Advisory Agreement") with
the Trust. The Adviser, through its Trust Group, makes the investment decisions
for the assets of the Funds and continuously reviews, supervises and administers
the investment programs of the Treasury Fund, subject to the supervision of, and
policies established by, the Trustees of the Trust. With respect to the Tax
Exempt Fund, the Adviser has delegated these responsibilities, subject to its
supervision, to the sub-adviser.
As of September 30, 1997, the Adviser's Trust Group managed approximately $3.2
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market portfolios for the past nine years.
The Glass-Steagall Act restricts the securities activities of national banks
such as First NBC but the Comptroller of the Currency permits national banks to
provide investment advisory and other services to mutual funds. Should the
Comptroller's position be challenged successfully in court or reversed by
legislation, the Trust might have to make other investment advisory
arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce Corporation
and are not insured by the Federal Deposit Insurance Corporation or issued or
guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .30% of the Treasury Fund's average daily net assets and 0.45%
of the Tax Exempt Fund's average daily net assets. The Adviser may voluntarily
waive a portion of its fee in order to limit the total operating expenses of the
Funds. The Adviser reserves the right, in its sole discretion, to terminate
these voluntary fee waivers at any time. For the fiscal year ended September 30,
1997, the Adviser was paid an advisory fee of .30% of the Treasury Fund's
average
<PAGE>
10
net assets and .44% of the Tax Exempt Fund's average net assets.
Gerald S. Dugal, Vice President of the Adviser, is the portfolio manager of the
Treasury Securities Money Market Fund as well as the Trust's Institutional Money
Market Fund and Strategic Income Bond Fund. Mr. Dugal is currently a senior
portfolio manager and Manager of Fixed Income and Trading. Mr. Dugal has over 12
years of experience in portfolio management, investment trading and research,
the past seven with the Adviser. He is licensed as a general securities
principal and a municipal securities principal.
First NBC has also entered into a custodian agreement with the Trust under which
it provides all safekeeping services as required by the Investment Company Act
of 1940 (the "1940 Act"). First NBC is entitled to a custodian fee, calculated
daily and paid monthly, at an annual rate of up to 0.04% of the average daily
net assets of each Fund. It is anticipated that the Trust will pay the Custodian
0.04% of the average daily net assets of each Fund during the fiscal year ending
September 30, 1998.
THE SUB-ADVISER
Weiss, Peck & Greer, L.L.C. ("WPG") serves as the Tax Exempt Fund's investment
sub-adviser under a sub-advisory agreement (the "Sub-Advisory Agreement") with
the Adviser. Under the Sub-Advisory Agreement, WPG invests the assets of the
Fund on a daily basis, and continuously administers the investment program of
the Fund.
WPG is a limited liability company founded as a limited partnership in 1970, and
engages in investment management, venture capital management and management
buyouts. Since its founding, WPG has been active in managing portfolios of tax
exempt securities. As of September 30, 1997, WPG managed over $14.6 billion in
assets, $2 billion of which is invested in tax exempt money market funds. The
principal business address of WPG is One New York Plaza, New York, N.Y. 10004.
WPG is entitled to a fee which is paid by the Adviser and which is calculated
daily and paid monthly, at an annual rate of: .075% of the Tax Exempt Fund's
average daily net assets up to $150 million; .05% of the next $350 million of
the Fund's average daily net assets, .04% of the next $500 million in average
daily net assets; and .03% of the Fund's average daily net assets over $1
billion.
For the fiscal period ended September 30, 1997, WPG was paid a sub-advisory fee
of .075% (annualized) of the Tax Exempt Fund's average daily net assets.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator are parties to an Administration Agreement (the "Administration
Agreement"). Under the terms of the Administration Agreement, the Administrator
provides the Trust with administrative services, other than investment advisory
services, including all regulatory reporting, necessary office space, equipment,
personnel and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of each Fund's average daily net assets.
The Administrator may voluntarily waive a portion of its fees in order to limit
the total operating expenses of the Funds.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a transfer agent agreement.
THE DISTRIBUTOR
The Cash Sweep Class shares of the Funds have a Rule 12b-1 distribution plan
(the "Cash Sweep Class Plan"), and the Trust and SEI Investments Distribution
Co. (the "Distributor"), Oaks, Pennsylvania 19456, a wholly-owned subsidiary of
SEI Investments Company, have entered into a distribution agreement (the
"Distribution Agreement").
As provided in the Distribution Agreement and the Cash Sweep Class Plan, the
Trust pays the Distributor a fee at the annual rate of .75% of the average daily
net assets of the Cash Sweep Class shares of each of the Treasury Fund and Tax
<PAGE>
11
Exempt Fund. This fee will be calculated and paid each month based on average
daily net assets for that month. The Distributor from time to time may waive a
portion of this distribution fee in order to limit the distribution fee for Cash
Sweep Class shares of the Funds. The Distributor reserves the right in its sole
discretion to terminate this voluntary waiver at any time.
The Distributor may use such fees to make payments to financial institutions and
intermediaries such as banks (including the Adviser and its affiliates), savings
and loan associations, insurance companies, and investment counselors, broker-
dealers, and the Distributor's affiliates (collectively, "financial
intermediaries") as compensation for shareholder services or as compensation to
the Distributor for its services. The Cash Sweep Class Plan is characterized as
a compensation plan since this fee will be paid to the Distributor without
regard to the shareholder service expenses incurred by the Distributor or the
amount of payments made to financial intermediaries. If the Distributor's
expenses are less than its fees, the Trust will still pay the full fee and the
Distributor will realize a profit, but the Trust will not be obligated to pay in
excess of the full fee, even if the Distributor's actual expenses are higher.
The Distributor has agreed, however, to pay the entire amount of the fee to
financial intermediaries for shareholder services.
The Funds may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor, for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise each Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of a Fund refers to the income generated by an investment over a
seven-day period which is then "annualized." That is, the amount of income
generated by an investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment is assumed to be reinvested. The "effective yield" will
be slightly higher than the "current yield" because of the compounding effect of
this assumed reinvestment.
The Tax Exempt Fund may also advertise a "tax-equivalent yield," which is
calculated by determining the rate of return that would have to be achieved on a
fully taxable investment to produce the after-tax equivalent of this Fund's
yield, assuming certain tax brackets for the shareholder.
In addition, the Trust may from time to time compare performance of a Fund to
that of other mutual funds tracked by mutual fund rating services, financial and
business publications and periodicals, broad groups of comparable mutual funds
or unmanaged indices which may assume investment of dividends but generally do
not reflect deductions for administrative and management costs or to other
investment alternatives.
The performance of the various classes of shares of a Fund will differ because
of the distribution fees charged to the Cash Sweep Class and Retail Class
shares.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Funds or its shareholders. In
addition, state and local tax consequences of an investment in a Fund may differ
from the federal income tax consequences described below. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. Each Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
<PAGE>
12
Subchapter M of the Internal Revenue Code of 1986, as amended, so as to be
relieved of federal income tax on that part of its net investment company
taxable income, and net capital gain (the excess of net long-term capital gains
over net short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from net investment company
taxable income are taxable to shareholders as ordinary income (whether received
in cash or in additional shares) to the extent of a Fund's earnings and profits.
Net capital gains will be distributed at least annually and will be taxed to
shareholders as a 20% rate gain distribution (taxed at a rate of 20%) or a 28%
rate gain distribution (taxed at a rate of 28%), depending upon the designation
by the Fund (such designation being dependent upon the Fund's holding period in
the underlying asset generating the net capital gain), regardless of how long
the shareholders have held their shares and regardless of whether the
distributions are received in cash or in additional shares. If no designation is
made regarding a capital gain dividend, it will be classified as a 28% rate gain
distribution, and, thus, taxed at a rate of 28%. Dividends and distribution of
capital gains paid by a Fund do not qualify for the dividends received deduction
for corporate shareholders. Each Fund will make annual reports to shareholders
of the federal income tax status of all distributions.
If, at the close of each quarter of its taxable year, at least 50% of the value
of the Tax Exempt Fund's assets consist of obligations the interest on which is
excludable from gross income for federal tax purposes, that Fund may pay
"exempt-interest dividends" to its shareholders. Those dividends constitute the
portion of the aggregate dividends as designated by the Fund equal to the excess
of the excludable interest over certain amounts disallowed as deductions.
Exempt-interest dividends are excludable from a shareholder's gross income for
regular federal income tax purposes, but may have certain collateral federal
income tax consequences, including alternative minimum tax. See the Statement of
Additional Information.
Current federal law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Tax Exempt Fund to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the payment of
"exempt-interest dividends."
Dividends declared by a Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of the year declared paid by the Fund at any time during the
following January.
With respect to investments in U.S. Treasury STRIPS, which are sold with
original issue discount and do not make periodic cash interest payments, a Fund
will be required to include as part of its current income the imputed interest
on such obligations even though the Fund has not received any interest payments
on such obligations during that period. Because each Fund distributes all of its
net investment income to its shareholders, a Fund may have to sell portfolio
securities to distribute such imputed income, which may occur at a time when the
Adviser would not have chosen to sell such securities and which may result in a
taxable gain or loss.
Investment income received directly by a Fund on direct U.S. Government
obligations is exempt from income tax at the state level when received directly
and may be exempt, depending on the state, when received by a shareholder as
income dividends provided certain state specific conditions are satisfied.
Interest received on repurchase agreements collateralized by direct U.S.
Government obligations normally is not exempt from state taxation. Each Fund
will inform shareholders annually of the percentage of income and distributions
derived from direct U.S. Government obligations. Shareholders should consult
their tax advisers to determine whether any portion of the income dividends
received from a Fund is considered tax exempt in their particular states.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
<PAGE>
13
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated June 29, 1993. The Declaration of Trust permits the Trust to offer
separate series of shares or "funds" and different classes of each fund. In
addition to the Funds, the Trust offers the following funds: Institutional Money
Market Fund, Government Securities Fund, Louisiana Tax-Free Income Fund,
Strategic Income Bond Fund, Balanced Fund, Value Equity Fund, Growth Equity
Fund, Small Cap Equity Fund and International Equity Fund. All consideration
received by the Trust for shares of any fund and all assets of such fund belong
to that fund and would be subject to liabilities related thereto. The Trust
reserves the right to create and issue shares of additional funds.
Each Fund pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management,
administrative and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee may
be removed by the remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of a Fund is determined
and declared on each Business Day as a dividend for shareholders of record as of
the close of business on that day. Shareholders who own shares at the close of
business on the record date will be entitled to receive the dividend. Currently,
capital gains of each Fund, if any, will be distributed at least annually.
Dividends are paid by the Funds in Federal funds or in additional shares at the
discretion of the shareholder on the first business day of each month.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Funds and associated risk factors. The only permitted
investments for the Treasury Fund include Repurchase Agreements and U.S.
Treasury obligations. Further discussion is contained in the Statement of
Additional Information.
<PAGE>
14
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. Bankers' acceptances are used
by corporations to finance the shipment and storage of goods and to furnish
dollar exchange. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT -- Certificates of deposit are interest bearing
instruments with a specific short-term maturity. They are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market prior to maturity. Certificates of deposit
with penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few to 270 days.
FIXED INCOME SECURITIES -- Fixed income securities include bonds, notes,
debentures and other interest-bearing securities that represent indebtedness.
The market value of the fixed income investments in which the Funds invest will
change in response to interest rate changes and other factors. During periods of
falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of these securities will not necessarily affect cash income derived
from these securities but will affect a Fund's net asset value.
MUNICIPAL LEASES -- Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract, or a
participation certificate in any of the above.
Municipal lease obligations typically are not backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If funds
are not appropriated for the following year's lease payments, a lease may
terminate, with a possibility of default on the lease obligation and significant
loss to the Fund. Under guidelines established by the Board of Trustees, the
credit quality of municipal leases will be determined on an ongoing basis,
including an assessment of the likelihood that a lease will be canceled.
MUNICIPAL SECURITIES -- Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
operating expenses, and for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial development bonds
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair, or improvement of privately operated
facilities. General obligation bonds are backed by the taxing power of the
issuing municipality. Revenue bonds are backed by the revenues of a project or
facility; tolls from a toll bridge for example. Certificates of participation
represent an interest in an underlying obligation or commitment such as an
obligation issued in connection with a leasing arrangement. The payment of
principal and interest on private activity and industrial development bonds
generally is dependent solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and personal property so
financed as security for such payment.
Municipal securities include general obligation notes, tax anticipation notes,
revenue anticipation notes, bond anticipation notes, certificates of
indebtedness, demand notes and construction loan notes. Municipal bonds include
general obligation bonds, revenue or special obligation bonds, private activity
and industrial development bonds.
PARTICIPATION INTERESTS -- Participation interests are interests in Municipal
Securities from financial institutions such as commercial and investment banks,
savings and loan associations and insurance companies. These interests may take
the form of participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows a Fund to treat
the
<PAGE>
15
income from the investment as exempt from federal income tax. The Tax Exempt
Fund invests in these participation interests in order to obtain credit
enhancement or demand features that would not be available through direct
ownership of the underlying Municipal Securities.
RECEIPTS -- TRs, TIGRs and CATS -- interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury obligations into
a special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts are sold as
zero coupon securities which means that they are sold at a substantial discount
and redeemed at face value at their maturity date without interim cash payments
of interest or principal. The amount of this discount is accrued over the life
of the security and constitutes the income earned on the security for both
accounting and tax purposes. Because of these features, receipts may be subject
to greater price volatility than interest paying U.S. Treasury Obligations.
Receipts include Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs"), and Certificates of Accrual on Treasury Securities ("CATS").
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements must be fully collateralized at all times. A Fund bears a risk of
loss in the event the other party defaults on its obligations and the Fund is
delayed or prevented from its right to dispose of the collateral. A Fund will
enter into repurchase agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered loans under the
1940 Act, as amended.
SECURITIES LENDING -- In order to generate additional income, the Tax Exempt
Fund may lend securities which it owns pursuant to agreements requiring that the
loan be continuously secured by collateral consisting of cash or securities of
the U.S. Government or its agencies equal to at least 100% of the market value
of the securities lent. The Fund continues to receive interest on the securities
lent while simultaneously earning a portion of the return generated from the
collateral (or a portion of the return on the investment of cash collateral).
Collateral is marked to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral should the borrower of
the securities fail financially or become insolvent.
STANDBY COMMITMENTS -- Some securities dealers are willing to sell Municipal
Securities to a Fund accompanied by their commitments to repurchase the
Municipal Securities prior to maturity, at the Fund's option, for the amortized
cost of the Municipal Securities at the time of repurchase. These arrangements
are not used to protect against changes in the market value of Municipal
Securities. They permit a Fund, however, to remain fully invested and still
provide liquidity to satisfy redemptions. The cost of Municipal Securities
accompanied by these "standby" commitments could be greater than the cost of
Municipal Securities without such commitments. Standby commitments are not
marketable or otherwise assignable and have value only to a Fund. The default or
bankruptcy of a securities dealer giving such a commitment would not affect the
quality of the Municipal Securities purchased. However, without a standby
commitment, these securities could be more difficult to sell. The Tax Exempt
Fund enters into standby commitments only with those dealers whose credit the
investment adviser believes to be of high quality.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or that
mature in more than seven days are considered to be illiquid securities.
U.S. GOVERNMENT AGENCY OBLIGATIONS -- Obligations issued or guaranteed by
agencies of the United States Government, including, among others, the Federal
Farm Credit Bank, the Federal Housing Administration and the Small Business
Administration, and obligations issued or
<PAGE>
16
guaranteed by instrumentalities of the United States Government, including,
among others, the Federal Home Loan Mortgage Corporation, the Federal Land Banks
and the United States Postal Service. Some of these securities are supported by
the full faith and credit of the United States Treasury, others are supported by
the right of the issuer to borrow from the Treasury, while still others are
supported only by the credit of the instrumentality. Guarantees of principal by
agencies or instrumentalities of the United States Government may be a guarantee
of payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing on
the obligation prior to maturity. Guarantees as to the timely payment of
principal and interest do not extend to the value or yield of these securities
nor to the value of the Tax Exempt Fund's shares.
U.S. GOVERNMENT SECURITIES -- Any guaranty by the U.S. Government of the
securities in which a Fund invests guarantees only the payment of principal and
interest on the guaranteed security and does not guarantee the yield or value of
that security or the yield or value of shares of the Fund.
U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Funds do not expect to trade STRIPS
actively.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain of the obligations purchased
by the Tax Exempt Fund may carry variable or floating rates of interest, may
involve a conditional or unconditional demand feature and may include variable
amount master demand notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or some
other reset period, and may have a floor or ceiling on interest rate changes.
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such securities.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
However, the Tax Exempt Fund may purchase securities on a when-issued or delayed
basis only when settlement takes place within 15 days of the purchase of such
securities. To the extent required by the 1940 Act, the Tax Exempt Fund will
maintain with the custodian a separate account with liquid high grade debt
securities or cash in an amount at least equal to these commitments. The
interest rate realized on these securities is fixed as of the purchase date and
no interest accrues to the Fund before settlement. These securities are subject
to market fluctuation due to changes in market interest rates and it is possible
that the market value at the time of settlement could be higher or lower than
the purchase price if the general level of interest rates has changed. Although
the Tax Exempt Fund generally purchases securities on a when-issued or forward
commitment basis with the intention of actually acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if it deems appropriate.
<PAGE>
17
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary................................................................... 2
Expense Summary........................................................... 3
Financial Highlights...................................................... 4
The Trust................................................................. 5
Investment Objective and Policies for the Treasury Fund................... 5
Investment Objective and Policies for the Tax Exempt Fund................. 5
General Investment Policies............................................... 6
Investment Limitations.................................................... 6
Purchase of Shares........................................................ 6
Exchanges................................................................. 8
Redemption of Shares...................................................... 8
The Adviser............................................................... 9
The Sub-Adviser........................................................... 10
The Administrator......................................................... 10
The Shareholder Servicing Agent and Transfer Agent........................ 10
The Distributor........................................................... 10
Performance............................................................... 11
Taxes..................................................................... 11
General Information....................................................... 13
Description of Permitted Investments and Risk Factors..................... 13
</TABLE>
<PAGE>
MARQUIS FUNDS-REGISTERED TRADEMARK-
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
- TREASURY SECURITIES MONEY MARKET FUND
- TAX EXEMPT MONEY MARKET FUND
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is a mutual fund that offers a
convenient and economical means of investing in one or more professionally
managed portfolios of securities. This Prospectus offers the RETAIL CLASS shares
of the TREASURY SECURITIES MONEY MARKET FUND and TAX EXEMPT MONEY MARKET FUND
(the "Funds"), each a separate series of the Trust.
This Prospectus sets forth concisely the information about the Funds and the
Trust that a prospective investor should know before investing in the Funds.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated February 1, 1998, as
supplemented from time to time, has been filed with the Securities and Exchange
Commission (the "SEC") and is available without charge by calling
1-800-471-1144. The Statement of Additional Information is incorporated into
this Prospectus by reference.
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, INCLUDING FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
FEBRUARY 1, 1998
<PAGE>
2
SUMMARY
MARQUIS FUNDS-REGISTERED TRADEMARK- (THE "TRUST") IS AN OPEN-END
MANAGEMENT INVESTMENT COMPANY PROVIDING A CONVENIENT WAY TO INVEST IN
PROFESSIONALLY MANAGED PORTFOLIOS OF SECURITIES. THIS SUMMARY PROVIDES BASIC
INFORMATION ABOUT THE RETAIL CLASS SHARES OF THE TRUST'S TREASURY SECURITIES
MONEY MARKET FUND (THE "TREASURY FUND") AND TAX EXEMPT MONEY MARKET FUND
(THE "TAX EXEMPT FUND") (TOGETHER, THE "FUNDS"). EACH FUND IS A SEPARATE
SERIES OF THE TRUST.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS? The
TREASURY FUND seeks to preserve principal value and maintain a high degree
of liquidity while providing current income by investing exclusively in
obligations issued by the U.S. Treasury and in repurchase agreements
involving such obligations. The TAX EXEMPT FUND seeks to preserve principal
value and maintain a high degree of liquidity while providing current income
exempt from Federal income taxes by investing, under normal market
conditions, at least 80% of its net assets in eligible securities issued by
or on behalf of the states, territories, and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies, and instrumentalities, the interest on which is exempt from
Federal income tax. There can be no assurance that either Fund will achieve
its investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUNDS? While each
Fund seeks to maintain a net asset value of $1.00 per share, there can be no
assurance that either Fund will be able to do this on a continuous basis.
There may be other risks involved in the ownership of money market mutual
funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its
agencies or instrumentalities of the securities in which either Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of that Fund. The Trust's shares are not federally
insured by the FDIC or any other government agency.
For more information about each Fund, see "Investment Objective and
Policies," "General Investment Policies" and "Description of Permitted
Investments and Risk Factors."
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce
in New Orleans serves as the investment adviser (the "Adviser") of each
Fund. Additionally, Weiss, Peck & Greer, L.L.C. serves as investment
sub-adviser to the Tax Exempt Fund. See "Expense Summary," "The Adviser" and
"The Sub-Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder
servicing agent, transfer agent and dividend disbursing agent for the Trust.
See "The Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. serves as
distributor of the Trust's shares. See "The Distributor."
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be
made through the Transfer Agent or financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust on any day when the New York Stock Exchange and Federal Reserve wire
system are open for business (a "Business Day"). A purchase order will be
effective as of the Business Day received by the Transfer Agent if the
Transfer Agent receives an order and payment with readily available funds
prior to the time the Funds calculate their net asset value, normally 11:00
a.m., Central Time. To purchase shares by wire, you must first call
1-800-471-1144. Redemption orders placed with the Transfer Agent prior to
11:00 a.m., Central Time on any Business Day will be effective that day. The
Funds also offer both an Automatic Investment Plan and a Systematic
Withdrawal Plan. The purchase and redemption price for shares is the net
asset value per share determined as of the end of the day the order is
effective. Retail Class shares of the Funds are, absent fee waivers, subject
to annual distribution fees of 0.25% of their respective average daily net
assets. See "Purchase of Shares" and "Redemption of Shares."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of each Fund is distributed in the form of
monthly dividends. Any capital gain is distributed at least annually.
Dividends are paid in additional shares unless the shareholder elects to
take payment in cash on the first Business Day of each month. See
"Dividends."
<PAGE>
3
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES RETAIL CLASS
<TABLE>
<CAPTION>
TREASURY
SECURITIES TAX EXEMPT
MONEY MARKET MONEY MARKET
FUND FUND
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases................................. None None
Maximum Sales Load Imposed on Reinvested Dividends...................... None None
Maximum Contingent Deferred Sales Charge................................ None None
Wire Redemption Fee..................................................... $25 $25
Exchange Fee............................................................ None None
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
TREASURY
SECURITIES MONEY TAX EXEMPT MONEY
MARKET FUND MARKET FUND
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees (after fee waivers) (1)................................. .30% .44%
12b-1 Fees (after fee waivers) (1)...................................... .20% .00%
Other Expenses (after fee waivers) (1).................................. .20% .21%
- --------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (2)........................ .70% .65%
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Adviser and Administrator have voluntarily agreed to waive their fees
and the Distributor has voluntarily agreed to waive 12b-1 fees to the extent
necessary to keep "Total Operating Expenses" for the Retail Class shares of
the Treasury Fund and Tax Exempt Fund from exceeding 0.70% and 0.65%,
respectively. The Adviser, Administrator and the Distributor reserve the
right to terminate their waivers at any time in their sole discretion.
Absent such waivers, Management Fees for the Tax Exempt Fund would be 0.45%,
Other Expenses for the Tax Exempt Fund would be 0.25% and the 12b-1 fee for
the Retail Class shares of the Funds would be 0.25%.
(2) Absent the Adviser's, Administrator's and the Distributor's voluntary fee
waivers, Total Operating Expenses for Retail Class shares of the Treasury
Fund and Tax Exempt Fund would be 0.75% and 0.95%, respectively.
EXAMPLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Retail Class shares assuming (1)
5% annual return and (2) redemption at the end
of each time period:
Treasury Money Market Fund.................... $7 $22 $39 $87
Tax Exempt Money Market Fund.................. $7 $21 $36 $81
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Retail Class shares of the Fund. Shareholders purchasing shares through a
financial institution may be charged additional account fees by that
institution. Additional information may be found under "The Adviser," "The
Administrator" and "The Distributor."
<PAGE>
4
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the Trust's financial statements and notes
thereto which are incorporated by reference into the Statement of Additional
Information under the heading "Financial Information." Additional performance
information is set forth in the Trust's 1997 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144.
For a Retail Class Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
REALIZED
AND NET
NET ASSET UNREALIZED DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TREASURY SECURITIES MONEY MARKET FUND -- RETAIL CLASS
- -----------------------------------------------------------------------------------------------------------------------------------
1997................................................... $ 1.00 $ 0.05 -- $(0.05) $1.00 4.83%
1996................................................... 1.00 0.05 -- (0.05) 1.00 4.86
1995................................................... 1.00 0.05 -- (0.05) 1.00 5.16
1994(1)................................................ 1.00 0.03 -- (0.03) 1.00 3.15*
- -----------------------------------------------------------------------------------------------------------------------------------
TAX EXEMPT MONEY MARKET FUND -- RETAIL CLASS
- -----------------------------------------------------------------------------------------------------------------------------------
1997................................................... $ 1.00 $ 0.03 -- $(0.03) $1.00 3.12%
1996(2)................................................ 1.00 0.01 -- (0.01) 1.00 2.83*
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
RATIO OF NET
RATIO OF EXPENSES INVESTMENT
NET TO INCOME TO
NET INVESTMENT AVERAGE AVERAGE
ASSETS RATIO OF INCOME TO NET NET
END OF EXPENSES TO AVERAGE ASSETS ASSETS
PERIOD AVERAGE NET (EXCLUDING (EXCLUDING
(000) NET ASSETS ASSETS WAIVERS) WAIVERS)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
TREASURY SECURITIES MONEY MARKET FUND -- RETAIL CLASS
- ----------------------------------------------------------------------------------------------------------------
1997...................................................$ 604,919 0.70% 4.73% 0.75% 4.68%
1996................................................... 411,068 0.70 4.72 0.78 4.64
1995................................................... 282,747 0.68 5.12 0.82 4.98
1994(1)................................................ 86,848 0.59* 3.27* 0.83* 3.03*
- ----------------------------------------------------------------------------------------------------------------
TAX EXEMPT MONEY MARKET FUND -- RETAIL CLASS
- ----------------------------------------------------------------------------------------------------------------
1997...................................................$ 76,744 0.65% 3.07% 0.95% 2.77%
1996(2)................................................ 66,214 0.65* 2.92* 1.12* 2.45*
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(1) Commenced operations on October 19, 1993.
(2) Commenced operations on June 7, 1996.
<PAGE>
5
THE TRUST
MARQUIS FUNDS-REGISTERED TRADEMARK- (the "Trust") is an open-end management
investment company that offers units of beneficial interest ("shares") in the
Funds. Each of the Funds offered by this Prospectus is a diversified fund. There
are three separate classes of shares: Trust Class (Treasury Fund only), Retail
Class and Cash Sweep Class which provide for variations in distribution costs,
voting rights and dividends. Except for these differences between classes, each
share of each Fund represents an undivided, proportionate interest in that Fund.
This Prospectus relates to the Retail Class shares of the Funds. Information
regarding the Trust Class shares of the Treasury Fund, Cash Sweep Class shares
of both Funds and the Trust's other funds is contained in separate prospectuses
that may be obtained by calling 1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TREASURY FUND
The TREASURY FUND seeks to preserve principal value and maintain a high degree
of liquidity while providing current income. There can be no assurance that the
Fund will be able to achieve its investment objective.
The Treasury Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit, and in
repurchase agreements involving such obligations.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TAX EXEMPT FUND
The TAX EXEMPT FUND seeks to preserve principal value and maintain a high degree
of liquidity while providing current income exempt from Federal income taxes.
There can be no assurance that the Fund will be able to achieve its investment
objective.
Under normal market conditions, the Tax Exempt Fund will invest at least 80% of
its net assets in eligible securities issued by or on behalf of the states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, the interest
on which is exempt from Federal income tax (collectively, "Municipal
Securities"). The Fund will invest at least 80% of its assets in Municipal
Securities the interest on which is not treated as a preference item for
purposes of the federal alternative minimum tax. This investment policy is a
fundamental policy of the Fund. The Fund will purchase municipal bonds,
municipal notes, municipal lease obligations, tax-exempt money market mutual
funds, and tax-exempt commercial paper rated in the two highest short-term
rating categories by a nationally recognized statistical rating organization (an
"NRSRO") in accordance with Securities and Exchange Commission ("SEC")
regulations at the time of investment or, if not rated, determined by the
Adviser to be of comparable quality. Since the Fund often purchases securities
supported by credit enhancements from banks and other financial institutions,
changes in the credit quality of these institutions could cause losses to the
Fund and affect its share price.
The Adviser will not invest more than 25% of the Tax Exempt Fund's assets in
Municipal Securities (a) whose issuers are located in the same state or (b) the
interest on which is derived from revenues of similar type projects. This
restriction does not apply to Municipal Securities in any of the following
categories: public housing authorities; general obligations of states and
localities; state and local housing finance authorities; or municipal utilities
systems.
The Tax Exempt Fund may purchase municipal obligations with demand features,
including variable and floating rate obligations. In addition, the Fund may
invest in commitments to purchase securities on a "when issued" basis and
purchase securities subject to a standby commitment.
The Tax Exempt Fund may purchase securities on a when-issued or delayed basis
only when settlement takes place within 15 days of the purchase of such
securities.
The Tax Exempt Fund may invest up to 20% of the Fund's net assets in the
aggregate in taxable money market instruments, taxable money market mutual
funds, and securities subject to the alternative minimum tax. Taxable money
market instruments in which the Fund may invest consist of (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks, (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government, including STRIPs; (iii) high quality
<PAGE>
6
commercial paper issued by U.S. and foreign corporations; (iv) debt obligations
with a maturity of one year or less issued by corporations with outstanding
high-quality commercial paper; (v) receipts and (vi) repurchase agreements
involving any of the foregoing obligations entered into with highly-rated banks
and broker-dealers.
The Tax Exempt Fund may engage in securities lending and may also borrow money
in amounts up to 33 1/3% of its net assets.
GENERAL INVESTMENT POLICIES
Each Fund complies with regulations of the SEC applicable to money market funds.
These regulations impose certain quality, maturity and diversification
restraints on investments by a Fund. Under these regulations, each Fund will
maintain a dollar-weighted average portfolio maturity of 90 days or less, and
will acquire only obligations with remaining maturities of 397 days or less.
Each Fund will attempt to maintain a net asset value of $1.00 per share,
although there can be no assurance that it will be able to do so.
For additional information regarding permitted investments, investment practices
and risks, see "Description of Permitted Investments and Risk Factors."
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to a Fund without the
consent of the holders of a majority of that Fund's outstanding shares.
A Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer. This restriction
applies to 75% of the Tax Exempt Fund's assets.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities; and, with respect to the Tax
Exempt Fund, (ii) tax-exempt securities issued by governments or political
subdivisions of governments.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and with respect to the Tax Exempt Fund (iii) engage in
securities lending as described in this Prospectus and in the Statement of
Additional Information.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase Retail Class shares of a Fund directly from the Trust's
shareholder servicing and transfer agent, DST Systems, Inc., or an authorized
sub-transfer agent (collectively, the "Transfer Agent") by mail, by wire, or
through an automatic investment plan. Shares may also be purchased through
broker-dealers, including Marquis Investments, LLC that have established a
dealer agreement with SEI Investments Distribution Co., the Trust's distributor
(the "Distributor"). Retail Class shares of the Funds are sold on a continuous
basis.
BY MAIL
You may purchase Retail Class shares of a Fund by completing and signing an
Account Application form and mailing it, along with a check (or other negotiable
bank instrument or money order) payable to "Marquis Funds (Fund Name)," to
Marquis Funds at P.O. Box 419316, Kansas City, MO 64141-6316. You may purchase
additional shares at any time by mailing payment to Marquis Funds. Orders placed
by mail will be executed on receipt of your payment. If your check does not
clear, your purchase will be cancelled and you could be liable for any losses or
fees incurred.
Third party checks, credit cards, credit card checks and cash will not be
accepted. When purchases are made by check, redemption proceeds will not be
<PAGE>
7
forwarded until the investment being redeemed has been in the account for 15
days.
You may obtain Account Application forms by calling 1-800-471-1144.
BY WIRE
You may purchase Retail Class shares of a Fund by wiring Federal funds, provided
that your Account Application has been previously received. You must wire funds
to the Transfer Agent and the wire instructions must include your account
number. You must call 1-800-471-1144 before wiring any funds. An order to
purchase shares by Federal funds wire will be deemed to have been received by
the Fund on the Business Day (defined below) of the wire, provided that the
shareholder notifies the Transfer Agent prior to the time the Funds calculate
their net asset value, normally 11:00 a.m., Central Time. If the Transfer Agent
does not receive notice by the time the Funds calculate their net asset value,
normally 11:00 a.m., Central Time, on the Business Day of the wire, the order
will be executed on the next Business Day.
AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in a Fund through automatic
deductions by Automated Clearing House ("ACH") from a checking account by
completing an AIP Application Form. The minimum pre-authorized investment amount
is $50 per month. An AIP Application Form may be obtained by calling
1-800-471-1144. The AIP is available only for additional investments for an
existing account.
GENERAL INFORMATION REGARDING PURCHASES
You may purchase Retail Class shares of a Fund on any day the New York Stock
Exchange and the Federal Reserve wire system are open for business ("Business
Days").
The minimum initial investment in Retail Class shares of a Fund is $2,500 ($500
minimum for individual retirement accounts and employees of the Adviser or its
affiliates); however, the Distributor may waive the minimum investment at its
discretion. Subsequent purchases of shares must be at least $100, except for
purchases through the AIP and payroll deductions, which must be at least $50.
A purchase order for shares will be effective, and eligible to receive dividends
declared that same day, on the Business Day the order is received by the
Transfer Agent if it receives the order and payment before the time the Funds
calculate their net asset value, normally 11:00 a.m., Central Time. A purchase
order received (with payment) after this time will be effective on the next
Business Day. The purchase price of Retail Class shares of a Fund is the net
asset value per share next computed after the order is received and accepted by
the Trust. Each Fund expects to maintain its net asset value per share constant
at $1.00. The net asset value per share of a Fund is determined by dividing the
total value of its investments and other assets, less any liabilities, by its
total outstanding shares. Each Fund's net asset value per share is calculated as
of the earlier of 11:00 a.m. (Central Time) or the close of regular trading on
the New York Stock Exchange (normally, 3:00 p.m., Central Time), each Business
Day and is based on the amortized cost method described in the Statement of
Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders of record who desire to transfer registration of their shares
should call 1-800-471-1144.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
Shares may also be purchased through financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust. Shares purchased by persons ("Customers") through financial institutions
may be held in street name by the financial institution. Financial institutions
may impose an earlier cut-off time for receipt of purchase orders directed
through them to allow for processing and transmittal of these orders to the
Transfer Agent for effectiveness the same day. Customers should contact their
financial institution for information as to that institution's procedures for
transmitting purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish the transfer. Certain
<PAGE>
8
financial institutions may be required under state law to register as
broker/dealers.
Depending upon the terms of a particular Customer account, a financial
institution may charge Customer account fees. Information concerning these
services and any charges will be provided to the Customer by the financial
institution.
EXCHANGES
You may exchange your shares for Class A or Class B shares of other funds of the
Trust. You will be subject to the applicable sales charge on exchange unless you
qualify for a sales load waiver.
You must have received a current prospectus of the Trust's other fund into which
you wish to move your investment (the "new" fund) before the exchange will be
effected. Exchanges will be made only after instructions in writing or by
telephone (an "Exchange Request") are received by the Transfer Agent. If an
Exchange Request in good order is received by the Transfer Agent by 3:00 p.m.
Central Time, on any Business Day, the exchange will occur on that day. The
exchange privilege may be exercised only in those states where the class or
shares of the new fund may legally be sold.
Customers who beneficially own shares held of record by a financial institution
should contact that institution if they wish to exchange shares. The institution
will contact the Transfer Agent and effect the exchange on behalf of the
Customer.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon 60 days' notice.
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $25 charge for wiring redemption proceeds. Shares may be redeemed by
mail, by telephone or through a systematic withdrawal plan. Investors who own
shares held of record by a financial institution should contact that financial
institution for information on how to redeem shares. Shares cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, the Transfer Agent may require that the signature on the written
redemption request be guaranteed. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union, securities exchange or
association, clearing agency or savings association. A notary public cannot
guarantee signatures.
BY TELEPHONE
You may redeem your shares by telephone if you have elected that option on your
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption. You
may have the proceeds mailed to your address of record or wired to a commercial
bank account previously designated on your Account Application. There is no
charge for having redemption proceeds mailed to you or to a designated bank
account, but there is a charge for wiring redemption proceeds.
You may request a wire redemption for redemptions in excess of $500 by calling
1-800-471-1144, however a wire charge of $25 will be deducted from the amount of
the wire redemption.
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions. When market conditions are
extremely busy, it is possible that you may experience difficulties placing
redemption orders by telephone, and may wish to place them by mail.
<PAGE>
9
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Trust offers a Systematic Withdrawal Plan which you may use to receive
regular distributions from your account. Upon commencement of the SWP, your
account must have a current value of $5,000 or more. You may elect to receive
automatic payments via check or ACH of $100 or more on a monthly, quarterly,
semi-annual or annual basis. You may obtain a SWP Application Form by calling
1-800-471-1144.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the frequency and amounts of the withdrawal payments and/or any
fluctuations in the net asset value per share, your original investment could be
exhausted entirely. You may change or cancel the SWP at any time on written
notice to the Transfer Agent.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central Time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per share
will be determined as of the earlier of 11:00 a.m. (Central Time) or the close
of regular trading on the New York Stock Exchange (normally, 3:00 p.m., Central
Time). Redeemed shares are not entitled to dividends declared on the day the
redemption order is effective.
Payment to shareholders for shares redeemed will be made within 7 days after the
Transfer Agent receives the valid redemption request. At various times, however,
a Fund may be requested to redeem shares for which it has not yet received good
payment. When purchases are made by check, redemption proceeds will not be
forwarded until the investment being redeemed has been in the account for
fifteen days.
Due to the relatively high costs of handling small investments, each Fund
reserves the right to redeem your shares at their net asset value if, because of
redemptions, your account in that Fund has a value of less than the minimum
initial purchase amount (normally $2,500; $500 for individual retirement
accounts and for employees of the Adviser or its affiliates). Accordingly, if
you purchase shares of a Fund in only the minimum investment amount, you may be
subject to involuntary redemption if you redeem any shares. Before a Fund
exercises its right to redeem your shares, you will be given notice that the
value of the shares in your account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least the minimum amount.
THE ADVISER
First National Bank of Commerce in New Orleans ("First NBC" or the "Adviser"),
201 St. Charles Avenue, New Orleans, Louisiana 70170, acts as each Fund's
investment adviser under an advisory agreement (the "Advisory Agreement") with
the Trust. The Adviser, through its Trust Group, makes the investment decisions
for the assets of the Treasury Fund and continuously reviews, supervises and
administers the investment programs of the Funds, subject to the supervision of,
and policies established by, the Trustees of the Trust. With respect to the Tax
Exempt Fund, the Adviser has delegated these responsibilities, subject to its
supervision, to the investment sub-adviser.
As of September 30, 1997, the Adviser's Trust Group managed approximately $3.2
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market portfolios for the past nine years.
The Glass-Steagall Act restricts the securities activities of national banks
such as First NBC but the Comptroller of the Currency permits national banks to
provide investment advisory and other services to mutual funds. Should the
Comptroller's position be challenged successfully in court or reversed by
legislation, the Trust might have to make other investment advisory
arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce Corporation
and are not insured by the Federal Deposit Insurance Corporation or issued or
<PAGE>
10
guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .30% of the Treasury Fund's average daily net assets and 0.45%
of the Tax Exempt Fund's average daily net assets. The Adviser may voluntarily
waive a portion of its fee in order to limit the total operating expenses of the
Funds. The Adviser reserves the right, in its sole discretion, to terminate any
such voluntary fee waivers at any time. For the fiscal year ended September 30,
1997, the Adviser was paid an advisory fee of .30% of the Treasury Fund's
average net assets and .44% of the Tax Exempt Fund's average net assets.
Gerald S. Dugal, Vice President of the Adviser, is the portfolio manager of the
Treasury Securities Money Market Fund as well as the Trust's Institutional Money
Market Fund and Strategic Income Bond Fund. Mr. Dugal is currently a senior
portfolio manager and Manager of Fixed Income and Trading. Mr. Dugal has over 12
years of experience in portfolio management, investment trading and research,
the past seven with the Adviser. He is licensed as a general securities
principal and a municipal securities principal.
First NBC has also entered into a custodian agreement with the Trust under which
it provides all safekeeping services as required by the Investment Company Act
of 1940 (the "1940 Act"). First NBC is entitled to a custodian fee, calculated
daily and paid monthly, at an annual rate of up to 0.04% of the average daily
net assets of each Fund. It is anticipated that the Trust will pay the Custodian
0.04% of the average daily net assets of each Fund during the fiscal year ending
September 30, 1998.
THE SUB-ADVISER
Weiss, Peck & Greer, L.L.C. ("WPG") serves as the Tax Exempt Fund's investment
sub-adviser under a sub-advisory agreement (the "Sub-Advisory Agreement") with
the Adviser. Under the Sub-Advisory Agreement, and subject at all times to the
supervision of the Adviser and the Trustees of the Trust, WPG invests the assets
of the Fund on a daily basis, and continuously administers the investment
program of the Fund.
WPG is a limited liability company founded as a limited partnership in 1970, and
engages in investment management, venture capital management and management
buyouts. Since its founding, WPG has been active in managing portfolios of tax
exempt securities. As of September 30, 1997, WPG managed over $14.6 billion in
assets, $2 billion of which is invested in tax exempt money market funds. The
principal business address of WPG is One New York Plaza, New York, N.Y. 10004.
WPG is entitled to a fee which is paid by the Adviser and which is calculated
daily and paid monthly, at an annual rate of: .075% of the Tax Exempt Fund's
average daily net assets up to $150 million, .05% of the next $350 million of
the Fund's average daily net assets, .04% of the next $500 million in average
daily net assets; and .03% of the Fund's average daily net assets over $1
billion.
For the fiscal period ended September 30, 1997, WPG was paid a sub-advisory fee
of .075% (annualized) of the Tax Exempt Fund's average daily net assets.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator are parties to an Administration Agreement (the "Administration
Agreement"). Under the terms of the Administration Agreement, the Administrator
provides the Trust with administrative services, other than investment advisory
services, including all regulatory reporting, necessary office space, equipment,
personnel and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of each Fund's average daily net assets.
The Administrator may voluntarily waive a portion of its fees in order to limit
the total operating expenses of the Funds.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a transfer agent agreement.
<PAGE>
11
THE DISTRIBUTOR
The Retail Class shares of the Funds have a Rule 12b-1 distribution plan (the
"Retail Class Plan"), and the Trust and SEI Investments Distribution Co. (the
"Distributor"), Oaks, Pennsylvania 19456, a wholly-owned subsidiary of SEI
Investments Company, have entered into a distribution agreement (the
"Distribution Agreement").
As provided in the Distribution Agreement and the Retail Class Plan, the Trust
pays the Distributor a fee at the annual rate of .25% of the average daily net
assets of the Retail Class shares of the Funds. This fee will be calculated and
paid each month based on average daily net assets for that month. The
Distributor from time to time may waive a portion of this distribution fee in
order to limit the distribution fee for Retail Class shares of the Funds. The
Distributor reserves the right in its sole discretion to terminate this
voluntary waiver at any time.
The Distributor may use such fees to make payments to financial institutions and
intermediaries such as banks (including the Adviser and its affiliates), savings
and loan associations, insurance companies, and investment counselors, broker-
dealers, and the Distributor's affiliates (collectively, "financial
intermediaries") as compensation for shareholder services or as compensation to
the Distributor for its services. The Retail Class Plan is characterized as a
compensation plan since this fee will be paid to the Distributor without regard
to the shareholder service expenses incurred by the Distributor or the amount of
payments made to financial intermediaries. If the Distributor's expenses are
less than its fees, the Trust will still pay the full fee and the Distributor
will realize a profit, but the Trust will not be obligated to pay in excess of
the full fee, even if the Distributor's actual expenses are higher. The
Distributor has agreed, however, to pay the entire amount of the fee to
financial intermediaries for shareholder services.
The Funds may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor, for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise each Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of a Fund refers to the income generated by an investment over a
seven-day period which is then "annualized." That is, the amount of income
generated by an investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment is assumed to be reinvested. The "effective yield" will
be slightly higher than the "current yield" because of the compounding effect of
this assumed reinvestment.
The Tax Exempt Fund may also advertise a "tax-equivalent yield," which is
calculated by determining the rate of return that would have to be achieved on a
fully taxable investment to produce the after-tax equivalent of this Fund's
yield, assuming certain tax brackets for the shareholder.
In addition, the Trust may from time to time compare performance of a Fund to
that of other mutual funds tracked by mutual fund rating services, financial and
business publications and periodicals, broad groups of comparable mutual funds
or unmanaged indices which may assume investment of dividends but generally do
not reflect deductions for administrative and management costs or to other
investment alternatives.
The performance of the various classes of shares of a Fund will differ because
of the distribution fees charged to the Cash Sweep Class and Retail Class
shares.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Funds or its shareholders. In
addition, state and local tax consequences of an
<PAGE>
12
investment in a Fund may differ from the federal income tax consequences
described below. Accordingly, shareholders are urged to consult with their tax
advisers regarding specific questions as to federal, state and local income
taxes. Additional information concerning taxes is set forth in the Statement of
Additional Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. Each Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended, so as to be
relieved of federal income tax on that part of its net investment company
taxable income, and net capital gain (the excess of net long-term capital gains
over net short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from net investment company
taxable income are taxable to shareholders as ordinary income (whether received
in cash or in additional shares) to the extent of a Fund's earnings and profits.
Net capital gains will be distributed at least annually and will be taxed to
shareholders as a 20% rate gain distribution (taxed at a rate of 20%) or a 28%
rate gain distribution (taxed at a rate of 28%), depending upon the designation
by the Fund (such designation being dependent upon the Fund's holding period in
the underlying asset generating the net capital gain), regardless of how long
the shareholders have held their shares and regardless of whether the
distributions are received in cash or in additional shares. If no designation is
made regarding a capital gain dividend, it will be classified as a 28% rate gain
distribution, and, thus, taxed at a rate of 28%. Dividends and distribution of
capital gains paid by a Fund do not qualify for the dividends received deduction
for corporate shareholders. Each Fund will make annual reports to shareholders
of the federal income tax status of all distributions.
If, at the close of each quarter of its taxable year, at least 50% of the value
of the Tax Exempt Fund's assets consist of obligations, the interest on which is
excludable from gross income for federal tax purposes, that Fund may pay
"exempt-interest dividends" to its shareholders. Those dividends constitute the
portion of the aggregate dividends as designated by the Fund equal to the excess
of the excludable interest over certain amounts disallowed as deductions.
Exempt-interest dividends are excludable from a shareholder's gross income for
regular federal income tax purposes, but may have certain collateral federal
income tax consequences, including alternative minimum tax. See the Statement of
Additional Information.
Current federal law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Tax Exempt Fund to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the payment of
"exempt-interest dividends."
Dividends declared by a Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of the year declared paid by the Fund at any time during the
following January.
With respect to investments in U.S. Treasury STRIPS, which are sold with
original issue discount and do not make periodic cash interest payments, a Fund
will be required to include as part of its current income the imputed interest
on such obligations even though the Fund has not received any interest payments
on such obligations during that period. Because each Fund distributes all of its
net investment income to its shareholders, a Fund may have to sell portfolio
securities to distribute such imputed income, which may occur at a time when the
Adviser would not have chosen to sell such securities and which may result in a
taxable gain or loss.
Investment income received directly by a Fund on direct U.S. Government
obligations is exempt from income tax at the state level when received directly
and may be exempt, depending on the state, when received by a shareholder as
income dividends provided certain state specific conditions are satisfied.
Interest received on repurchase agreements collateralized by direct U.S.
Government obligations normally is not exempt from state
<PAGE>
13
taxation. Each Fund will inform shareholders annually of the percentage of
income and distributions derived from direct U.S. Government obligations.
Shareholders should consult their tax advisers to determine whether any portion
of the income dividends received from a Fund is considered tax exempt in their
particular states.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated June 29, 1993. The Declaration of Trust permits the Trust to offer
separate series of shares or "funds" and different classes of each fund. In
addition to the Funds, the Trust offers the following funds: Institutional Money
Market Fund, Government Securities Fund, Louisiana Tax-Free Income Fund,
Strategic Income Bond Fund, Balanced Fund, Value Equity Fund, Growth Equity
Fund, Small Cap Equity Fund and International Equity Fund. All consideration
received by the Trust for shares of any fund and all assets of such fund belong
to that fund and would be subject to liabilities related thereto. The Trust
reserves the right to create and issue shares of additional funds.
Each Fund pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management,
administrative and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee may
be removed by the remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of a Fund is determined
and declared on each Business Day as a dividend for shareholders of record as of
the close of business on that day. Shareholders who own shares at the close of
business on the record date will be entitled to receive the dividend. Currently,
capital gains of each Fund, if any, will be distributed at least annually.
Dividends are paid by the Funds in Federal funds or in additional shares at the
discretion of the shareholder on the first business day of each month.
<PAGE>
14
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Funds and associated risk factors. The only permitted
investments for the Treasury Fund include Repurchase Agreements and U.S.
Treasury obligations. Further discussion is contained in the Statement of
Additional Information.
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. Bankers' acceptances are used
by corporations to finance the shipment and storage of goods and to furnish
dollar exchange. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT -- Certificates of deposit are interest bearing
instruments with a specific short-term maturity. They are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market prior to maturity. Certificates of deposit
with penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few to 270 days.
FIXED INCOME SECURITIES -- Fixed income securities include bonds, notes,
debentures and other interest-bearing securities that represent indebtedness.
The market value of the fixed income investments in which the Funds invest will
change in response to interest rate changes and other factors. During periods of
falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of these securities will not necessarily affect cash income derived
from these securities but will affect a Fund's net asset value.
MUNICIPAL LEASES -- Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract, or a
participation certificate in any of the above.
Municipal lease obligations typically are not backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If funds
are not appropriated for the following year's lease payments, a lease may
terminate, with a possibility of default on the lease obligation and significant
loss to the Fund. Under guidelines established by the Board of Trustees, the
credit quality of municipal leases will be determined on an ongoing basis,
including an assessment of the likelihood that a lease will be canceled.
MUNICIPAL SECURITIES -- Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
operating expenses, and for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial development bonds
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair, or improvement of privately operated
facilities. General obligation bonds are backed by the taxing power of the
issuing municipality. Revenue bonds are backed by the revenues of a project or
facility; tolls from a toll bridge for example. Certificates of participation
represent an interest in an underlying obligation or commitment such as an
obligation issued in connection with a leasing arrangement. The payment of
principal and interest on private activity and industrial development bonds
generally is dependent solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and personal property so
financed as security for such payment.
<PAGE>
15
Municipal securities include general obligation notes, tax anticipation notes,
revenue anticipation notes, bond anticipation notes, certificates of
indebtedness, demand notes and construction loan notes. Municipal bonds include
general obligation bonds, revenue or special obligation bonds, private activity
and industrial development bonds.
PARTICIPATION INTERESTS -- Participation interests are interests in Municipal
Securities from financial institutions such as commercial and investment banks,
savings and loan associations and insurance companies. These interests may take
the form of participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows a Fund to treat
the income from the investment as exempt from federal income tax. The Tax Exempt
Fund invests in these participation interests in order to obtain credit
enhancement or demand features that would not be available through direct
ownership of the underlying Municipal Securities.
RECEIPTS -- TRs, TIGRs and CATS -- interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing U.S. Treasury obligations into
a special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts are sold as
zero coupon securities which means that they are sold at a substantial discount
and redeemed at face value at their maturity date without interim cash payments
of interest or principal. The amount of this discount is accrued over the life
of the security and constitutes the income earned on the security for both
accounting and tax purposes. Because of these features, receipts may be subject
to greater price volatility than interest paying U.S. Treasury Obligations.
Receipts include Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs"), and Certificates of Accrual on Treasury Securities ("CATS").
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements must be fully collateralized at all times. A Fund bears a risk of
loss in the event the other party defaults on its obligations and the Fund is
delayed or prevented from its right to dispose of the collateral. A Fund will
enter into repurchase agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered loans under the
1940 Act, as amended.
SECURITIES LENDING -- In order to generate additional income, the Tax Exempt
Fund may lend securities which it owns pursuant to agreements requiring that the
loan be continuously secured by collateral consisting of cash or securities of
the U.S. Government or its agencies equal to at least 100% of the market value
of the securities lent. The Fund continues to receive interest on the securities
lent while simultaneously earning a portion of the return generated from the
collateral (or a portion of the return on the investment of cash collateral).
Collateral is marked to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral should the borrower of
the securities fail financially or become insolvent.
STANDBY COMMITMENTS -- Some securities dealers are willing to sell Municipal
Securities to a Fund accompanied by their commitments to repurchase the
Municipal Securities prior to maturity, at the Fund's option, for the amortized
cost of the Municipal Securities at the time of repurchase. These arrangements
are not used to protect against changes in the market value of Municipal
Securities. They permit a Fund, however, to remain fully invested and still
provide liquidity to satisfy redemptions. The cost of Municipal Securities
accompanied by these "standby" commitments could be greater than the cost of
Municipal Securities without such commitments. Standby commitments are not
marketable or otherwise assignable and have value only to a Fund. The default or
bankruptcy of a securities dealer giving such a commitment would not affect the
quality of the Municipal Securities purchased. However, without a standby
commitment, these securities could be more difficult to sell. The Tax Exempt
Fund enters into standby commitments only with those dealers whose credit the
investment adviser believes to be of high quality.
<PAGE>
16
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or that
mature in more than seven days are considered to be illiquid securities.
U.S. GOVERNMENT AGENCY OBLIGATIONS -- Obligations issued or guaranteed by
agencies of the United States Government, including, among others, the Federal
Farm Credit Bank, the Federal Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by instrumentalities of the
United States Government, including, among others, the Federal Home Loan
Mortgage Corporation, the Federal Land Banks and the United States Postal
Service. Some of these securities are supported by the full faith and credit of
the United States Treasury, others are supported by the right of the issuer to
borrow from the Treasury, while still others are supported only by the credit of
the instrumentality. Guarantees of principal by agencies or instrumentalities of
the United States Government may be a guarantee of payment at the maturity of
the obligation so that in the event of a default prior to maturity there might
not be a market and thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal and interest do not
extend to the value or yield of these securities nor to the value of the Tax
Exempt Fund's shares.
U.S. GOVERNMENT SECURITIES -- Any guaranty by the U.S. Government of the
securities in which a Fund invests guarantees only the payment of principal and
interest on the guaranteed security and does not guarantee the yield or value of
that security or the yield or value of shares of the Fund.
U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Funds do not expect to trade STRIPS
actively.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain of the obligations purchased
by the Tax Exempt Fund may carry variable or floating rates of interest, may
involve a conditional or unconditional demand feature and may include variable
amount master demand notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or some
other reset period, and may have a floor or ceiling on interest rate changes.
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such securities.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
However, the Tax Exempt Fund may purchase securities on a when-issued or delayed
basis only when settlement takes place within 15 days of the purchase of such
securities. To the extent required by the 1940 Act, the Tax Exempt Fund will
maintain with the custodian a separate account with liquid high grade debt
securities or cash in an amount at least equal to these commitments. The
interest rate realized on these securities is fixed as of the purchase date and
no interest accrues to the Fund before settlement. These securities are subject
to market fluctuation due to changes in market interest rates and it is possible
that the market value at the time of settlement could be higher or lower than
the purchase price if the general level of interest rates has changed. Although
the Tax Exempt Fund generally purchases securities on a when-issued or forward
commitment basis with the intention of actually acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if it deems appropriate.
<PAGE>
17
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary................................................................... 2
Expense Summary........................................................... 3
Financial Highlights...................................................... 4
The Trust................................................................. 5
Investment Objective and Policies for the Treasury Fund................... 5
Investment Objective and Policies for the Tax Exempt Fund................. 5
General Investment Policies............................................... 6
Investment Limitations.................................................... 6
Purchase of Shares........................................................ 6
Exchanges................................................................. 8
Redemption of Shares...................................................... 8
The Adviser............................................................... 9
The Sub-Adviser........................................................... 10
The Administrator......................................................... 10
The Shareholder Servicing Agent and Transfer Agent........................ 10
The Distributor........................................................... 11
Performance............................................................... 11
Taxes..................................................................... 11
General Information....................................................... 13
Description of Permitted Investments and Risk Factors..................... 14
</TABLE>
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
EQUITY FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) ASSET ALLOCATION FUND
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND
THE ONE GROUP(R) LARGE COMPANY VALUE FUND
THE ONE GROUP(R) GROWTH OPPORTUNITIES FUND
THE ONE GROUP(R) INTERNATIONAL EQUITY INDEX FUND
THE ONE GROUP(R) DISCIPLINED VALUE FUND
THE ONE GROUP(R) EQUITY INDEX FUND
THE ONE GROUP(R) INCOME EQUITY FUND
THE ONE GROUP(R) VALUE GROWTH FUND
THE ONE GROUP(R) SMALL CAPITALIZATION FUND
This prospectus describes ten mutual funds with a variety of investment
objectives, including total return, capital appreciation, current income, and
long-term capital growth. The information in this prospectus is important.
Please read it carefully before you invest, and save it for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: O ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; O ARE NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY FEDERAL OR
STATE GOVERNMENTAL AGENCY; O INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................ 1
ABOUT THE FUNDS......................................... 2
The One Group(R) Asset Allocation Fund............... 2
The One Group(R) Large Company Growth Fund........... 5
The One Group(R) Large Company Value Fund............ 8
The One Group(R) Growth Opportunities Fund........... 11
The One Group(R) International Equity Index Fund..... 14
The One Group(R) Disciplined Value Fund.............. 17
The One Group(R) Equity Index Fund................... 20
The One Group(R) Income Equity Fund.................. 23
The One Group(R) Value Growth Fund................... 26
The One Group(R) Small Capitalization Fund........... 29
MORE ABOUT THE FUNDS.................................... 32
HOW TO DO BUSINESS WITH THE ONE GROUP................... 33
Purchasing Fund Shares............................... 33
Sales Charges........................................ 34
Sales Charge Reductions and Waivers.................. 36
Exchanging Fund Shares............................... 37
Redeeming Fund Shares................................ 38
SHAREHOLDER INFORMATION................................. 40
Voting Rights........................................ 40
Dividend Policies.................................... 40
Tax Treatment of the Funds........................... 40
Tax Treatment of Shareholders........................ 40
Shareholder Inquiries................................ 41
ORGANIZATION AND MANAGEMENT OF THE FUNDS................ 42
The Funds............................................ 42
The Board of Trustees................................ 42
The Advisor.......................................... 42
The Sub-Advisor...................................... 42
The Distributor...................................... 43
The Administrator and Sub-Administrator.............. 43
The Transfer Agent, Custodian and Sub-Custodian...... 43
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES.............................................. 44
Investment Practices................................. 44
Investment Risks..................................... 47
Investment Policies.................................. 48
APPENDIX: DESCRIPTION OF RATINGS........................ 49
</TABLE>
<PAGE>
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP EQUITY FUNDS?
The Funds are designed for a variety of investment objectives,
including total return, capital appreciation, current income,
and long-term capital growth. Each Fund pursues a different
objective and involves different risks. Please read about each
Fund before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds normally will invest in a variety of equity
securities, including common stock. The Funds also may invest
in debt securities and preferred stocks which are convertible
into common stock. Most of the Funds may invest in securities
of foreign issuers.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
Equity securities such as those in which the Funds may invest
are more volatile and carry more risk than some other forms of
investment. Accordingly, as with all equity investments, you
may lose money by investing in the Funds. The Funds may invest
in derivative securities. These securities may expose the
Funds to special risks. In addition, investments in foreign
securities may expose the Funds to risks that are different
from investments in U.S. securities. For more information
about risks, please read "More About the Funds" and
"Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Funds currently offer four classes of Shares: Class A,
Class B, Class C and Fiduciary Class. Class A, Class B and
Class C shares are offered to the general public. Fiduciary
Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository
institution, insurance company, pension plan or other
organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities. The section called "How To Do
Business With The One Group" will provide more information.
Fiduciary Class shares are not available to Individual
Retirement Accounts ("IRA").
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C shares are not available
for purchase in all of the Funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on the last business day of
each month and are distributed periodically on the first
business day of each month. The One Group International Equity
Index Fund, however, distributes dividends annually. Any
capital gains are distributed at least annually. Distributions
are paid in additional shares of the same class unless you
elect to take the payment in cash. For a more detailed
discussion of dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. Independence
International Associates, Inc. (the "Sub-Advisor") serves as
Sub-Advisor to the International Equity Index Fund. The
Sub-Advisor's fees are paid by Banc One Investment Advisors. A
more detailed discussion regarding Banc One Investment
Advisors, its services and compensation can be found in the
Prospectus under the headings "The Advisor" and "Expense
Summary." Additional information regarding the Sub-Advisor is
located in the Prospectus under the heading "The Sub-Advisor."
<PAGE>
2
THE ONE GROUP(R)
ASSET ALLOCATION FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks to provide total return while preserving capital.
[ICON] INVESTMENT STRATEGY
The Fund invests in a combination of stocks, fixed income securities and money
market instruments. Banc One Investment Advisors will regularly review the
Fund's asset allocations and vary them over time to favor investments which they
believe will provide the most favorable total return. In making asset allocation
decisions, Banc One Investment Advisors will evaluate projections of risk,
market and economic conditions, volatility, yields and expected return. Because
the Fund seeks total return over the long term, Banc One Investment Advisors
will not attempt to time the market. Rather, asset allocation shifts will be
made gradually over time.
[ICON] PORTFOLIO SECURITIES
The Fund normally will invest between 40% and 75% of its total assets in all
types of equity securities, including the stock of both large and small
capitalization companies, as well as growth and value securities. Up to 20% of
the equities held by the Fund may be foreign securities, including American
Depository Receipts. Between 25% and 60% of the Fund's total assets will be
invested in fixed income securities, including bonds, notes, and other debt
securities. The balance of the Fund's total assets will be invested in money
market instruments. For a list of all the securities in which the Fund may
invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. The Fund also will invest in fixed income securities. The value of
these securities will change in response to interest rate changes and other
factors. This is especially true to the extent the Fund invests in debt
securities in the lowest investment grade category. Such securities have
speculative characteristics. Before you invest, please read "More About the
Funds" and "Investment Practices."
[ICON] FUND MANAGEMENT
Scott Grimshaw is the Manager of the fixed income portion of the Fund, having
served in that position since November, 1996. He has been employed as a research
analyst for Banc One Investment Advisors or its affiliates since 1988.
Since May 1, 1997, Dan Kapusta has served as Manager of the equity portion of
the Fund. Mr. Kapusta has been an equity analyst with Banc One Investment
Advisors since 1992. Before joining Banc One Investment Advisors, Mr. Kapusta
worked for Robert W. Baird, Inc. in Milwaukee, Wisconsin as an equity analyst.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .55% .55% .55% .55%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses .40% .40% .40% .40%
Total Fund Operating Expenses (after fee
waivers) (6) 1.20% 1.95% 1.95% .95%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .65% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(6) Total Operating Expenses have been revised to reflect fee waivers. Without
the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.40% for Class A shares, 2.05% for Class B
shares, 2.05% for Class C shares and 1.05% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 81 $ 108 $184
Class A (without fee waivers) $ 59 $ 87 $ 118 $205
Class B $ 70 $ 91 $ 125 $208
Class B (without fee waiver) $ 71 $ 94 $ 130 $221
Class C $ 30 $ 61 $ 105 $227
Class C (without fee waiver) $ 31 $ 64 $ 110 $238
Fiduciary Class $ 10 $ 30 $ 53 $117
Fiduciary Class (without fee waiver) $ 11 $ 33 $ 58 $128
</TABLE>
Assuming no redemption the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 81 $ 108 $184
Class A (without fee waivers) $ 59 $ 87 $ 118 $205
Class B $ 20 $ 61 $ 105 $208
Class B (without fee waiver) $ 21 $ 64 $ 110 $221
Class C $ 20 $ 61 $ 105 $227
Class C (without fee waiver) $ 21 $ 64 $ 110 $238
Fiduciary Class $ 10 $ 30 $ 53 $117
Fiduciary Class (without fee waiver) $ 11 $ 33 $ 58 $128
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
3
THE ONE GROUP(R) ASSET ALLOCATION FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.71 $ 10.73 $ 9.64 $ 10.06 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.43 0.41 0.38 0.29 0.07
Net realized and unrealized gains (losses) from
investments 1.81 1.16 1.12 (0.38) 0.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.24 1.57 1.50 (0.09) 0.13
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.43) (0.41) (0.37) (0.29) (0.07)
From net realized gains (0.54) (0.18) (0.04) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.97) (0.59) (0.41) (0.33) (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.98 $ 11.71 $ 10.73 $ 9.64 $ 10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 20.16% 14.87% 16.06% (1.01)% 5.45%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 94,971 $ 50,323 $ 37,658 $ 42,751 $ 30,441
Ratio of expenses to average net assets 0.80% 0.94% 1.06% 1.06% 0.90%(b)
Ratio of net investment income to average net
assets 3.55% 3.58% 3.72% 2.91% 3.03%(b)
Ratio of expenses to average net assets* 1.00% 1.19% 1.31% 1.33% 1.34%(b)
Ratio of net investment income to average net
assets* 3.35% 3.33% 3.47% 2.64% 2.59%(b)
Portfolio turnover(c) 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d) $ 0.0497 $ 0.0616
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Fiduciary Shares commenced offering on April 5,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares
issued. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.72 $ 10.74 $ 9.65 $ 10.06 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.39 0.37 0.35 0.27 0.05
Net realized and unrealized gains (losses) from
investments 1.83 1.16 1.13 (0.38) 0.07
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.22 1.53 1.48 (0.11) 0.12
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions From net investment income (0.40) (0.37) (0.34) (0.26) (0.06)
In excess of net investment income -- -- (0.01) -- --
From net realized gains (0.54) (0.18) (0.04) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.94) (0.55) (0.39) (0.30) (0.06)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.00 $ 11.72 $ 10.74 $ 9.65 $10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 19.85% 14.48% 15.76% (1.19)% 5.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 31,379 $ 17,849 $ 4,745 $ 1,691 $ 571
Ratio of expenses to average net assets 1.05% 1.19% 1.31% 1.33% 1.15%(b)
Ratio of net investment income to average net
assets 3.30% 3.33% 3.57% 2.68% 2.84%(b)
Ratio of expenses to average net assets* 1.34% 1.54% 1.66% 1.67% 1.62%(b)
Ratio of net investment income to average net
assets* 3.01% 2.98% 3.22% 2.34% 2.37%(b)
Portfolio turnover(c) 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d) $ 0.0497 $ 0.0616
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) The Fund commenced operations on April 2,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares
issued. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<PAGE>
4
THE ONE GROUP(R) ASSET ALLOCATION FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.76 $ 10.76 $ 9.67 $ 10.37
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.28 0.27 0.08
Net realized and unrealized gains (losses) from investments 1.83 1.18 1.14 (0.70)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.13 1.46 1.41 (0.62)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions From net investment income (0.31) (0.28) (0.27) (0.08)
In excess of net investment income -- -- (0.01) --
From net realized gains (0.54) (0.18) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.85) (0.46) (0.32) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.04 $ 11.76 $ 10.76 $ 9.67
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 18.90% 13.79% 14.90% (5.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 43,900 $ 18,575 $ 3,019 $ 1,862
Ratio of expenses to average net assets 1.81% 1.94% 2.07% 2.40%(c)
Ratio of net investment income to average net assets 2.54% 2.58% 2.77% 1.99%(c)
Ratio of expenses to average net assets* 2.01% 2.19% 2.31% 2.40%(c)
Ratio of net investment income to average net assets* 2.34% 2.33% 2.52% 1.99%(c)
Portfolio turnover(d) 80.96% 73.38% 115.36% 56.55%
Average commission rate paid(e) $ 0.0497 $ 0.0616
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B commenced offering shares on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
5
THE ONE GROUP(R)
LARGE COMPANY GROWTH FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation and growth of income by investing
primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in equity securities of large, well-established
companies. The weighted average capitalization of companies in which the Fund
invests normally will exceed the market median capitalization of the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500).*
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the equity
securities of companies described above, including common stock, warrants and
rights to buy common stocks. The remainder of the Fund's total assets will be
invested in nonconvertible fixed income securities, options and futures,
repurchase agreements, and securities issued by the U.S. government and its
agencies and instrumentalities. For daily cash management purposes, the Fund may
invest in repurchase agreements and cash equivalents. For a list of all the
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. The Fund also will invest in fixed income securities. The value of
these securities will change in response to interest rate changes and other
factors. This is especially true to the extent the Fund invests in debt
securities with speculative characteristics. Before you invest, please read
"More About the Funds" and "Investment Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
*"Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation, which does not sponsor and is in no way affiliated with the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waiver) (5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.35% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 70 $ 93 $ 128 $213
Class C $ 30 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of the periods, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A...................................... $ 57 $ 83 $ 111 $189
Class A (without fee waiver)................. $ 58 $ 86 $ 116 $200
Class B...................................... $ 20 $ 63 $ 108 $213
Class C...................................... $ 20 $ 63 $ 108 $233
Fiduciary Class.............................. $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
6
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $ 15.44 $ 13.47 $ 11.32 $ 10.92 $ 9.85 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.12 0.18 0.20 0.20 0.23 0.08
Net realized and
unrealized gains
(losses) from
investments 4.79 2.14 3.04 0.67 1.12 (0.16)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 4.91 2.32 3.24 0.87 1.35 (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment
income (0.11) (0.18) (0.20) (0.20) (0.23) (0.07)
From net realized gains (0.80) (0.17) (0.89) (0.27) (0.05) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.91) (0.35) (1.09) (0.47) (0.28) (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 19.44 $ 15.44 $ 13.47 $ 11.32 $ 10.92 $ 9.85
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 33.11% 17.36% 21.85% 8.04% 13.92% (0.80)%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 1,142,864 $ 745,986 $ 531,595 $ 150,035 $ 41,317 $ 25,019
Ratio of expenses to
average net assets 0.99% 0.96% 1.00% 0.78% 0.39% 0.30%(d)
Ratio of net investment
income to average net
assets 0.69% 1.20% 1.72% 1.87% 2.24% 2.37%(d)
Ratio of expenses to
average net assets* 0.99% 0.99% 1.00% 1.13% 1.43% 1.49%(d)
Ratio of net investment
income to average net
assets* 0.69% 1.17% 1.72% 1.52% 1.21% 1.12%(d)
Portfolio turnover(a) 57.17% 35.51% 14.22% 9.04% 10.61% 3.09%
Average commission rate
paid(b) $ 0.0681 $ 0.0647
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) The Fund commenced operations on February 28,
1992. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 15.83 $ 13.83 $ 11.62 $ 11.78
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.08 0.14 0.17 0.04
Net realized and unrealized gains (losses) from
investments 4.88 2.17 3.10 (0.16)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 4.96 2.31 3.27 (0.12)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment
income (0.07) (0.14) (0.16) (0.04)
In excess of net
investment income -- -- (0.01) --
From net realized gains (0.80) (0.17) (0.89) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.87) (0.31) (1.06) (0.04)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 19.92 $ 15.83 $ 13.83 $ 11.62
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes
Sales Charge) 32.57% 16.85% 21.52% (1.02)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 125,910 $ 75,114 $ 27,428 $ 368
Ratio of expenses to
average net assets 1.24% 1.21% 1.26% 1.25%(c)
Ratio of net investment
income to average net
assets 0.44% 0.95% 1.49% 1.78%(c)
Ratio of expenses to
average net assets* 1.32% 1.34% 1.36% 1.35%(c)
Ratio of net investment
income to average net
assets* 0.36% 0.82% 1.39% 1.68%(c)
Portfolio turnover(d) 57.17% 35.51% 14.22% 9.04%
Average commission rate
paid(e) $ 0.0681 $ 0.0647
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on January 1, 1994. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (e) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<PAGE>
7
THE ONE GROUP(R) LARGE COMPANY GROWTH FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.63 $ 13.63 $ 11.47 $ 11.57
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.04) 0.05 0.09 0.03
Net realized and unrealized gains (losses) from
investments 4.82 2.17 3.06 (0.10)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 4.78 2.22 3.15 (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions From net investment income -- (0.05) (0.09) (0.03)
In excess of net investment income -- -- (0.01) --
From net realized gains (0.80) (0.17) (0.89) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.80) (0.22) (0.99) (0.03)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 19.61 $ 15.63 $ 13.63 $ 11.47
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 31.74% 16.41% 20.65% (0.66)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 132,268 $ 56,261 $ 6,918 $ 334
Ratio of expenses to average net assets 2.00% 1.96% 2.01% 1.99%(c)
Ratio of net investment income (loss) to average net
assets (0.33)% 0.20% 0.74% 0.96%(c)
Ratio of expenses to average net assets* 2.00% 1.99% 2.01% 1.99%(c)
Ratio of net investment income (loss) to average net
assets* (0.33)% 0.17% 0.74% 0.96%(c)
Portfolio turnover(d) 57.17% 35.51% 14.22% 9.04%
Average commission rate paid(e) $ 0.0681 $ 0.0647
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
8
THE ONE GROUP(R)
LARGE COMPANY VALUE FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks capital appreciation with the incidental goal of achieving
current income by investing primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in equity securities of large capitalization companies that are
believed to be selling below their long-term investment values. The weighted
average capitalization of companies in which the Fund invests normally will
exceed the market median capitalization of the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500).* The Fund also may invest in the stock of
companies which have "breakup values" well in excess of current market values or
which have uniquely undervalued corporate assets.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the equity
securities of companies described above, including common stocks and debt
securities and preferred stock that is convertible to common stock. A portion of
the Fund's assets will be held in cash equivalents. For a list of all the
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
As a result, the value of your investment in the Fund may increase or decrease
in value. Before you invest, please read "More About the Funds" and "Investment
Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
*"Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation, which does not sponsor and is in no way affiliated with the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver)(4) .25% 1.00% 1.00% none
Other Expenses .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waiver) (5) 1.24% 1.99% 1.99% .99%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary 12b-1 fees, Total Operating Expenses would be 1.34%
for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 110 $188
Class A (without fee waiver) $ 58 $ 86 $ 115 $199
Class B $ 70 $ 92 $ 127 $212
Class C $ 30 $ 62 $ 107 $232
Fiduciary Class $ 10 $ 32 $ 55 $121
</TABLE>
Assuming no redemption at the end of the period, the dollar amounts in the above
example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 110 $188
Class A (without fee waiver) $ 58 $ 86 $ 115 $199
Class B $ 20 $ 62 $ 107 $212
Class C $ 20 $ 62 $ 107 $232
Fiduciary Class $ 10 $ 32 $ 55 $121
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
9
THE ONE GROUP(R) LARGE COMPANY VALUE FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991(c)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $ 12.83 $ 12.87 $ 11.34 $ 11.64 $ 11.34 $ 10.07 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.31 0.31 0.20 0.18 0.21 0.08
Net realized and
unrealized gains
(losses) from
investments 3.01 1.20 2.18 (0.01) 0.58 1.34 0.07
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 3.28 1.51 2.49 0.19 0.76 1.55 0.15
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.26) (0.31) (0.32) (0.19) (0.18) (0.21) (0.08)
From net realized gains (1.06) (1.24) (0.64) (0.30) (0.28) (0.07) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.32) (1.55) (0.96) (0.49) (0.46) (0.28) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 14.79 $ 12.83 $ 12.87 $ 11.34 $ 11.64 $ 11.34 $ 10.07
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 27.10% 12.71% 23.42% (1.59)% 6.73% 15.53% 4.47%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 686,156 $ 584,527 $ 365,376 $ 169,127 $ 132,833 $ 62,075 $ 36,237
Ratio of expenses to
average net assets 0.97% 0.97% 1.00% 0.95% 0.86% 0.82% 0.52%(b)
Ratio of net investment
income to average net
assets 1.99% 2.43% 2.74% 1.72% 1.62% 1.91% 2.48%(b)
Ratio of expenses to
average net assets* 0.97% 0.98% 1.01% 1.02% 1.12% 1.34% 1.26%(b)
Ratio of net investment
income to average net
assets* 1.99% 2.42% 2.73% 1.65% 1.36% 1.39% 1.74%(b)
Portfolio turnover(a) 77.05% 186.84% 203.13% 111.72% 51.75% 55.90% 19.87%
Average commission rate
paid(d) $ 0.0575 $ 0.0415
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fund commenced operations on March 1,
1991. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.87 $ 12.89 $ 11.34 $ 11.64 $ 11.33 $ 11.42
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.23 0.27 0.28 0.17 0.16 0.07
Net realized and unrealized gains
(losses) from investments 3.04 1.22 2.20 (0.01) 0.59 (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.27 1.49 2.48 0.16 0.75 (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.23) (0.27) (0.27) (0.16) (0.16) (0.08)
In excess of net investment income -- -- (0.02) -- -- --
From net realized gains (1.06) (1.24) (0.64) (0.30) (0.28) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.29) (1.51) (0.93) (0.46) (0.44) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.85 $ 12.87 $ 12.89 $ 11.34 $ 11.64 $ 11.33
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 26.90% 12.40% 22.64% 1.35% 6.64% (0.33%)(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 14,832 $ 9,380 $ 3,481 $ 698 $ 451 $ 12
Ratio of expenses to average net assets 1.22% 1.22% 1.25% 1.20% 1.10% 1.02%(d)
Ratio of net investment income to average
net assets 1.72% 2.18% 2.52% 1.57% 1.41% 2.12%(d)
Ratio of expenses to average net assets* 1.31% 1.33% 1.37% 1.37% 1.50% 1.22%(d)
Ratio of net investment income to average
net assets* 1.63% 2.07% 2.41% 1.40% 1.01% 1.92%(d)
Portfolio turnover(a) 77.05% 186.84% 203.13% 111.72% 51.75% 55.90%
Average commission rate paid(b) $ 0.0575 $ 0.0415
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Class A Shares commenced offering on February
28, 1992. (d) Annualized.
<PAGE>
10
THE ONE GROUP(R) LARGE COMPANY VALUE FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.98 $ 12.96 $ 11.41 $ 11.87
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.18 0.17 0.05
Net realized and unrealized gains (losses) from investments 3.04 1.26 2.19 (0.46)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.18 1.44 2.36 (0.41)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.15) (0.18) (0.17) (0.05)
From net realized gains (1.06) (1.24) (0.64) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.21) (1.42) (0.81) (0.05)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.95 $ 12.98 $ 12.96 $ 11.41
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 25.86% 11.95% 22.28% 3.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 9,288 $ 4,135 $ 861 $ 182
Ratio of expenses to average net assets 1.97% 1.97% 2.00% 2.00%(c)
Ratio of net investment income to average net assets 0.96% 1.43% 1.74% 1.06%(c)
Ratio of expenses to average net assets* 1.97% 1.98% 2.01% 2.00%(c)
Ratio of net investment income to average net assets* 0.96% 1.42% 1.72% 1.06%(c)
Portfolio turnover(d) 77.05% 186.84% 203.13% 111.72%
Average commission rate paid(e) $ 0.0575 $ 0.0415
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
11
THE ONE GROUP(R)
GROWTH OPPORTUNITIES FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks growth of capital and secondarily, current income by investing
primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in securities that have the potential to produce above-average
earnings growth per share over a one-to-three year period. Typically, the Fund
acquires shares of established companies with a history of above-average growth,
as well as those companies expected to enter periods of above average growth.
Not all the securities purchased by the Fund will pay dividends. The Fund also
invests in smaller companies in emerging growth industries.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in equity securities,
including common stocks and debt securities and preferred stocks that are
convertible to common stock. A portion of the Fund's assets will be held in cash
equivalents. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Also, the stocks of smaller companies may be subject to greater risks
than those of larger companies. Before you invest, please read "More About the
Funds" and "Investment Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waiver) (5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.35% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 70 $ 93 $ 128 $213
Class C $ 30 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of the period, the dollar amounts in the above
example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 20 $ 63 $ 108 $213
Class C $ 20 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
12
THE ONE GROUP(R) GROWTH OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.81 $ 18.40 $ 15.96 $ 16.96 $ 14.54 $ 12.92 $ 12.14
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.25 0.20 0.06 0.07 0.06 0.09 0.21
Net realized and unrealized gains
(losses) from investments 3.59 3.83 2.98 (0.05) 2.99 1.87 0.92
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.84 4.03 3.04 0.02 3.05 1.96 1.13
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.25) (0.20) (0.06) (0.07) (0.06) (0.08) (0.21)
In excess of net investment (0.02) -- -- -- -- -- --
From net realized gains (2.92) (3.42) (0.54) (0.95) (0.57) (0.26) (0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (3.19) (3.62) (0.60) (1.02) (0.63) (0.34) (0.35)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 19.46 $ 18.81 $ 18.40 $ 15.96 $ 16.96 $ 14.54 $ 12.92
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 22.75% 24.63% 19.75% (0.16)% 21.36% 15.15% 9.85%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 623,911 $ 532,525 $ 413,518 $389,567 $ 232,898 $ 131,533 $ 53,831
Ratio of expenses to average net assets 0.99% 1.00% 0.98% 0.98% 0.89% 0.75% 0.45%
Ratio of net investment income to
average net assets 1.32% 1.15% 0.38% 0.42% 0.41% 1.23% 1.75%
Ratio of expenses to average net assets* 0.99% 1.01% 0.98% 1.03% 1.11% 0.51% 1.19%
Ratio of net investment income to
average net assets* 1.32% 1.14% 0.38% 0.37% 0.19% 0.03% 1.01%
Portfolio turnover(a) 301.35% 435.30% 132.63% 70.67% 64.64% 42.77% 68.83%
Average commission rate paid(b) $ 0.0386 $ 0.0451
<CAPTION>
------------------------
FIDUCIARY 1990 1989(c)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.71 $ 10.00
- ---------------------------------------------------------------------
Investment Activities
Net investment income 0.19 0.11
Net realized and unrealized gains
(losses) from investments 1.97 0.71
- ---------------------------------------------------------------------
Total from Investment Activities 2.16 0.82
- ---------------------------------------------------------------------
Distributions
From net investment income (0.19) (0.11)
In excess of net investment -- --
From net realized gains (0.54) --
- ---------------------------------------------------------------------
Total Distributions (0.73) (0.11)
- ---------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.14 $ 10.71
- ---------------------------------------------------------------------
Total Return 20.83% 24.86%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 31,804 $ 22,753
Ratio of expenses to average net assets 0.41% 0.38%(d)
Ratio of net investment income to
average net assets 1.65% 3.20%(d)
Ratio of expenses to average net assets* 1.15% 1.12%(d)
Ratio of net investment income to
average net assets* 0.91% 2.46%(d)
Portfolio turnover(a) 92.55% 68.51%
Average commission rate paid(b)
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) The Fund commenced operations on March 2, 1989;
at that time, the Fund did not offer multiple classes of shares. Subsequently
all shares of the Fund were redesignated as Fiduciary Class
shares. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(d)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.76 $ 18.36 $ 15.93 $ 16.96 $ 14.54 $ 16.53
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.17 0.02 0.04 0.03 0.01
Net realized and unrealized gains (losses) from
investments 3.58 3.80 2.98 (0.08) 3.00 (1.99)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.79 3.97 3.00 (0.04) 3.03 (1.98)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.24) (0.15) (0.01) (0.03) (0.04) (0.01)
In excess of net investment income (0.02) -- (0.02) (0.01) -- --
From net realized gains (2.92) (3.42) (0.54) (0.95) (0.57) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (3.18) (3.57) (0.57) (0.99) (0.61) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 19.37 $ 18.76 $ 18.36 $ 15.93 $ 16.96 $ 14.54
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 22.52% 24.32% 19.50% (0.52)% 21.70%(a) (34.00)%(a)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 43,370 $ 28,052 $ 11,178 $ 8,097 $ 5,757 $ 84
Ratio of expenses to average net assets 1.25% 1.25% 1.23% 1.22% 1.11%(a) 1.31%(a)
Ratio of net investment income to average net
assets 0.92% 0.90% 0.12% 0.27% 0.25%(a) 0.12%(a)
Ratio of expenses to average net assets* 1.34% 1.36% 1.33% 1.38% 1.48%(a) 1.50%(a)
Ratio of net investment income (loss) to average
net assets* 0.83% 0.79% 0.02% 0.11% (0.12)%(a) (0.07)%(a)
Portfolio turnover(b) 301.35% 435.30% 132.63% 70.67% 64.64% 42.77%
Average commission rate paid(c) $ 0.0386 $ 0.0451
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Annualized. (b) Portfolio turnover is calculated on the basis
of the Fund as a whole without distinguishing among the classes of shares
issued. (c) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year. (d) Class A Shares
commenced offering on February 18, 1992.
<PAGE>
13
THE ONE GROUP(R) GROWTH OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.43 $ 18.14 $ 15.85 $ 17.44
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) 0.11 0.09 (0.07) (0.02)
Net realized and unrealized gains (losses) from investments 3.44 3.69 2.90 (1.56)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 3.55 3.78 2.83 (1.58)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.22) (0.07) -- (0.01)
In excess of net investment income (0.02) -- -- --
From net realized gains (2.92) (3.42) (0.54) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (3.16) (3.49) (0.54) (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 18.82 $ 18.43 $ 18.14 $ 15.85
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 21.73% 23.53% 18.47% (9.07)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 37,409 $ 12,910 $ 2,787 $1,131
Ratio of expenses to average net assets 2.00% 2.00% 1.98% 2.12%(c)
Ratio of net investment income (loss) to average net assets 0.01% 0.15% (0.63)% (0.55)%(c)
Ratio of expenses to average net assets* 2.00% 2.01% 1.98% 2.12%(c)
Ratio of net investment income (loss) to average net assets* 0.01% 0.14% (0.63)% (0.55)%(c)
Portfolio turnover(d) 301.35% 435.30% 132.63% 70.67%
Average commission rate paid(e) $ 0.0386 $ 0.0451
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
14
THE ONE GROUP(R)
INTERNATIONAL EQUITY INDEX FUND
- -------------------------------
[ICON] INVESTMENT OBJECTIVE
The Fund seeks to provide investment results that correspond to the aggregate
price and dividend performance of the securities in the MSCI EAFE GDP Index.*
[ICON] INVESTMENT STRATEGY
The Fund attempts to track the capital performance and dividend income of the
Index by investing in a representative portion of the stocks which match as
closely as possible the characteristics of the stocks which comprise the Index.
The Fund also will invest in stock index futures. The Fund will attempt to
achieve a correlation between the performance of its portfolio and that of the
MSCI EAFE GDP Index of at least 0.90, without taking into account expenses.
Perfect correlation would be 1.00.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in foreign equity
securities, consisting of common stocks (including American Depository Receipts)
and preferred stocks, securities convertible to common stock (provided they are
traded on an exchange or over-the-counter), warrants and receipts. No more than
10% of the Fund's assets will be held in cash or cash equivalents. The Fund may
invest up to 10% of its net assets in securities of emerging international
markets such as Mexico, Chile and Brazil, either directly through local
exchanges, through publicly traded closed-end country funds, or through "passive
foreign investment companies." A substantial portion of the Fund's assets will
be denominated in foreign currencies. For a list of all the securities in which
the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Because the Fund's investments are tied to an index, fluctuations in the
index will affect the value of your investment in the Fund. Also, investments in
foreign securities involve risks different from investments in U.S. securities.
Before you invest, please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Independence International Associates, Inc. ("Independence International")
serves as sub-advisor to the Fund. Independence International is an indirect
subsidiary of John Hancock Mutual Life Insurance Company.
*Gross Domestic Produced Weighted Morgan Stanley Capital International Europe,
Australia and Far East Index. MSCI EAFE GDP Index is a registered service mark
of Morgan Stanley Capital International, which does not sponsor and is in no
way affiliated with the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .55% .55% .55% .55%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .41% .41% .41% .41%
Total Fund Operating Expenses (after fee
waiver) (5) 1.21% 1.96% 1.96% .96%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.31% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 82 $ 109 $185
Class A (without fee waiver) $ 58 $ 85 $ 114 $196
Class B $ 70 $ 92 $ 126 $209
Class C $ 30 $ 62 $ 106 $229
Fiduciary Class $ 10 $ 31 $ 53 $118
</TABLE>
Assuming no redemption at the end of the period, the dollar amounts in the above
example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 82 $ 109 $185
Class A (without fee waiver) $ 58 $ 85 $ 114 $196
Class B $ 20 $ 62 $ 106 $209
Class C $ 20 $ 62 $ 106 $229
Fiduciary Class $ 10 $ 31 $ 53 $118
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
15
THE ONE GROUP(R) INTERNATIONAL EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.17 $ 13.93 $ 13.46 $ 11.80 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.15 0.11 0.13 0.11 0.06
Net realized and unrealized gains from
investments 2.02 1.43 0.46 1.68 1.75
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.17 1.54 0.59 1.79 1.81
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.17) (0.16) (0.08) (0.11) (0.01)
In excess of net investment income (0.13) (0.02) -- -- --
From net realized gains (0.15) (0.12) (0.04) (0.01) --
In excess of net realized gains -- -- -- (0.01) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.30) (0.12) (0.13) (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 16.89 $ 15.17 $ 13.93 $ 13.46 $ 11.80
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 14.64% 11.22% 4.20% 15.44% 26.96%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 449,949 $ 347,790 $ 218,299 $ 145,640 $ 35,384
Ratio of expenses to average net assets 0.86% 0.97% 1.04% 1.02% 1.22%(b)
Ratio of net investment income to average
net assets 1.00% 1.04% 1.25% 1.27% 1.37%(b)
Ratio of expenses to average net assets* 0.86% 1.00% 1.04% 1.02% 2.34%(b)
Ratio of net investment income to average
net assets* 1.00% 1.01% 1.25% 1.27% 0.25%(b)
Portfolio turnover(c) 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d) $ 0.0034 $ 0.0022
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Fiduciary Shares commenced offering on April 5,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares
issued. (d) The average commission represents the total dollar amount of
commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.16 $ 13.92 $ 13.49 $ 11.80 $ 11.74
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.11 0.14 0.12 0.09 0.02
Net realized and unrealized gains from
investments 2.03 1.40 0.43 1.67 0.04
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.14 1.54 0.55 1.76 0.06
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.13) (0.16) (0.08) (0.05) --
In excess of net investment income (0.10) (0.02) -- -- --
From net realized gains (0.15) (0.12) (0.04) (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.38) (0.30) (0.12) (0.07) --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 16.92 $ 15.16 $ 13.92 $ 13.49 $11.80
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 14.31% 11.20% 3.87% 15.18% 2.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 12,562 $ 10,789 $ 5,028 $ 2,395 $ 153
Ratio of expenses to average net assets 1.11% 1.22% 1.28% 1.26% 1.47%(b)
Ratio of net investment income to average
net assets 0.73% 0.79% 1.09% 1.15% 2.10%(b)
Ratio of expenses to average net assets* 1.19% 1.35% 1.38% 1.36% 2.35%(b)
Ratio of net investment income to average
net assets* 0.65% 0.66% 0.99% 1.05% 1.22%(b)
Portfolio turnover(c) 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d) $ 0.0034 $ 0.0022
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated. (a)
The Fund commenced operations on April 2, 1993. (b) Annualized. (c)
Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued. (d) The average
commission represents the total dollar amount of commissions paid on portfolio
security transactions divided by the total number of portfolio shares
purchased and sold for which commissions were charged. For the year ended June
30, 1996, the average commission was calculated for only the last seven months
of the year.
<PAGE>
16
THE ONE GROUP(R) INTERNATIONAL EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.79 $ 13.73 $ 13.40 $ 13.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.03 0.03 0.06
Net realized and unrealized gains from investments 1.86 1.32 0.41 0.34
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.95 1.35 0.44 0.40
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.08) (0.15) (0.07) --
In excess of net investment income (0.07) (0.02) -- --
From net realized gains (0.15) (0.12) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.29) (0.11) --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 16.44 $ 14.79 $ 13.73 $ 13.40
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 13.37% 9.97% 3.17% 3.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 10,033 $ 5,856 $ 3,687 $ 1,872
Ratio of expenses to average net assets 1.86% 1.97% 2.04% 2.00%(c)
Ratio of net investment income to average net assets 0.08% 0.04% 0.25% 1.37%(c)
Ratio of expenses to average net assets* 1.86% 2.00% 2.04% 2.00%(c)
Ratio of net investment income to average net assets* 0.08% 0.01% 0.25% 1.37%(c)
Portfolio turnover(d) 9.61% 6.28% 4.67% 7.74%
Average commission rate paid(e) $ 0.0034 $ 0.0022
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
17
THE ONE GROUP(R)
DISCIPLINED VALUE FUND
- ----------------------
[ICON] INVESTMENT OBJECTIVE
The Fund seeks capital appreciation with the secondary goal of achieving current
income by investing primarily in equity securities.
[ICON] INVESTMENT STRATEGY
The Fund primarily invests in the equity securities of companies with
below-market average price-to-earnings and price-to-book value ratios. The Fund
considers the issuer's soundness and earnings prospects. If Banc One Investment
Advisors determines that a company's fundamentals are declining or that the
company's ability to pay dividends has been impaired, it likely will eliminate
the Fund's holding of the company's stock.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in equity securities,
including common stocks, debt securities, and preferred stocks that are
convertible into common stocks. A portion of the Fund's assets will be held in
cash equivalents. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Before you invest, please read "More About the Funds" and "Investment
Practices."
[ICON] FUND MANAGEMENT
The Fund is managed by a team of portfolio managers, research analysts, and
other investment management professionals. Each team member makes
recommendations about the securities in the Fund. The research analysts provide
in-depth industry analysis and recommendations, while the portfolio managers
determine strategy, industry weightings, Fund holdings, and cash positions.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waiver) (5) 1.25% 2.00% 2.00% 1.00%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from the redemption amounts paid by
wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.35% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 70 $ 93 $ 128 $213
Class C $ 30 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 111 $189
Class A (without fee waiver) $ 58 $ 86 $ 116 $200
Class B $ 20 $ 63 $ 108 $213
Class C $ 20 $ 63 $ 108 $233
Fiduciary Class $ 10 $ 32 $ 55 $122
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
18
THE ONE GROUP(R) DISCIPLINED VALUE FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.69 $ 13.20 $ 11.90 $ 12.76 $ 11.49 $ 10.20 $ 10.42
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.22 0.29 0.28 0.26 0.28 0.34 0.39
Net realized and unrealized gains from
investments 2.57 2.27 1.57 0.29 1.27 1.29 (0.23)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.79 2.56 1.85 0.55 1.55 1.63 0.16
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.22) (0.29) (0.27) (0.26) (0.28) (0.34) (0.38)
From net realized gains (1.61) (0.78) (0.28) (1.15) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.83) (1.07) (0.55) (1.41) (0.28) (0.34) (0.38)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.65 $ 14.69 $ 13.20 $ 11.90 $ 12.76 $ 11.49 $ 10.20
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 20.56% 20.10% 16.03% 4.04% 13.58% 16.24% 1.75%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 562,302 $ 522,474 $ 448,530 $ 418,238 $ 211,785 $ 115,234 $ 74,481
Ratio of expenses to average net assets 0.98% 0.99% 1.00% 0.93% 0.89% 0.69% 0.41%
Ratio of net investment income to
average net assets 1.52% 2.04% 2.21% 2.14% 2.30% 3.17% 3.92%
Ratio of expenses to average net assets* 0.98% 1.00% 1.10% 0.98% 1.08% 1.23% 1.15%
Ratio of net investment income to
average net assets* 1.52% 2.03% 2.11% 2.09% 2.11% 2.63% 3.18%
Portfolio turnover(a) 92.66% 90.55% 176.66% 56.33% 108.79% 25.32% 49.62%
Average commission rate paid(b) $ 0.0601 $ 0.0576
<CAPTION>
------------------------
FIDUCIARY 1990 1989(c)
<S> <C> <C>
- --------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.85 $ 10.00
- --------------------------------------------------------------------
Investment Activities
Net investment income 0.48 0.14
Net realized and unrealized gains from
investments (0.09) 0.85
- --------------------------------------------------------------------
Total from Investment Activities 0.39 0.99
- --------------------------------------------------------------------
Distributions
From net investment income (0.48) (0.14)
From net realized gains (0.34) --
- ---------------------------------------------------------------------
Total Distributions (0.82) (0.14)
- ---------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.42 $ 10.85
- ---------------------------------------------------------------------
Total Return 3.49% 29.90%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 59,992 $ 45,872
Ratio of expenses to average net assets 0.35% 0.33%(d)
Ratio of net investment income to
average net assets 4.36% 3.95%(d)
Ratio of expenses to average net assets* 1.09% 1.07%(d)
Ratio of net investment income to
average net assets* 3.62% 3.21%(d)
Portfolio turnover(a) 51.14% 14.66%
Average commission rate paid(b)
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Fiduciary Class Shares commenced offering on
March 2, 1989. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.72 $ 13.22 $ 11.91 $ 12.75 $ 11.49 $ 11.45
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.19 0.25 0.24 0.24 0.25 0.12
Net realized and unrealized gains from investments 2.57 2.28 1.59 0.30 1.26 0.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.76 2.53 1.83 0.54 1.51 0.18
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.19) (0.25) (0.24) (0.23) (0.25) (0.14)
From net realized gains (1.61) (0.78) (0.26) (1.10) -- --
In excess of net realized gains -- -- (0.02) (0.05) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.80) (1.03) (0.52) (1.38) (0.25) (0.14)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.68 $ 14.72 $ 13.22 $ 11.91 $ 12.75 $11.49
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 20.21% 19.80% 15.43% 3.95% 13.27% 1.56%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 23,909 $ 20,838 $ 13,560 $ 10,448 $ 3,435 $ 35
Ratio of expenses to average net assets 1.23% 1.24% 1.26% 1.18% 1.12% 1.29%(d)
Ratio of net investment income to average net
assets 1.26% 1.79% 1.99% 2.00% 2.06% 2.43%(d)
Ratio of expenses to average net assets* 1.31% 1.35% 1.36% 1.33% 1.46% 1.49%(d)
Ratio of net investment income to average net
assets* 1.18% 1.68% 1.89% 1.85% 1.72% 2.23%(d)
Portfolio turnover(a) 92.66% 90.55% 176.66% 56.33% 108.79% 25.32%
Average commission rate paid(b) $ 0.0601 $ 0.0576
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued. (b) The average
commission represents the total dollar amount of commissions paid on portfolio
security transactions divided by the total number of portfolio shares
purchased and sold for which commissions were charged. For the year ended June
30, 1996, the average commission was calculated for only the last seven months
of the year. (c) Class A Shares commenced offering on February 18,
1992. (d) Annualized.
<PAGE>
19
THE ONE GROUP(R) DISCIPLINED VALUE FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.69 $ 13.19 $ 11.90 $ 12.60
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.08 0.15 0.15 0.07
Net realized and unrealized gains (losses) from investments 2.55 2.27 1.58 (0.70)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.63 2.42 1.73 (0.63)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.07) (0.14) (0.15) (0.06)
In excess of net investment income -- -- (0.01) (0.01)
From net realized gains (1.61) (0.78) (0.28) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.68) (0.92) (0.44) (0.07)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.64 $ 14.69 $ 13.19 $ 11.90
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 19.19% 18.93% 14.92% (5.00)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 20,499 $ 16,305 $ 11,222 $ 5,356
Ratio of expenses to average net assets 1.98% 1.99% 2.00% 1.96%(c)
Ratio of net investment income to average net assets 0.51% 1.04% 1.26% 1.80%(c)
Ratio of expenses to average net assets* 1.98% 2.00% 2.01% 1.96%(c)
Ratio of net investment income to average net assets* 0.51% 1.03% 1.25% 1.80%(c)
Portfolio turnover(d) 92.66% 90.55% 176.66% 56.33%
Average commission rate paid(e) $ 0.0601 $ 0.0576
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
20
THE ONE GROUP(R)
EQUITY INDEX FUND
- -----------------
[ICON] INVESTMENT OBJECTIVE
The Fund seeks investment results that correspond to the aggregate price and
dividend performance of securities in the S&P 500 Index.*
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in stocks included in the S&P 500 Index and,
secondarily in stock index futures. Banc One Investment Advisors will seek to
achieve a correlation between the performance of the Fund and that of the S&P
500 Index. To implement this strategy, Banc One Investment Advisors generally
selects stocks in the order of their weightings in the S&P 500 Index beginning
with the heaviest weighted stocks. The Fund will attempt to achieve a
correlation between the performance of its portfolio and that of the S&P 500
Index of at least 0.95, without taking into account expenses. Perfect
correlation would be 1.00.
[ICON] PORTFOLIO SECURITIES
The percentage of a stock that the Fund holds will be approximately the same
percentage that the stock represents in the S&P 500 Index. In addition, the Fund
may hold up to 10% of its net assets in cash or cash equivalents. For a list of
all the securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Because the Fund's investments are tied to an index, fluctuations in the
index will affect the value of your investment in the Fund. Before you invest,
please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Michael D. Weiner has been the Manager of the Fund since November 1994. Mr.
Weiner also serves as the Managing Director of Equity Research for Banc One
Investment Advisors. Before joining Banc One Investment Advisors, Mr. Weiner
served as the Director of Research and Head of U.S. Equities for the Dupont
Pension Fund Investment Company of Wilmington, Delaware from 1986 to 1994.
*"Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation, which does not sponsor and is in no way affiliated with the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .10% .10% .10% .10%
12b-1 Fees (after fee waiver) (5) .25% 1.00% 1.00% none
Other Expenses (6) .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waivers) (7) .60% 1.35% 1.35% .35%
</TABLE>
(1) If you buy or sell shares through an account with a Shareholder Servicing
Agent, you may be charged separate transaction fees by the Shareholder
Servicing Agent. In addition, a $7.00 charge is deducted from the redemption
amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .30% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(6) Without the fee waiver, other expenses would be .35% for all classes.
(7) Without the voluntary reduction of Investment Advisory, 12b-1 fees and other
expenses, Total Operating Expenses would be 1.00% for Class A shares, 1.65%
for Class B shares, 1.65% for Class C shares and .65% for Fiduciary Class
shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 51 $ 63 $ 77 $117
Class A (without fee waivers) $ 55 $ 75 $ 98 $162
Class B $ 64 $ 73 $ 94 $142
Class B (without fee waivers) $ 67 $ 82 $ 110 $175
Class C $ 24 $ 43 $ 74 $162
Class C (without fee waivers) $ 27 $ 52 $ 90 $195
Fiduciary Class $ 4 $ 11 $ 20 $ 44
Fiduciary Class (without fee waiver) $ 7 $ 21 $ 36 $ 81
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 51 $ 63 $ 77 $117
Class A (without fee waivers) $ 55 $ 75 $ 98 $162
Class B $ 14 $ 43 $ 74 $142
Class B (without fee waivers) $ 17 $ 52 $ 90 $175
Class C $ 14 $ 43 $ 74 $162
Class C (without fee waivers) $ 17 $ 52 $ 90 $195
Fiduciary Class $ 4 $ 11 $ 20 $ 44
Fiduciary Class (without fee waivers) $ 7 $ 21 $ 36 $ 81
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
21
THE ONE GROUP(R) EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 16.66 $ 14.03 $ 11.59 $ 11.92 $ 10.92 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.35 0.33 0.32 0.29 0.30 0.26
Net realized and unrealized
gains (losses) from
investments 5.27 3.16 2.59 (0.20) 1.13 0.95
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.62 3.49 2.91 0.09 1.43 1.21
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.33) (0.33) (0.29) (0.29) (0.30) (0.26)
In excess of net investment
income -- (0.01) (0.02) (0.04) -- --
From net realized gains (0.15) (0.52) (0.16) (0.09) (0.13) (0.03)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.48) (0.86) (0.47) (0.42) (0.43) (0.29)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.80 $ 16.66 $ 14.03 $ 11.59 $ 11.92 $ 10.92
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 34.30% 25.47% 25.79% 0.63% 13.04% 12.14%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 480,819 $ 321,058 $ 234,895 $ 165,370 $ 96,446 $62,150
Ratio of expenses to average
net assets 0.30% 0.30% 0.33% 0.46% 0.50% 0.73%(d)
Ratio of net investment income
to average net assets 1.87% 2.18% 2.57% 2.44% 2.46% 2.43%(d)
Ratio of expenses to average
net assets * 0.61% 0.59% 0.66% 0.59% 0.87% 1.16%(d)
Ratio of net investment income
to average net assets * 1.56% 1.89% 2.24% 2.31% 2.09% 2.00%(d)
Portfolio turnover(a) 5.81% 9.08% 2.71% 11.81% 2.71% 21.90%
Average commission rate paid(b) $ 0.0449 $ 0.0490
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) The Fund commenced operations on July 2,
1991. (d) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 16.67 $ 14.02 $ 11.59 $ 11.91 $ 10.92 $10.94
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.29 0.27 0.29 0.28 0.30 0.08
Net realized and unrealized
gains (losses) from
investments 5.28 3.18 2.58 (0.20) 1.10 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.57 3.45 2.87 0.08 1.40 0.08
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.28) (0.27) (0.28) (0.27) (0.28) (0.10)
In excess of net investment
income -- (0.01) -- (0.04) -- --
From net realized gains (0.15) (0.52) (0.16) (0.09) (0.13) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.43) (0.80) (0.44) (0.40) (0.41) (0.10)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.81 $ 16.67 $ 14.02 $ 11.59 $ 11.91 $10.92
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 33.94% 25.16% 25.43% 0.56% 12.75% 1.32%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 98,338 $32,186 $ 3,003 $1,416 $512 $ 5
Ratio of expenses to average
net assets 0.55% 0.55% 0.56% 0.62% 0.52% 1.09%(d)
Ratio of net investment income
to average net assets 1.59% 1.93% 2.38% 2.37% 2.51% 1.97%(d)
Ratio of expenses to average
net assets * 0.95% 0.94% 1.01% 0.94% 0.99% 1.27%(d)
Ratio of net investment income
to average net assets * 1.19% 1.54% 1.94% 2.05% 2.04% 1.79%(d)
Portfolio turnover(a) 5.81% 9.08% 2.71% 11.81% 2.71% 21.90%
Average commission rate paid(b) $ 0.0449 $ 0.0490
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Class A Shares commenced offering on February
18, 1992. (d) Annualized.
<PAGE>
22
THE ONE GROUP(R) EQUITY INDEX FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 16.68 $ 14.05 $ 11.61 $ 12.39
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.16 0.16 0.18 0.09
Net realized and unrealized
gains (losses) from
investments 5.27 3.16 2.61 (0.78)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.43 3.32 2.79 (0.69)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.16) (0.16) (0.19) (0.09)
In excess of net investment
income -- (0.01) -- --
From net realized gains (0.15) (0.52) (0.16) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.31) (0.69) (0.35) (0.09)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.80 $ 16.68 $ 14.05 $ 11.61
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 32.93% 24.05% 24.58% (5.57)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 168,699 $ 38,538 $ 1,408 $ 248
Ratio of expenses to average
net assets 1.30% 1.30% 1.34% 1.10%(c)
Ratio of net investment income
to average net assets 0.83% 1.18% 1.60% 2.08%(c)
Ratio of expenses to average
net assets* 1.61% 1.59% 1.67% 1.15%(c)
Ratio of net investment income
to average net assets* 0.52% 0.89% 1.27% 2.03%(c)
Portfolio turnover(d) 5.81% 9.08% 2.71% 11.81%
Average commission rate paid(e) $ 0.0449 $ 0.0490
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
23
THE ONE GROUP(R)
INCOME EQUITY FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks current income through regular payment of dividends with the
secondary goal of achieving capital appreciation by investing primarily in
equity securities.
[ICON] INVESTMENT STRATEGY
The Fund attempts to keep its yield above the S&P 500 Index* by investing in
common stocks of corporations which regularly pay dividends, as well as stocks
with favorable long-term fundamental characteristics. Continued payment of
dividends cannot be assured. Because achieving yield is the primary
consideration in selecting securities, stocks of companies that are out of favor
in the financial community may also be purchased.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the equity
securities of companies described above, including common stocks, debt
securities, and preferred stocks that are convertible into common stocks. A
portion of the Fund's assets will be held in cash equivalents. For a list of all
the securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities, which may increase or decrease in value.
Therefore, the value of your investment in the Fund may increase or decrease in
value. Before you invest, please read "More About the Funds" and "Investment
Practices."
[ICON] FUND MANAGEMENT
R. Lynn Yturri has served as manager of the Fund since July, 1993. Mr. Yturri
has 25 years of investment management experience. Prior to 1993, Mr. Yturri
served as Manager of Trust Investments at Valley National Bank of Arizona before
the bank was acquired by BANC ONE CORPORATION.
*"Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation, which does not sponsor and is in no way affiliated with the Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average
daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .27% .27% .27% .27%
Total Fund Operating Expenses
(after fee waiver) (5) 1.26% 2.01% 2.01% 1.01%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.36% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 111 $190
Class A (without fee waiver) $ 58 $ 86 $ 116 $201
Class B $ 70 $ 93 $ 128 $214
Class C $ 30 $ 63 $ 108 $234
Fiduciary Class $ 10 $ 32 $ 56 $124
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 57 $ 83 $ 111 $190
Class A (without fee waiver) $ 58 $ 86 $ 116 $201
Class B $ 20 $ 63 $ 108 $214
Class C $ 20 $ 63 $ 108 $234
Fiduciary Class $ 10 $ 32 $ 56 $124
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
24
THE ONE GROUP(R) INCOME EQUITY FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 17.65 $ 15.13 $ 13.22 $ 13.21 $ 12.24 $ 11.35 $ 11.06
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.40 0.40 0.39 0.43 0.49 0.54
Net realized and unrealized
gains from investments 4.89 3.22 2.28 0.01 0.97 0.90 0.26
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.25 3.62 2.68 0.40 1.40 1.39 0.80
- --------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.36) (0.40) (0.40) (0.39) (0.43) (0.50) (0.51)
From net realized gains (0.61) (0.70) (0.37) -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.97) (1.10) (0.77) (0.39) (0.43) (0.50) (0.51)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.93 $ 17.65 $ 15.13 $ 13.22 $ 13.21 $ 12.24 $ 11.35
- --------------------------------------------------------------------------------------------------------------------------
Total Return 30.90% 24.53% 21.04% 3.27% 11.56% 12.36% 7.48%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 649,007 $ 321,827 $ 170,919 $ 198,787 $ 153,144 $ 125,050 $ 73,552
Ratio of expenses to average
net assets 1.00% 0.98% 1.01% 0.98% 0.90% 0.70% 0.42%
Ratio of net investment income
to average net assets 1.91% 2.44% 2.85% 3.18% 3.37% 4.12% 4.80%
Ratio of expenses to average
net assets* 1.00% 1.01% 1.01% 1.05% 1.07% 1.23% 1.16%
Ratio of net investment income
to average net assets* 1.91% 2.41% 2.85% 3.11% 3.20% 3.59% 4.06%
Portfolio turnover(a) 28.18% 14.92% 4.03% 22.69% 7.53% 5.99% 9.36%
Average commission rate
paid(b) $ 0.0681 $ 0.0673
<CAPTION>
-------------------------------------
FIDUCIARY 1990 1989 1988(d)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 10.32 $ 9.10 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.53 0.45 0.23
Net realized and unrealized
gains from investments 0.77 1.22 (0.40)
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.30 1.67 (0.67)
- --------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.56) (0.45) (0.23)
From net realized gains -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.45) (0.23)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.06 $ 10.32 $ 9.10
- --------------------------------------------------------------------------------------------------------------------------
Total Return 12.79% 18.59% (6.73)%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $ 37,056 $ 24,591 $ 1,028
Ratio of expenses to average
net assets 0.49% 0.66% 2.29%(c)
Ratio of net investment income
to average net assets 4.94% 5.35% 2.43%(c)
Ratio of expenses to average
net assets* 1.23% 1.42% 3.23%(c)
Ratio of net investment income
to average net assets* 4.20% 4.59% 1.99%(c)
Portfolio turnover(a) 9.81% 7.14% 18.65%
Average commission rate
paid(b)
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Annualized. (d) Share class commenced
operations July 2, 1987.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.64 $ 15.11 $ 13.20 $ 13.20 $ 12.23 $ 12.34
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.38 0.03 0.36 0.40 0.20
Net realized and unrealized gains from investments 4.87 3.20 2.29 -- 0.98 (0.10)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.18 3.58 2.32 0.36 1.38 0.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.31) (0.35) (0.03) (0.34) (0.41) (0.21)
In excess of net investment income -- -- (0.01) (0.02) -- --
From net realized gains (0.61) (0.70) (0.37) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.92) (1.05) (0.41) (0.36) (0.41) (0.21)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.90 $ 17.64 $ 15.11 $ 13.20 $ 13.20 $12.23
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 30.39% 24.23% 20.79% 2.95% 11.38% 2.16%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 78,976 $ 44,284 $ 13,793 $ 12,054 $ 9,513 $ 118
Ratio of expenses to average net assets 1.25% 1.23% 1.26% 1.23% 1.11% 1.29%(d)
Ratio of net investment income to average net
assets 1.65% 2.19% 2.61% 3.01% 3.32% 3.97%(d)
Ratio of expenses to average net assets* 1.34% 1.36% 1.36% 1.40% 1.43% 1.49%(d)
Ratio of net investment income to average net
assets* 1.56% 2.06% 2.51% 2.84% 3.00% 3.77%(d)
Portfolio turnover(a) 28.18% 14.92% 4.03% 22.69% 7.53% 5.99%
Average commission rate paid(b) $ 0.0681 $ 0.0673
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares issued. (b) The
average commission represents the total dollar amount of commissions paid on
portfolio security transactions divided by the total number of portfolio
shares purchased and sold for which commissions were charged. For the year
ended June 30, 1996, the average commission was calculated for only the last
seven months of the year. (c) Class A Shares commenced offering on February
18, 1992. (d) Annualized.
<PAGE>
25
THE ONE GROUP(R) INCOME EQUITY FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.68 $ 15.14 $ 13.23 $ 13.83
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.17 0.24 0.26 0.11
Net realized and unrealized gains (losses) from investments 4.89 3.23 2.29 (0.60)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 5.06 3.47 2.55 (0.49)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.18) (0.23) (0.25) (0.11)
In excess of net investment income -- -- (0.02) --
From net realized gains (0.61) (0.70) (0.37) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.79) (0.93) (0.64) (0.11)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.95 $ 17.68 $ 15.14 $ 13.23
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 29.48% 23.41% 19.91% (3.37)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $79,518 $29,169 $3,468 $1,714
Ratio of expenses to average net assets 2.00% 1.98% 2.01% 1.95%(c)
Ratio of net investment income to average net assets 0.89% 1.44% 1.88% 2.70%(c)
Ratio of expenses to average net assets* 2.00% 2.01% 2.02% 1.95%(c)
Ratio of net investment income to average net assets* 0.89% 1.41% 1.87% 2.70%(c)
Portfolio turnover(d) 28.18% 14.92% 4.03% 22.69%
Average commission rate paid (e) $ 0.0681 $ 0.0673
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not Annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (e) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
26
THE ONE GROUP(R)
VALUE GROWTH FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long term capital growth and growth of income with a secondary
objective of providing a moderate level of current income.
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in common stocks, debt securities, preferred stocks,
convertible securities, warrants, and other equity securities of overlooked or
undervalued companies that have the potential for earnings growth over time.
Although the Fund expects to invest in securities that pay a moderate level of
income, it may also invest in non-income producing securities if the potential
for capital growth or future income appears promising. Because the Fund seeks
return over the long term, Banc One Investment Advisors will not attempt to time
the market.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in the securities
described in "Investment Strategy." Up to 35% of its total assets may be
invested in U.S. Government Securities, other investment grade fixed income
securities, cash, and cash equivalents. For a list of all the securities in
which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
As a result, your investment in the Fund may increase or decrease in value. The
Fund also will invest in fixed income securities. The value of these securities
will change in response to interest rate changes and other factors. This is
especially true to the extent that the Fund invests in debt securities with
speculative characteristics. Before you invest, please read "More About the
Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Michael D. Weiner has been the Manager of the Fund since February, 1996. Since
1994, Mr. Weiner also has served as manager of the Equity Index Fund. Mr. Weiner
also serves as the Managing Director of Equity Research for Banc One Investment
Advisors. Before joining Banc One Investment Advisors, Mr. Weiner served as the
Director of Research and Head of U.S. Equities for the Dupont Pension Fund
Investment Company of Wilmington, Delaware from 1986 to 1994.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3)
(as a percentage of average daily
net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .31% .31% .31% .31%
Total Fund Operating Expenses
(after fee waiver) (5) 1.30% 2.05% 2.05% 1.05%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.40% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 58 $ 84 $ 113 $195
Class A (without fee waiver) $ 59 $ 87 $ 118 $205
Class B $ 71 $ 94 $ 130 $219
Class C $ 31 $ 64 $ 110 $238
Fiduciary Class $ 11 $ 33 $ 58 $128
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 58 $ 84 $ 113 $195
Class A (without fee waiver) $ 59 $ 87 $ 118 $205
Class B $ 21 $ 64 $ 110 $219
Class C $ 21 $ 64 $ 110 $238
Fiduciary Class $ 11 $ 33 $ 58 $128
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
27
THE ONE GROUP(R) VALUE GROWTH FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR MARCH 26,
ENDED 1996 TO
JUNE 30, JUNE 30,
FIDUCIARY 1997 1996(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.11 0.03
Net realized and unrealized gains from investments 2.85 0.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.96 0.42
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.11) (0.03)
From net realized gains (1.73) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.84) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.51 $ 10.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 31.97% 10.49%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $430,837 $ 191,212
Ratio of expenses to average net assets 0.98% 0.95%(d)
Ratio of net investment income to average net assets 1.06% 1.13%(d)
Ratio of expenses to average net assets* 1.00% 1.04%(d)
Ratio of net investment income to average net assets* 1.04% 1.04%(d)
Portfolio turnover(e) 113.17% 65.21%
Average commission rate paid(f) $ 0.0532 $ 0.0373
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Represents total return for Class A Shares from December 1, 1995
through March 25, 1996 plus total return for Fiduciary Shares for the period
from March 26, 1996 through June 30, 1996. (c) Not
annualized. (d) Annualized. (e) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (f) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
SEVEN MONTHS YEAR ENDED JUNE 30,
YEAR ENDED ENDED JUNE
JUNE 30, 30, ------------------------------------------------------------
CLASS A 1997 1996(a) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42 $ 7.80 $ 6.39
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities Net
investment income 0.09 0.94 0.12 0.13 0.11 0.11 0.12
Net realized and
unrealized gains
(losses) from
investments 2.83 0.08 2.44 (0.56) 0.83 1.75 1.44
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 2.92 1.02 2.56 (0.43) 0.94 1.86 1.56
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.08) (0.94) (0.12) (0.14) (0.12) (0.10) (0.14)
In excess of net
investment income -- (0.01) -- -- -- -- --
From net realized gains (1.73) (0.83) (0.29) (0.45) (0.22) (0.14) (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.81) (1.78) (0.41) (0.59) (0.34) (0.24) (0.15)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 11.50 $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42 $ 7.80
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 31.53% 10.40%(b) 29.57% (4.32)% 10.13% 24.27% 24.97%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $47,306 $35,984 $217,978 $173,198 $171,141 $133,614 $93,400
Ratio of expenses to
average net assets 1.23% 0.97%(c) 0.95% 0.96% 0.96% 0.97% 0.95%
Ratio of net investment
income to average net
assets 0.83% 0.65%(c) 1.25% 1.34% 1.21% 1.25% 1.73%
Ratio of expenses to
average net assets* 1.34% 1.05%(c) 0.95% 0.96% 0.96% 0.97% 1.02%
Ratio of net investment
income to average net
assets* 0.72% 0.77%(c) 1.25% 1.34% 1.21% 1.25% 1.66%
Portfolio turnover(d) 113.17% 65.21% 77.00% 53.00% 66.00% 43.00% 54.00%
Average commission rate
paid(e) $ 0.0532 $ 0.0373
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Upon reorganizing as a fund of The One Group, the Paragon
Value Growth Fund became the Value Growth Fund. Financial highlights for the
periods prior to March 26, 1996 represent the Paragon Value Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.26 to $10.00
effective March 26, 1996. (b) Not annualized. (c) Annualized. (d) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued. (e) The average commission
represents the total dollar amount of commissions paid on portfolio security
transactions divided by the total number of portfolio shares purchased and
sold for which commissions were charged. For the year ended June 30, 1996, the
average commission was calculated for only the last seven months of the year.
<PAGE>
28
THE ONE GROUP(R) VALUE GROWTH FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEVEN
YEAR MONTHS Year September 9,
ENDED ENDED ended 1994 to
JUNE 30, JUNE 30, November 30, November 30,
CLASS B 1997 1996(a) 1995 1994(b)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 11.16 $ 9.01 $ 9.85
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.01 0.91 0.05 0.02
Net realized and unrealized gains (losses) from
investments 2.82 0.07 2.46 (0.84)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.83 0.98 2.51 (0.82)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment income (0.02) (0.91) (0.07) (0.02)
In excess of net investment income -- (0.01) -- --
From net realized gains (1.73) (0.83) (0.29) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.75) (1.75) (0.36) (0.02)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.47 $ 10.39 $ 11.16 $ 9.01
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 30.52% 9.86%(c) 28.74% (8.31)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $10,517 $4,673 $2,923 $412
Ratio of expenses to average net assets 1.98% 1.56%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets 0.07% 0.13%(d) 0.38% 0.76%(d)
Ratio of expenses to average net assets* 2.00% 1.94%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets* 0.05% 0.05%(d) 0.38% 0.76%(d)
Portfolio turnover(e) 113.17% 65.21% 77.00% 53.00%
Average commission rate paid(f) $ 0.0532 $ 0.0373
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Upon reorganizing as a fund of The One Group, the Paragon
Value Growth Fund became the Value Growth Fund. Financial highlights for the
periods prior to March 26, 1996 represent the Paragon Value Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.21 to $10.00
effective March 26, 1996. (b) Class B Shares commenced offering September 9,
1994. (c) Not annualized. (d) Annualized. (e) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued. (f) The average commission represents the total
dollar amount of commissions paid on portfolio security transactions divided
by the total number of portfolio shares purchased and sold for which
commissions were charged. For the year ended June 30, 1996, the average
commission was calculated for only the last seven months of the year.
<PAGE>
29
THE ONE GROUP(R)
SMALL CAPITALIZATION FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth primarily by investing in a portfolio of
equity securities of small capitalization and emerging growth companies.
[ICON] INVESTMENT STRATEGY
The Fund invests primarily in common stocks, debt securities, preferred stocks,
convertible securities, warrants, and other equity securities of small
capitalization companies. Generally, Banc One Investment Advisors selects a
portfolio of companies with a market capitalization equivalent to the median
market capitalization of the S&P Small-Cap 600 Index*, although the Fund may
occasionally hold securities of companies with larger capitalizations if doing
so contributes to the Fund's investment objective. This Fund was formerly called
The One Group Gulf South Growth Fund.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 65% of its total assets in the securities described in
"Investment Strategy." Up to 35% of its total assets may be invested in U.S.
Government Securities, other investment grade fixed income securities, cash, and
cash equivalents. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in equity securities which may increase or decrease in value.
As a result, your investment in the Fund may increase or decrease in value.
Also, smaller companies may be subject to greater business risks than larger
companies. Before you invest, please read "More About the Funds" and "Investment
Risks."
[ICON] FUND MANAGEMENT
In 1996, Richard R. Jandrain, III, Senior Managing Director of Equity Securities
for Banc One Investment Advisors, became co-manager of the Fund. Mr. Jandrain
has been a manager of the Growth Opportunities Fund since 1994. Mr. Jandrain has
over 19 years of investment experience and has served in various investment
management positions with Banc One Investment Advisors and its affiliates for
the past eight years.
Donald E. Allred has served as co-manager of the Fund since its inception in
1996. Mr. Allred served as manager of the Fund's predecessor, Paragon Gulf South
Growth Fund, from its inception in 1991 to 1996. Mr. Allred has over 30 years of
investment management experience.
*"Standard & Poor's Small-Cap 600" is a registered service mark of Standard &
Poor's Corporation, which does not sponsor and is in no way affiliated with the
Fund.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption
proceeds, as applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a percentage of average daily net assets)
Investment Advisory Fees .74% .74% .74% .74%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee waiver) (5) 1.31% 2.06% 2.06% 1.06%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver, 12b-1 fees would be .35% for Class A shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.41% for Class A shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 58 $ 85 $ 114 $196
Class A (without fee waiver) $ 59 $ 88 $ 119 $206
Class B $ 71 $ 95 $ 131 $220
Class C $ 31 $ 65 $ 111 $239
Fiduciary Class $ 11 $ 34 $ 58 $129
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 58 $ 85 $ 114 $196
Class A (without fee waiver) $ 59 $ 88 $ 119 $206
Class B $ 21 $ 65 $ 111 $220
Class C $ 21 $ 65 $ 111 $239
Fiduciary Class $ 11 $ 34 $ 58 $129
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
30
THE ONE GROUP(R) SMALL CAPITALIZATION FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR MARCH 26,
ENDED 1996 TO
JUNE 30, JUNE 30,
FIDUCIARY 1997 1996(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.75 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.02) --
Net realized and unrealized gains from investments 1.31 0.78
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.29 0.78
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net realized gains (1.10) (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.10) (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.94 $ 10.75
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 13.44% 13.39%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $78,318 $83,371
Ratio of expenses to average net assets 1.02% 0.96%(d)
Ratio of net investment income (loss) to average net assets (0.16)% (0.16)(d)
Ratio of expenses to average net assets* 1.12% 1.05%(d)
Ratio of net investment income (loss) to average net assets* (0.26)% (0.25)%(d)
Portfolio turnover(e) 92.01% 59.57%
Average commission rate paid(f) $ 0.0676 $ 0.0685
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Represents total return for Class A Shares from December 1, 1995
through March 25, 1996 plus total return for Fiduciary Shares for the period
from March 26, 1996 through June 30, 1996. (c) Not
annualized. (d) Annualized. (e) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (f) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year.
<TABLE>
<CAPTION>
YEAR SEVEN MONTHS FIVE MONTHS
ENDED ENDED JUNE YEAR ENDED NOVEMBER 30, ENDED
JUNE 30, 30, ------------------------------------------------------ NOVEMBER 30,
CLASS A 1997 1996(a) 1995 1994 1993 1992 1991(f)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48 $ 7.38 $ 6.37
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment
income (loss) (0.04) (0.07) (0.04) (0.04) (0.02) 0.01 0.01
Net realized and
unrealized gains
(losses) from
investments 1.35 1.40 2.35 (0.63) 0.88 2.10 1.01
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 1.31 1.33 2.31 (0.67) 0.86 2.11 1.02
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net investment
income -- -- -- -- (0.01) (0.01) (0.01)
From net realized
gains (1.10) (2.10) (0.17) (0.08) (0.22) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.10) (2.10) (0.17) (0.08) (0.23) (0.01) (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 10.94 $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48 $ 7.38
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes
Sales Charge) 13.52% 12.85%(b) 25.07% (6.66)% 9.10% 28.59% 16.12%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000) $17,299 $18,356 $95,467 $77,540 $74,982 $55,719 $34,546
Ratio of expenses to
average net assets 1.27% 1.05%(c) 1.03% 1.00% 1.01% 1.00% 1.05%(c)
Ratio of net
investment income
(loss) to average
net assets (0.41)% (0.33)%(c) (0.36)% (0.38)% (0.21)% 0.15% 0.31%(c)
Ratio of expenses to
average net
assets* 1.45% 1.37%(c) 1.03% 1.00% 1.01% 1.00% 1.05%(c)
Ratio of net
investment income
(loss) to average
net assets* (0.59)% (0.35)%(c) (0.36)% (0.30)% (0.21)% 0.15% 0.31%(c)
Portfolio
turnover(d) 92.01% 59.57% 65.00% 51.00% 59.00% 42.00% 12.00%
Average commission
rate paid(e) $ 0.0676 $ 0.0685
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Upon reorganizing as a fund of The One Group, the Paragon Gulf
South Growth Fund became the Gulf South Growth Fund. Financial highlights for
the periods prior to March 26, 1996 represent the Paragon Gulf South Growth
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $15.70
to $10.00 effective March 26, 1996. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued. (e) The average commission represents the total dollar amount
of commissions paid on portfolio security transactions divided by the total
number of portfolio shares purchased and sold for which commissions were
charged. For the year ended June 30, 1996, the average commission was
calculated for only the last seven months of the year. (f) Period from
commencement of operations.
<PAGE>
31
THE ONE GROUP(R) SMALL CAPITALIZATION FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEVEN
YEAR MONTHS Year September 12,
ENDED ENDED ended 1994 to
JUNE 30, JUNE 30, November 30, November 30,
CLASS B 1997 1996(a) 1995 1994(b)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.72 $ 11.56 $ 9.47 $ 10.40
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment loss (0.10) (0.06) (0.07) (0.01)
Net realized and unrealized gains (losses) from
investments 1.32 1.35 2.33 (0.92)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.22 1.29 2.26 (0.93)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
From net realized gains (1.10) (2.13) (0.17) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.10) (2.13) (0.17) --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.84 $ 10.72 $ 11.56 $ 9.47
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 12.74% 12.47%(c) 24.21% (9.08)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $3,835 $2,545 $1,814 $231
Ratio of expenses to average net assets 2.02% 1.87%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average net
assets (1.16)% (1.10)%(d) (1.16)% (0.90)%(d)
Ratio of expenses to average net assets* 2.12% 1.92%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average net
assets* (1.26)% (1.15)%(d) (1.16)% (0.90)%(d)
Portfolio turnover(e) 92.01% 59.57% 65.00% 51.00%
Average commission rate paid(f) $ 0.0676 $ 0.0685
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as
indicated. (a) Upon reorganizing as a fund of The One Group, the Paragon Gulf
South Growth Fund became the Gulf South Growth Fund. Financial highlights for
the periods prior to March 26, 1996 represent the Paragon Gulf South Growth
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $15.48
to $10.00 effective March 26, 1996. (b) Class B Shares commenced offering
September 12, 1994. (c) Not annualized. (d) Annualized. (e) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued. (f) The average commission
represents the total dollar amount of commissions paid on portfolio security
transactions divided by the total number of portfolio shares purchased and
sold for which commissions were charged. For the year ended June 30, 1996, the
average commission was calculated for only the last seven months of the year.
<PAGE>
MORE ABOUT THE FUNDS
32
PORTFOLIO QUALITY
- ----------------------------------------------------
The Funds only purchase securities that meet certain rating criteria.
- - >If the Funds invest in municipal bonds, the bonds must be rated as investment
grade.
- - >Other municipal securities, such as tax-exempt commercial paper, notes and
variable rate demand obligations, must be rated in one of the two highest
investment grade categories at the time of investment.
- - >Corporate bonds generally will be rated in one of the three highest
investment grade categories.
- - >Banc One Investment Advisors reserves the right to invest in corporate bonds
which present attractive opportunities and are rated in the lowest investment
grade category. These corporate bonds may be riskier than higher rated bonds.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other investments. These
include:
- - >options, futures contracts, and options on futures contracts
- - >warrants
- - >mortgage-backed securities, including collateralized mortgage obligations and
Real Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs)
- - >asset-backed securities
- - >swap, cap and floor transactions
- - >new financial products
- - >currency forwards
- - >structured instruments
Derivatives may be riskier than traditional investments.
SMALL CAPITALIZATION COMPANIES: Investments in smaller, younger companies may be
riskier than investments in larger, more established companies. These companies
may be more vulnerable to changes in economic conditions, specific industry
conditions, market fluctuations, and other factors effecting the profitability
of other companies. Because economic events may have a greater impact on smaller
companies, there may be a greater and more frequent fluctuation in their stock
price. This may cause frequent and unexpected increases or decreases in the
value of your investment.
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
INDEX FUNDS: An index fund's investment objective is to track the performance of
a specified index. Therefore, securities may be purchased, retained and sold by
an index fund at times when an actively managed fund would not do so. As a
result, you can expect greater risk of loss (and a correspondingly greater
prospect of gain) from changes in the value of securities that are heavily
weighted in the index than would be the case if the funds were not fully
invested in such securities. Because of this, an index fund's share price can be
volatile and you should be able to handle sudden, and sometimes substantial,
fluctuations in the value of your investment.
INTERNATIONAL FUNDS: Investments in foreign securities involve risks different
from investments in U.S. securities. For more details, see "Investment
Practices" and "Investment Risks." Because of these risk factors, the share
price of the International Equity Index Fund is expected to be volatile, and you
should be able to sustain sudden, and sometimes substantial, fluctuations in the
value of your investment.
<PAGE>
HOW TO DO BUSINESS WITH THE ONE GROUP
33
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Years Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
- - Purchase requests received by The One Group Services Company before 4 p.m.
Eastern Standard Time ("EST") will be effective that day.
- - Purchase orders may be cancelled by the Fund's Custodian, State Street Bank
and Trust Company, if it does not receive "federal funds" by 4:00 p.m. EST (i)
on the business day after the order is placed if you are buying Fiduciary
Class shares, and (ii) on the third business day if you are purchasing Class
A, Class B or Class C shares.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - If you intend to hold your shares for six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
The One Group Fund Direct IRA. The One Group offers a retirement plan and, in
1998, will offer an education plan. These plans allow participants to defer
taxes while their retirement and education savings grow. The education IRA
requires a minimum investment of $500. Call The One Group Services Company at
1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV") plus a sales charge, if any.
- - Each class of shares in each Fund has a different NAV. This is primarily
because each class has different distribution expenses.
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- - A Fund's NAV changes every day. NAV is calculated each business day at 4:00
p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000 ($100 for employees of BANC ONE
CORPORATION and its affiliates).
- Subsequent investments must be at least $100 ($25 for employees of BANC ONE
CORPORATION and its affiliates).
- You may purchase no more than $250,000 of Class B shares at one time.
- The One Group Services Company may waive these minimums.
3.Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means that
you will not have to complete additional paperwork later.
<PAGE>
34
4.Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
Contributions to Fund Direct IRAs should be made payable to "State Street
Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10) calendar
days if purchases are made by check or under the Systematic Investment Plan
(see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check made payable to "The One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CONVERSION FEATURE
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - Because the share price of the Class A shares may be higher than that of the
Class B shares at the time of conversion, you may receive fewer Class A
shares; however, the dollar value will be the same.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips (including lodging at luxury
resorts), tickets to entertainment events, and merchandise.
<PAGE>
35
CLASS A SHARES
This table shows the amount of sales charge you pay and the commissions paid to
Shareholder Servicing Agents.
<TABLE>
<CAPTION>
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not assessed a
sales charge at the time of purchase, you will be charged the equivalent of
1% of the purchase price if you redeem any or all of the Class A shares
within one year of purchase.
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
After first year none
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the current market value or the original cost of the
shares, whichever is less.
- - A sales charge is not imposed on increases in NAV above the initial purchase
price, nor is a sales charge assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A Shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE>
36
12B-1 FEES
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily net assets of
the Fund, which is currently being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund. This will cause expenses for Class B and Class C
shares to be higher and dividends to be lower than for Class A shares.
3. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% and 1.00% of the
average daily net assets of Class A and Class B shares, respectively.
- - The One Group Services Company may pay 12b-1 fees to its affiliates and to
Banc One Investment Advisors and its affiliates (or any sub-advisor) for
brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A, Class B
or Class C shares of a Fund (except a money market fund) that you (and your
spouse and minor children) already own to the amount of your next Class A
purchase for purposes of calculating the sales charge. An Intermediary also
may take advantage of this option.
2. Letter of Intent: With an initial investment of $2,000, you may purchase
Class A shares of one or more funds over the next 13 months and pay the same
sales charge that you would have paid if all shares were purchased at once. A
percentage of your investment will be held in escrow until the full amount
covered by the Letter of Intent has been invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your investment
representative. To determine if you are eligible for the accumulation privilege,
contact The One Group Services Company at 1-800-480-4111. These programs may be
terminated or amended at any time.
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Funds if the shares were:
1. Bought with the reinvestment of dividends and capital gains distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge has
been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of:
- The One Group.
- BANC ONE CORPORATION and its subsidiaries and affiliates.
- The One Group Services Company and its subsidiaries and affiliates.
- State Street Bank and Trust Company and its subsidiaries and affiliates.
- Broker/dealers who have entered into dealer agreements with The One Group
and their subsidiaries and affiliates.
- An investment sub-advisor of a fund of The One Group and such sub-advisor's
subsidiaries and affiliates.
4. Bought by:
- Affiliates of BANC ONE CORPORATION and certain accounts (other than IRA
Accounts) for which an Intermediary acts in a fiduciary, advisory, agency,
custodial or similar capacity.
- Accounts as to which a bank or broker-dealer charges an asset allocation
fee, provided the bank or broker-dealer has an agreement with The One Group
Services Company.
- Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
<PAGE>
37
- Shareholder Servicing Agents who have a dealer arrangement with The One
Group Services Company, who place trades for their own accounts or for the
accounts of their clients and who charge a management, consulting or other
fee for their services, as well as clients of such Shareholder Servicing
Agents who place trades for their own accounts if the accounts are linked
to the master account of such Shareholder Servicing Agent.
5. Bought with proceeds from the sale of Fiduciary Class shares of a Fund of The
One Group or acquired in an exchange of Fiduciary Class shares of a Fund for
Class A shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund (other than a
fund of The One Group) for which a sales charge was paid, but only if the
purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee benefit
plan, but only if the purchase is made within 60 days of the sale or
distribution and, at the time of the distribution, the employee benefit plan
had plan assets invested in a Fund of The One Group.
8. Bought with assets of The One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
<PAGE>
38
The One Group does not charge a fee for this privilege. In addition, The One
Group may change the terms and conditions of your exchange privileges upon 60
days written notice.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 4:00 p.m., EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds in which you wish
to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2.That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
You may redeem all or some of your shares on any day that the Funds are open for
business.
- - Redemption requests received by The One Group Services Company before 4:00
p.m. EST will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and Trust Company at the
following address:
The One Group
c/o State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association
<PAGE>
39
Medallion Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3.the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2.State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will be paid within seven days after receipt of the
redemption request.
WHAT WILL MY SHARES BE WORTH?
- - If you own Class A and Fiduciary Class shares and the Fund receives your
redemption request by 4:00 p.m. EST, you will receive that day's NAV.
- - If you own Class B or Class C shares and the Fund receives your redemption
request by 4:00 p.m. EST, you will receive that day's NAV, minus the amount of
any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000, you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A shares while
participating in a Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
3. If you are age 70 1/2, you may elect to receive payments to the extent
that the payment represents a minimum required distribution from an IRA or
other qualifying retirement plan.
4. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your shares. This will reduce
the amount of your investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE>
SHAREHOLDER INFORMATION
40
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940, to
control the Funds. This is because as of August 5, 1997, BANC ONE CORPORATION or
its affiliates possessed the power to vote substantially all of the Fiduciary
Class shares of the Funds.
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on the last business day of each month.
Dividends are distributed on the first business day of the next month. Capital
gains, if any, for all Funds are distributed at least annually.
The Funds pay dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B and Class C shares
have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
(including net short-term capital gains) on at least an annual basis. Dividends
you receive from a Fund, whether reinvested or received in cash, will be taxable
to you. Dividends from a Fund's net investment income will be taxable as
ordinary income and dividends from a Fund's long-term capital gains will be
taxable to you as such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
<PAGE>
41
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans will not be taxable.
However, if shares are held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received shares as a distribution from a
retirement plan, the distributions will be taxable to the plan or individual as
described in "Taxation of Distributions." If you are considering purchasing
shares with qualified retirement plan assets, you should consult your tax
advisor for a more complete explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUNDS
42
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Ten of the Funds
are described in this prospectus; the other Funds are described in separate
prospectuses. Each Fund described in this prospectus is diversified. Each Fund
is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets.
For the fiscal year ended June 30, 1997, the Funds paid advisory fees at the
following rates:
<TABLE>
<CAPTION>
FUND NAME ANNUAL RATE AS PERCENTAGE
OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
The One Group(R) Asset Allocation Fund .55%
The One Group(R) Large Company Growth
Fund .74%
The One Group(R) Large Company Value Fund .74%
The One Group(R) Growth Opportunities
Fund .74%
The One Group(R) International Equity
Index Fund .55%
The One Group(R) Disciplined Value Fund .74%
The One Group(R) Equity Index Fund .10%
The One Group(R) Income Equity Fund .74%
The One Group(R) Value Growth Fund .74%
The One Group(R) Small Capitalization
Fund .74%
</TABLE>
THE SUB-ADVISOR
Independence International Associates, Inc. ("Independence International"), 75
State Street, Boston, Massachusetts, 02109, is the sub-advisor to the
International Equity Index Fund. Independence International specializes in the
management of international equity portfolios. Independence International is an
indirect subsidiary of John Hancock Mutual Life Insurance Company. As of June
30, 1997, Independence International had approximately $26.8 billion in assets
under management.
For the fiscal year ended June 30, 1997, Banc One Investment Advisors paid
Independence International sub-investment advisory fees at the following rates:
<TABLE>
<CAPTION>
FUND ASSETS ANNUAL RATE AS PERCENTAGE
OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
Up to $10 million .275%
Over $10,000,000 up to $25,000,000 .225%
Over $25,000,000 up to $50,000,000 .195%
Over $50,000,000 up to $100,000,000 .125%
Over $100,000,000 .060%
</TABLE>
<PAGE>
43
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500, or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statementing, distributes dividends, and processes buy and
sell requests. As the Funds' custodian, State Street holds the Funds' assets,
settles all portfolio trades and assists in calculating the Funds' net asset
values. Bank One Trust Company, N.A. serves as sub-custodian in connection with
the Funds' securities lending activities under an agreement with State Street
Bank and Trust Company. Bank One Trust Company, N.A. is paid a fee by the Funds
for this service.
<PAGE>
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
44
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Equity securities are subject mainly to market
risk. Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. For a more complete discussion, see the Statement of Additional
Information. Following the table is a more complete discussion of risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Asset Allocation Fund 1
The One Group(R) Large Company Growth Fund 2
The One Group(R) Large Company Value Fund 3
The One Group(R) Growth Opportunities Fund 4
The One Group(R) Disciplined Value Fund 5
The One Group(R) Income Equity Fund 6
The One Group(R) Value Growth Fund 7
The One Group(R) Small Capitalization Fund 8
The One Group(R) International Equity Index
Fund 9
The One Group(R) Equity Index Fund 10
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-10 Market
CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-10 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-10 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1-10 Market
maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1-10 Liquidity
exchange for the deposit of funds. Credit
Market
COMMON STOCK: Shares of ownership of a company. 1-10 Market
REPURCHASE AGREEMENTS: The purchase of a security and the 1-10 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-10 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-10 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-10 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1-10 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
CONVERTIBLE SECURITIES: Bonds or preferred stock that convert to 1-10 Market
common stock. Credit
</TABLE>
<PAGE>
45
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
CALL AND PUT OPTIONS: A call option gives the buyer the right to 1-10 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell only covered call and Leverage
secured put options.
FUTURES AND RELATED OPTIONS: A contract providing for the future 1-10 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled investment 1-10 Liquidity
vehicles which invest primarily in income producing real estate Management
or real estate related loans or interest. Market
Regulatory
Tax
Pre-payment
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1-8, 10 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1-8, 10 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
FOREIGN SECURITIES: Stocks issued by foreign companies, as well 1-9 Market
as commercial paper of foreign issuers and obligations of Political
foreign banks, overseas branches of U.S. banks and supranational Liquidity
entities. Includes American Depository Receipts. Foreign Investment
RESTRICTED SECURITIES: Securities not registered under the 1-8, 10 Liquidity
Securities Act of 1933, such as privately placed commercial Market
paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-8 Credit
interest rates which are reset daily, weekly, quarterly or some Liquidity
other period and which may be payable to the Fund on demand. Market
WARRANTS: Securities, typically issued with preferred stock or 1-3, 7-9 Market
bonds, that give the holder the right to buy a proportionate Credit
amount of common stock at a specified price.
PREFERRED STOCK: A class of stock that generally pays a dividend 1-10 Market
at a specified rate and has preference over common stock in the
payment of dividends and in liquidation.
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs"), Real Estate Mortgage Investment Credit
Conduits ("REMICs") and Stripped Mortgage-Backed Securities Regulatory
("SMBS").
CORPORATE DEBT SECURITIES: Corporate bonds and non-convertible 1 Market
debt securities. Credit
DEMAND FEATURES: Securities that are subject to puts and standby 1 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
ASSET-BACKED SECURITIES: Securities secured by company 1 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets.
MORTGAGE DOLLAR ROLLS: A transaction in which a Fund sells 1 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
ADJUSTABLE RATE MORTGAGE LOANS ("ARMS"): Loans in a mortgage 1 Pre-payment
pool which provide for a fixed initial mortgage interest rate Market
for a specified period of time, after which the rate may be Credit
subject to periodic adjustments. Regulatory
SWAPS, CAPS AND FLOORS: A Fund may enter into these transactions 1-10 Management
to manage its exposure to changing interest rates and other Credit
factors. Swaps involve an exchange of obligations by two Liquidity
parties. Caps and floors entitle a purchaser to a principal Market
amount from the seller of the cap or floor to the extent that a
specified index exceeds or falls below a predetermined interest
rate or amount.
</TABLE>
<PAGE>
46
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
NEW FINANCIAL PRODUCTS: New options and futures contracts and 1-10 Management
other financial products, continue to be developed and the Funds Credit
may invest in such options, contracts and products. Market
Liquidity
STRUCTURED INSTRUMENTS: Debt securities issued by agencies and 1 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other references indices. Foreign Investment
MUNICIPAL SECURITIES: Securities issued by a state or political 1 Market
subdivision to obtain funds for various public purposes. Credit
Municipal securities include private activity bonds and Political
industrial development bonds, as well as General Obligation Tax
Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
OBLIGATIONS OF SUPRANATIONAL AGENCIES: Obligations of 9 Credit
supranational agencies who are chartered to promote economic Foreign Investment
development and are supported by various governments and
governmental agencies.
CURRENCY FUTURES AND RELATED OPTIONS: The Fund may engage in 9 Management
transactions in financial futures and related options, which are Liquidity
generally described above. The Fund will enter into these Credit
transactions in foreign currencies and for hedging purposes Market
only. Political
Leverage
Foreign Investment
FORWARD FOREIGN EXCHANGE TRANSACTIONS: Contractual agreement to 9 Management
purchase or sell one specified currency for another currency at Liquidity
a specified future date and price. The Fund will enter into Credit
forward foreign exchange transactions for hedging purposes only. Market
Political
Leverage
Foreign Investment
</TABLE>
<PAGE>
47
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risk than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
- HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching between
the derivative and underlying security, and there can be no assurance that
a Fund's hedging transactions will be effective.
- SPECULATIVE. To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that would normally prevail in
the market. The seller may have to lower the price, sell other securities
instead or forego an investment opportunity, any of which could have a
negative effect on fund management or performance. This includes the risk of
missing out on an investment opportunity because the assets necessary to take
advantage of it are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There is also the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments in
foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. The risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments. This
also includes the risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may widen any losses. Exchange
rate volatility also my affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
<PAGE>
48
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early prepayment, a Fund may
fail to recover any premium paid, resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the investment policies summarized below
are fundamental. This means that they cannot be changed without the consent of a
majority of the outstanding shares of the Funds. The full text of the
fundamental policies can be found in the Statement of Additional Information.
Each Fund may not:
1. Purchase an issuer's securities if as a result more than 5% of its total
assets would be invested in the securities of that issuer or the Fund would
own more than 10% of the outstanding voting securities of that issuer. This
does not include securities issued or guaranteed by the United States, its
agencies or instrumentalities, and repurchase agreements involving these
securities. This restriction applies with respect to 75% of a Fund's total
assets.
2. Concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include obligations issued or guaranteed by the
U.S. government or its agencies and instrumentalities and repurchase
agreements involving such securities.
3. Make loans, except that a Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending.
The One Group Equity Index Fund may not:
1. Invest more than 10% of its total assets in securities issued or guaranteed
by the United States, its agencies or instrumentalities.
Additional investment policies can be found in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
Sometimes Banc One Investment Advisors decides that the Funds should temporarily
be invested in cash and cash equivalents. Cash equivalents include:
- - Securities issued by the U.S. Government, its agencies and instrumentalities
- - Repurchase Agreements
- - Certificates of Deposit
- - Bankers' Acceptances
- - Commercial Paper (rated in one of the two highest rating categories)
- - Variable Rate Master Demand Notes
- - Bank Money Market Deposit Accounts
All of the Funds (other than the International Equity Index Fund and the Equity
Index Fund) may temporarily invest up to 100% of their total assets in cash and
cash equivalents. The Equity Index Fund may temporarily invest only 10% of its
total assets in cash and cash equivalents, while the International Equity Index
Fund may invest up to 20% of its total assets in debt securities issued or
guaranteed by foreign governments or any of their political subdivisions,
agencies or instrumentalities, or by supranational issuers rated in one of the
three highest rating categories.
While the Funds are engaged in a temporary defensive position, they will not be
pursuing their investment objectives. Therefore, the Funds will pursue a
temporary defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Funds and may result in additional tax consequences to you. The portfolio
turnover rate for each Fund for the fiscal year ended June 30, 1997 is shown on
the Financial Highlights.
<PAGE>
APPENDIX
49
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE>
50
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
Aaa The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
Aa The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF CORPORATE/
MUNICIPAL BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligation.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the obligation. In the event of adverse busi-
<PAGE>
51
ness, financial, or economic conditions, they are not likely to have the
capacity to meet its financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & Short-term municipal securities rated MIG1 or VMIG1 are of the best
VMIGX1 quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & These Short-term municipal securities are of high quality. Margins of
VMIG2 protection are ample although not so large as in the preceding group.
MIG3 & Favorable quality. All security elements are accounted for, but the
VMIG3 undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the
<PAGE>
52
least risk of dividend impairment within the universe of preferred
stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE>
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Sub-Advisor
Independence International Associates, Inc.
75 State Street
Boston, MA 02109
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-120
<PAGE>
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
MUNICIPAL BOND FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND
THE ONE GROUP(R) MUNICIPAL INCOME FUND
THE ONE GROUP(R) ARIZONA MUNICIPAL BOND FUND
THE ONE GROUP(R) WEST VIRGINIA MUNICIPAL BOND FUND
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND
THE ONE GROUP(R) OHIO MUNICIPAL BOND FUND
THE ONE GROUP(R) KENTUCKY MUNICIPAL BOND FUND
This prospectus describes seven mutual funds that attempt to produce income
exempt from Federal and/or state income tax. The information in this
prospectus is important. Please read it carefully before you invest, and
save it for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: oO ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; oO ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; oO
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................. 1
ABOUT THE FUNDS.......................................... 2
The One Group(R) Intermediate Tax-Free Bond Fund...... 2
The One Group(R) Municipal Income Fund................ 5
The One Group(R) Arizona Municipal Bond Fund.......... 8
The One Group(R) West Virginia Municipal Bond Fund.... 11
The One Group(R) Louisiana Municipal Bond Fund........ 14
The One Group(R) Ohio Municipal Bond Fund............. 17
The One Group(R) Kentucky Municipal Bond Fund......... 20
MORE ABOUT THE FUNDS..................................... 23
HOW TO DO BUSINESS WITH THE ONE GROUP.................... 24
Purchasing Fund Shares................................ 24
Sales Charges......................................... 25
Sales Charge Reductions and Waivers................... 27
Exchanging Fund Shares................................ 28
Redeeming Fund Shares................................. 29
SHAREHOLDER INFORMATION.................................. 31
Voting Rights......................................... 31
Dividend Policies..................................... 31
Tax Treatment of the Funds............................ 32
Tax Treatment of Shareholders......................... 32
Shareholder Inquiries................................. 33
ORGANIZATION AND MANAGEMENT OF THE FUNDS................. 34
The Funds............................................. 34
The Board of Trustees................................. 34
The Advisor........................................... 34
The Distributor....................................... 34
The Administrator and Sub-Administrator............... 34
The Transfer Agent, Custodian and Sub-Custodian....... 34
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES............................................... 35
Investment Practices.................................. 35
Investment Risks...................................... 37
Investment Policies................................... 38
APPENDIX: DESCRIPTION OF RATINGS......................... 40
</TABLE>
<PAGE>
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE MUNICIPAL BOND FUNDS?
The Funds are designed to produce income exempt from Federal
and/ or state income tax. Each Fund pursues a different
investment objective and involves different risks. These Funds
may not be appropriate for Individual Retirement Accounts,
Qualified Plans, and other Retirement Plans that receive
favorable tax treatment. Please read about each Fund before
investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Intermediate Tax-Free Bond Fund and the Municipal Income
Fund invest in debt securities issued by or on behalf of
states, territories, and possessions of the United States and
their agencies that produce interest that is exempt from
Federal income tax. The Arizona Municipal Bond Fund, the West
Virginia Municipal Bond Fund, the Louisiana Municipal Bond
Fund, the Kentucky Municipal Bond Fund and the Ohio Municipal
Bond Fund invest in debt securities of their respective states
that produce interest that is exempt from Federal Income Tax
and the personal income tax of each Fund's respective state.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The Funds invest in fixed-income investments that are subject
to market fluctuations as a result of changes in interest
rates. As a result, the value of investments in the Funds may
decrease during periods of rising interest rates and increase
during periods of declining interest rates. In addition, some
of the Funds invest in mortgage-related securities which may
have greater price and yield volatility than traditional
fixed-income securities. All of the Funds, except the
Intermediate Tax Free Bond Fund and the Municipal Income Fund,
are non-diversified funds which expose investors to special
risks, including risks associated with state specific
investments. For more information about risks, please read
"More About the Funds" and "Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Funds currently offer four classes of Shares: Class A,
Class B, Class C and Fiduciary Class. Class A, Class B and
Class C shares are offered to the general public. Fiduciary
Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository
institution, insurance company, pension plan or other
organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities. The section called "How To Do
Business With The One Group" will provide more information.
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C shares are not available
for purchase in all of the funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed periodically on the first business day of each
month. Any capital gains are distributed at least annually.
Distributions are paid in additional shares of the same class
unless you elect to take the payment in cash. For a more
detailed discussion of dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE>
2
THE ONE GROUP(R)
INTERMEDIATE TAX-FREE BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks current income exempt from Federal
income taxes consistent with prudent investment management and the preservation
of capital.
[ICON] INVESTMENT STRATEGY
The Fund invests in bonds and notes of states, territories and possessions of
the United States, including the District of Columbia, and their respective
authorities, political subdivisions, agencies and instrumentalities, the
interest on which is exempt from Federal income tax ("Municipal Securities").
The Fund's average weighted maturity normally will range between three and ten
years.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its net assets in Municipal Securities. As a
matter of fundamental policy, the Fund invests at least 65% of its total assets
in bonds. The Fund also may invest in mortgage-backed securities, restricted
securities, and mortgage dollar rolls. The securities in which the Fund invests
may have fixed rates of return or floating or variable rates. For a list of all
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund may invest in Municipal Securities that are rated in the lowest
investment grade. Even though such securities are generally considered
investment grade they are considered to have speculative characteristics.
Issuers of such securities are more vulnerable to changes in economic conditions
than issuers of higher grade securities. The Municipal Securities are also fixed
income investments. The value of these securities will change in response to
interest rate changes and other factors. In addition, the Fund invests in
mortgage-related securities which have significantly greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 20% of the Fund's assets may be invested in Municipal Securities, the
interest on which is subject to the Federal alternative minimum tax.
Shareholders who are subject to the Federal alternative minimum tax may have all
or a portion of their income from the Fund subject to Federal income tax. In
addition, corporate shareholders will be required to take the interest on
Municipal Securities into account in determining their alternative minimum
taxable income.
[ICON] FUND MANAGEMENT
Patrick M. Morrissey has served as the manager of the Fund since February, 1994.
Since 1993, Mr. Morrissey also has managed the Municipal Income Fund. Mr.
Morrissey has been employed by Banc One Investment Advisors and its affiliates
since October, 1992. From September, 1986 to October, 1992, Mr. Morrissey served
as Portfolio Manager at Norwest Investments and Trust.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .26% .26% .26% .26%
Total Fund Operating Expenses (after fee
waivers) (6) .91% 1.56% 1.56% .66%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.21% for Class A shares, 1.86% for Class B
shares, 1.86% for Class C shares and .86% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 73 $ 93 $152
Class A (without fee waivers) $ 57 $ 82 $ 109 $185
Class B $ 66 $ 79 $ 105 $168
Class B (without fee waivers) $ 69 $ 88 $ 121 $201
Class C $ 26 $ 49 $ 85 $186
Class C (without fee waivers) $ 29 $ 58 $ 101 $218
Fiduciary Class $ 7 $ 21 $ 37 $ 82
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 73 $ 93 $152
Class A (without fee waivers) $ 57 $ 82 $ 109 $185
Class B $ 16 $ 49 $ 85 $168
Class B (without fee waivers) $ 19 $ 58 $ 101 $201
Class C $ 16 $ 49 $ 85 $186
Class C (without fee waivers) $ 19 $ 58 $ 101 $218
Fiduciary Class $ 7 $ 21 $ 37 $ 82
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
3
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991(c)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 10.67 $ 10.64 $ 10.49 $ 11.15 $ 10.69 $ 10.28 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.54 0.52 0.54 0.52 0.53 0.55 0.49
Net realized and
unrealized gains
(losses) from
investments 0.27 0.04 0.15 (0.52) 0.49 0.42 0.27
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.81 0.56 0.69 0.00 1.02 0.97 0.76
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.54) (0.51) (0.54) (0.53) (0.52) (0.55) (0.48)
In excess of net
investment income -- -- -- (0.01) -- -- --
Net realized gains (0.02) (0.02) -- (0.01) (0.04) (0.01) --
In excess of net realized
gains -- -- -- (0.11) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.53) (0.54) (0.66) (0.56) (0.56) (0.48)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 10.92 $ 10.67 $ 10.64 $ 10.49 $ 11.15 $ 10.69 $ 10.28
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.76% 5.39% 6.75% (0.11)% 9.79% 9.54% 9.49%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $451,089 $217,201 $211,229 $182,611 $166,489 $142,672 $82,192
Ratio of expenses to
average net assets 0.58% 0.54% 0.53% 0.48% 0.54% 0.55% 0.30%(b)
Ratio of net investment
income to average net
assets 5.05% 4.87% 5.17% 4.78% 4.93% 5.28% 6.04%(b)
Ratio of expenses to
average net assets* 0.81% 0.87% 0.88% 0.84% 0.94% 1.07% 0.90%(b)
Ratio of net investment
income to average net
assets* 4.82% 4.54% 4.82% 4.42% 4.53% 4.77% 5.44%(b)
Portfolio turnover(a) 86.89% 111.58% 199.76% 105.98% 31.99% 11.50% 35.15%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fiduciary Class commenced operations on
September 4, 1990.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.67 $ 10.63 $ 10.48 $ 11.14 $ 10.69 $ 10.57
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.51 0.50 0.51 0.50 0.55 0.15
Net realized and unrealized gains
(losses) from investments 0.26 0.05 0.15 (0.52) 0.44 0.18
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.77 0.55 0.66 (0.02) 0.99 0.33
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.51) (0.49) (0.49) (0.52) (0.50) (0.21)
In excess of net investment income -- -- (0.02) (0.01) -- --
Net realized gains (0.02) (0.02) -- -- (0.04) --
In excess of net realized gains -- -- -- (0.11) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.53) (0.51) (0.51) (0.64) (0.54) (0.21)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.91 $ 10.67 $ 10.63 $ 10.48 $ 11.14 $ 10.69
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.39% 5.28% 6.49% (0.33)% 9.47% 8.68%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 8,457 $ 6,622 $ 5,614 $ 5,556 $ 5,480 $ 5
Ratio of expenses to average net assets 0.83% 0.79% 0.78% 0.73% 0.71% 1.02%(b)
Ratio of net investment income to average
net assets 4.75% 4.62% 4.91% 4.57% 4.77% 4.91%(b)
Ratio of expenses to average net assets* 1.15% 1.22% 1.23% 1.19% 1.27% 1.32%(b)
Ratio of net investment income to average
net assets* 4.43% 4.19% 4.46% 4.11% 4.21% 4.61%(b)
Portfolio turnover(a) 86.89% 111.58% 199.76% 105.98% 31.99 11.50%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE>
4
THE ONE GROUP(R) INTERMEDIATE TAX-FREE BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.68 $ 10.65 $ 10.50 $ 11.18
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.45 0.43 0.46 0.17
Net realized and unrealized gains (losses) from investments 0.27 0.04 0.14 (0.67)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.72 0.47 0.60 (0.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.45) (0.42) (0.45) (0.17)
Net realized gains (0.02) (0.02) -- --
In excess of net realized gains -- -- -- (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.44) (0.45) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.93 $ 10.68 $ 10.65 $ 10.50
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.82% 4.48% 5.89% (4.48)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 3,307 $ 2,439 $ 1,116 $ 549
Ratio of expenses to average net assets 1.47% 1.44% 1.43% 1.40%(c)
Ratio of net investment income to average net assets 4.09% 3.97% 4.29% 4.08%(c)
Ratio of expenses to average net assets* 1.78% 1.87% 1.88% 1.85%(c)
Ratio of net investment income to average net assets* 3.78% 3.54% 3.84% 3.63%(c)
Portfolio turnover(d) 86.89% 111.58% 199.76% 105.98%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
5
THE ONE GROUP(R)
MUNICIPAL INCOME FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks current income exempt from Federal
income taxes.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities of states, territories and possessions of
the United States, including the District of Columbia, and their respective
authorities, political subdivisions, agencies and instrumentalities, the
interest on which is exempt from Federal income tax ("Municipal Securities").
The Fund's average weighted maturity normally will range from five to fifteen
years, although the Fund may shorten its average weighted maturity to as little
as two years if appropriate for temporary defensive purposes.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its net assets in Municipal Securities. As a
matter of fundamental policy, the Fund invests at least 65% of its total assets
in bonds. As a matter of fundamental policy, the Fund will not invest more than
25% of its net assets (i) in securities within a single industry; or (ii) in
securities of governmental units or issuers in the same state, territory, or
possession. However, the Fund will, from time to time, invest more than 25% of
its net assets in municipal housing authority obligations and single-family
mortgage revenue bonds. The Fund also may invest in mortgage-backed securities,
restricted securities, and mortgage dollar rolls. The securities in which the
Fund invests may have fixed rates of return or floating or variable rates. For a
list of all securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
The Fund may invest in Municipal Securities that are rated in the lowest
investment grade. Even though such securities are generally considered
investment grade securities, they are considered to have speculative
characteristics. Issuers of such securities are more vulnerable to changes in
economic conditions than issuers of higher grade securities. The Municipal
Securities are also fixed-income investments. The value of these securities will
change in response to interest rates and other factors. In addition, the Fund
invests in mortgage-related securities which may have greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Municipal Securities the
interest on which is subject to Federal alternative minimum tax. Shareholders
who are subject to the Federal alternative minimum tax may have all or a portion
of their income from the Fund subject to Federal income tax. In addition,
corporate shareholders will be required to take the interest on Municipal
Securities into account in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
Patrick M. Morrissey has served as the manager of the Fund since its inception
in February, 1993. Mr. Morrissey has been employed by Banc One Investment
Advisors and its affiliates as a fixed income portfolio manager since October,
1992. From September, 1986 to October, 1992, Mr. Morrissey served as Portfolio
Manager at Norwest Investments and Trust.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .35% .35% .35% .35%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .27% .27% .27% .27%
Total Fund Operating Expenses (after fee
waivers) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.07% for Class A shares, 1.72% for Class B
shares, 1.72% for Class C shares and .72% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 55 $ 78 $ 101 $171
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 67 $ 84 $ 113 $186
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 16 $ 51 $ 88 $192
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 7 $ 23 $ 40 $ 89
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 55 $ 78 $ 101 $171
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 15 $ 48 $ 83 $181
Class C $ 27 $ 54 $ 93 $203
Class C (without fee waivers) $ 17 $ 54 $ 93 $203
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 7 $ 23 $ 40 $ 89
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
6
THE ONE GROUP(R) MUNICIPAL INCOME FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.66 $ 9.69 $ 9.66 $ 10.11 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.53 0.56 0.57 0.56 0.19
Net realized and unrealized gains (losses)
from investments 0.18 (0.03) 0.03 (0.42) 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.71 0.53 0.60 0.14 0.30
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.53) (0.56) (0.57) (0.56) (0.19)
In excess of net realized gains -- -- -- (0.03) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.53) (0.56) (0.57) (0.59) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.84 $ 9.66 $ 9.69 $ 9.66 $ 10.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.49% 5.54% 6.46% 1.36% 5.18%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $408,577 $241,115 $185,916 $152,763 $40,777
Ratio of expenses to average net assets 0.57% 0.56% 0.56% 0.54% 0.54%(b)
Ratio of net investment income to average
net assets 5.38% 5.70% 6.02% 5.61% 5.66%(b)
Ratio of expenses to average net assets* 0.68% 0.76% 0.74% 0.71% 1.01%(b)
Ratio of net investment income to average
net assets* 5.27% 5.50% 5.84% 5.44% 5.19%(b)
Portfolio turnover(c) 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced operations on February 9, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.69 $ 9.72 $ 9.67 $ 10.12 $ 10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.51 0.55 0.55 0.55 0.19
Net realized and unrealized gains (losses)
from investments 0.18 (0.04) 0.05 (0.43) 0.05
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.69 0.51 0.60 0.12 0.24
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.51) (0.54) (0.55) (0.54) (0.18)
In excess of net realized gains -- -- -- (0.03) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.51) (0.54) (0.55) (0.57) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 9.69 $ 9.72 $ 9.67 $ 10.12
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.24% 5.35% 6.21% 1.34% 6.86%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $41,829 $25,787 $11,462 $10,725 $4,106
Ratio of expenses to average net assets 0.82% 0.81% 0.81% 0.79% 0.80%(b)
Ratio of net investment income to average
net assets 5.13% 5.45% 5.76% 5.44% 5.71%(b)
Ratio of expenses to average net assets* 1.03% 1.11% 1.09% 1.06% 1.36%(b)
Ratio of net investment income to average
net assets* 4.92% 5.15% 5.48% 5.17% 5.15%(b)
Portfolio turnover(c) 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on February 23, 1993.
(b) Annualized. (c) Portfolio turnover is calculated on the basis of the
Fund as a whole without distinguishing among the classes of shares issued.
<PAGE>
7
THE ONE GROUP(R) MUNICIPAL INCOME FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.66 $ 9.69 $ 9.62 $ 10.10
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.44 0.47 0.49 0.24
Net realized and unrealized gains (losses) from investments 0.18 (0.03) 0.07 (0.48)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.62 0.44 0.56 (0.24)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.44) (0.47) (0.49) (0.24)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.44) (0.47) (0.49) (0.24)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.84 $ 9.66 $ 9.69 $ 9.62
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.55% 4.65% 5.58% (1.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 36,258 $ 23,204 $ 8,326 $4,855
Ratio of expenses to average net assets 1.47% 1.46% 1.46% 1.41%(c)
Ratio of net investment income to average net assets 4.48% 4.80% 5.14% 4.95%(c)
Ratio of expenses to average net assets* 1.67% 1.76% 1.74% 1.62%(c)
Ratio of net investment income to average net assets* 4.28% 4.50% 4.86% 4.74%(c)
Portfolio turnover(d) 62.83% 83.17% 66.02% 101.48%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized. (c) Annualized. (d) Portfolio turnover is calculated
on the basis of the Fund as a whole without distinguishing among the classes
of shares issued.
<PAGE>
8
THE ONE GROUP(R)
ARIZONA MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and Arizona personal income tax, consistent with the preservation of
principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of Arizona and its
respective authorities, political subdivisions, agencies and instrumentalities,
the interest on which, in the opinion of issuer's counsel, is exempt from
Federal income tax and Arizona personal income tax ("Arizona Municipal
Securities"). The Fund's average weighted maturity normally will be between five
and twenty years, although the Fund may invest in securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in Arizona Municipal
Securities. This is a fundamental policy. The Fund also may invest up to 20% of
its total assets in bonds and notes of states (other than Arizona) as well as of
territories and possessions of the United States, including the District of
Columbia, and their respective authorities, agencies, instrumentalities, and
political subdivisions, the interest on which is exempt from Federal income tax
("Municipal Securities"). The securities in which the Fund invests may have
fixed rates of return or floating or variable rates. For a list of all
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Arizona Municipal Securities, which may be impacted by
economic and political developments in Arizona. The Arizona Municipal Securities
also include fixed-income investments. The value of these securities will change
in response to interest rate changes and other factors. Before you invest,
please read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Arizona Municipal Securities
and Municipal Securities the interest on which is subject to Federal alternative
minimum tax. Shareholders who are subject to the Federal alternative minimum tax
may have all or a portion of their income from the Fund subject to Federal
income tax. In addition, corporate shareholders will be required to take the
interest on Municipal Securities and Arizona Municipal Securities into account
in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
Todd Curtis, CFA, has served as the manager of the Fund since its inception in
1997. From 1984 to 1996, Mr. Curtis managed a bank common trust fund with
substantially the same investment objectives as the Fund. Mr. Curtis has been
involved in the management of both Arizona and national municipal securities
since 1984 and has been employed by Banc One Investment Advisors and its
affiliates in the investment management business since 1981.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.12% for Class A shares, 1.77% for Class B
shares, 1.77% for Class C shares and .77% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 68 $ 86 $ 116 $191
Class C $ 26 $ 51 $ 88 $192
Class C (without fee waivers) $ 28 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 18 $ 56 $ 96 $191
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 18 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
9
THE ONE GROUP(R) ARIZONA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
FIDUCIARY 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.23
Net realized and unrealized gains from investments 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.29
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.23)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.23)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $255,755
Ratio of expenses to average net assets 0.59%(c)
Ratio of net investment income to average net assets 5.09%(c)
Ratio of expenses to average net assets* 0.66%(c)
Ratio of net investment income to average net assets* 5.02%(c)
Portfolio turnover(d) 5.66%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS A 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.15
Net realized and unrealized gains (losses) from investments (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.14
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.15)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.15)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.99
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 1.40%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $1,500
Ratio of expenses to average net assets 0.85%(c)
Ratio of net investment income to average net assets 4.90%(c)
Ratio of expenses to average net assets* 0.96%(c)
Ratio of net investment income to average net assets* 4.79%(c)
Portfolio turnover(d) 5.66%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
10
THE ONE GROUP(R) ARIZONA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net realized and unrealized gains from investments 0.09
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.09
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.09
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 0.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $-- (c)
Ratio of expenses to average net assets -- (d)
Ratio of net investment income to average net assets -- (d)
Ratio of expenses to average net assets* -- (d)
Ratio of net investment income to average net assets* -- (d)
Portfolio turnover(e) 5.66%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Amount is less than $1,000. (d) Since net assets are less
than $1,000, ratios have not been presented. (e) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
11
THE ONE GROUP(R)
WEST VIRGINIA MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and West Virginia personal income tax, consistent with the
preservation of principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of West Virginia and
its respective authorities, political subdivisions, agencies and
instrumentalities, the interest on which, in the opinion of issuer's counsel, is
exempt from Federal income tax and West Virginia personal income tax ("West
Virginia Municipal Securities"). Generally, the Fund's average weighted maturity
will be between five and twenty years, although the Fund may invest in
securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in West Virginia Municipal
Securities. This is a fundamental policy. The Fund also may invest up to 20% of
its total assets in bonds and notes of states (other than West Virginia) as well
as of territories and possessions of the United States, including the District
of Columbia, and their respective authorities, agencies, instrumentalities, and
political subdivisions, the interest on which is exempt from Federal income tax
("Municipal Securities"). The securities in which the Fund invests may have
fixed rates of return or floating or variable rates. For a list of all
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in West Virginia Municipal Securities, which may be impacted by
economic and political developments in West Virginia. The West Virginia
Municipal Securities also include fixed-income investments. The value of these
securities will change in response to interest rate changes and other factors.
Before you invest, please read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in West Virginia Municipal
Securities and Municipal Securities the interest on which is subject to Federal
alternative minimum tax. Shareholders who are subject to the Federal alternative
minimum tax may have all or a portion of their income from the Fund subject to
Federal income tax. In addition, corporate shareholders will be required to take
the interest on Municipal Securities and West Virginia Municipal Securities into
account in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since 1997. Prior
to that time, Mr. Sivinski managed a bank common trust fund with substantially
the same investment objectives as the Fund. Since 1994, Mr. Sivinski also has
managed the Ohio and Kentucky Municipal Bond Funds. Mr. Sivinski has managed the
Louisiana Municipal Bond Fund since 1996. Mr. Sivinski has been with Banc One
Investment Advisors or its affiliates since 1975, working primarily in fixed
income portfolio management and mortgage/asset backed research.
As of November, 1997, Thomas S. Albright has served as co-manager of the Fund.
From 1981 until its acquisition by BANC ONE CORPORATION in 1994, Mr. Albright
served as an investment officer and portfolio manager for individual client
portfolios and other investment accounts with Liberty National Bank and Trust
Company of Kentucky or its affiliates. Since 1994, Mr. Albright has been
employed by Banc One Investment Advisors where he has been responsible for the
management of individual client portfolios.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.12% for Class A shares, 1.77% for Class B
shares, 1.77% for Class C shares and .77% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 68 $ 86 $ 116 $191
Class C $ 26 $ 51 $ 88 $192
Class C ((without fee waivers) $ 28 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 18 $ 56 $ 96 $191
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 18 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
12
THE ONE GROUP(R) WEST VIRGINIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
FIDUCIARY 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.22
Net realized and unrealized gains from investments 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.28
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.22)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.22)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $96,270
Ratio of expenses to average net assets 0.59%(c)
Ratio of net investment income to average net assets 5.04%(c)
Ratio of expenses to average net assets* 0.67%(c)
Ratio of net investment income to average net assets* 4.96%(c)
Portfolio turnover(d) 6.21%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS A 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.16
Net realized and unrealized gains from investments 0.15
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.31
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.15
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 3.08%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 808
Ratio of expenses to average net assets 0.84%(c)
Ratio of net investment income to average net assets 4.94%(c)
Ratio of expenses to average net assets* 0.97%(c)
Ratio of net investment income to average net assets* 4.81%(c)
Portfolio turnover(d) 6.21%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
13
THE ONE GROUP(R) WEST VIRGINIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.14
Net realized and unrealized gains from investments 0.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.26
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 2.64%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 614
Ratio of expenses to average net assets 1.49%(c)
Ratio of net investment income to average net assets 4.08%(c)
Ratio of expenses to average net assets* 1.62%(c)
Ratio of net investment income to average net assets* 3.95%(c)
Portfolio turnover(d) 6.21%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
14
THE ONE GROUP(R)
LOUISIANA MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income both consistent
with the preservation of principal and exempt from Federal income tax and
Louisiana income tax.
[ICON] INVESTMENT STRATEGY
The Fund invests in investment grade municipal securities issued by or on behalf
of Louisiana and its authorities, political subdivisions, agencies and
instrumentalities, the interest on which, in the opinion of issuer's counsel, is
exempt from both Federal income tax and Louisiana state income tax ("Louisiana
Municipal Securities"). The Fund's average weighted maturity normally will be
between five and twenty years, although the Fund may invest in securities of any
maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its net assets in Louisiana Municipal
Securities. This is a fundamental policy. The Fund also may hold up to 20% of
its total assets in cash or invest in municipal securities of other states
("Municipal Securities"), short-term taxable investments including repurchase
agreements, and U.S. Government Securities or other cash equivalents. The
securities in which the Fund invests may have fixed rates of return or floating
or variable rates. For a list of all securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Louisiana Municipal Securities, which may be impacted by
economic and political developments in Louisiana. The Louisiana Municipal
Securities also include fixed-income investments. The value of these securities
will change in response to interest rate changes and other factors. Before you
invest, please read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Louisiana Municipal
Securities and Municipal Securities the interest on which is subject to Federal
alternative minimum tax. Shareholders who are subject to the Federal alternative
minimum tax may have all or a portion of their income from the Fund subject to
Federal income tax. In addition, corporate shareholders will be required to take
the interest on Municipal Securities and Louisiana Municipal Securities into
account in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since February,
1996. Since 1994, Mr. Sivinski has also managed the Ohio and Kentucky Municipal
Bond Funds. Mr. Sivinski began managing the West Virginia Municipal Bond Fund in
1997. Mr. Sivinski has been with Banc One Investment Advisors or its affiliates
since 1975, working primarily in fixed income portfolio management and
mortgage/asset backed research.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.27% for Class A shares, 1.92% for Class B
shares, 1.92% for Class C shares and .92% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 69 $ 90 $ 124 $207
Class C $ 26 $ 51 $ 88 $192
Class C (without fee waivers) $ 29 $ 60 $ 104 $224
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 19 $ 60 $ 104 $207
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 19 $ 60 $ 104 $224
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
15
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR MARCH 26, 1996
ENDED THROUGH
JUNE 30, JUNE 30,
FIDUCIARY 1997 1996(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.49 0.13
Net realized and unrealized gains (losses) from investments 0.17 (0.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.49) (0.13)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.49) (0.13)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 9.93
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 6.81% 0.90%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $113,338 $136,041
Ratio of expenses to average net assets 0.62% 0.71%(d)
Ratio of net investment income to average net assets 4.91% 4.76%(d)
Ratio of expenses to average net assets* 0.84% 0.86%(d)
Ratio of net investment income to average net assets* 4.69% 4.61%(d)
Portfolio turnover(e) 17.39% 16.72%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Not annualized. (c) Represents total return for Class A Shares
from December 1, 1995 through March 25, 1996 plus total return for Fiduciary
Shares for the period March 26, 1996 through June 30,
1996. (d) Annualized. (e) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
SEVEN
YEARS MONTHS YEAR ENDED NOVEMBER 30,
ENDED JUNE ENDED JUNE
30, 30, ------------------------------------------------------------
CLASS A 1997 1996(a) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92 $ 9.73 $ 9.51
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.47 0.24 0.50 0.49 0.52 0.55 0.56
Net realized and unrealized
gains (losses) from
investments 0.17 (0.16) 0.71 (0.79) 0.42 0.26 0.22
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.64 0.08 1.21 (0.30) 0.94 0.82 0.78
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.47) (0.24) (0.50) (0.49) (0.52) (0.55) (0.56)
Net realized gains -- -- -- (0.10) (0.07) (0.07) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.24) (0.50) (0.59) (0.59) (0.62) (0.56)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales
Charge) 6.55% 0.84%(b) 13.11% (2.97)% 9.65% 8.64% 8.45%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $48,498 $53,479 $206,119 $196,820 $196,534 $135,692 $88,503
Ratio of expenses to average
net assets 0.87% 0.69%(c) 0.62% 0.65% 0.62% 0.58% 0.61%
Ratio of net investment
income to average net
assets 4.66% 4.71%(c) 5.07% 4.97% 5.07% 5.70% 5.86%
Ratio of expenses to average
net assets* 1.19% 0.86%(c) 0.77% 0.80% 0.78% 0.83% 0.86%
Ratio of net investment
income to average net
assets* 4.34% 4.54%(c) 4.92% 4.82% 4.91% 5.45% 5.61%
Portfolio turnover(d) 17.39% 16.72% 28.00% 24.00% 25.00% 32.00% 35.00%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Upon reorganizing as a fund of The One Group, the Paragon
Louisiana Tax-Free Fund became the Louisiana Municipal Bond Fund. Financial
highlights for the periods prior to March 26, 1996 represents the Paragon
Louisiana Tax-Free Fund. The per share data for the periods prior to March 26,
1996 have been restated to reflect the impact of restatement of net asset
value from $10.67 to $10.00 effective March 26, 1996. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
16
THE ONE GROUP(R) LOUISIANA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEVEN
YEAR MONTHS Year September 16,
ENDED ENDED ended 1994 through
JUNE 30, JUNE 30, November 30, November 30,
CLASS B 1997 1996(a) 1995 1994(b)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 10.09 $ 9.36 $ 9.73
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.40 0.21 0.42 0.08
Net realized and unrealized gains (losses) from
investments 0.17 (0.16) 0.73 (0.37)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.57 0.05 1.15 (0.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.40) (0.21) (0.42) (0.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.40) (0.21) (0.42) (0.08)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 9.93 $ 10.09 $ 9.36
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.87% 0.48%(c) 12.52% 2.94%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $3,835 $3,223 $2,115 $204
Ratio of expenses to average net assets 1.51% 1.50%(d) 1.37% 1.41%(d)
Ratio of net investment income to average net assets 4.02% 3.98%(d) 4.27% 4.45%(d)
Ratio of expenses to average net assets* 1.85% 1.70%(d) 1.52% 1.56%(d)
Ratio of net investment income to average net assets* 3.68% 3.78%(d) 4.12% 4.30%(d)
Portfolio turnover(e) 17.39% 16.72% 28.00% 24.00%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Upon reorganizing as a fund of The One Group, the Paragon
Louisiana Tax-Free Fund became the Louisiana Municipal Bond Fund. Financial
highlights for the periods prior to March 26, 1996 represents the Paragon
Louisiana Tax-Free Fund. The per share data for the periods prior to March 26,
1996 have been restated to reflect the impact of restatement of net asset
value from $10.70 to $10.00 effective March 26, 1996. (b) Class B Shares
commenced offering on September 16, 1994. (c) Not
annualized. (d) Annualized. (e) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
17
THE ONE GROUP(R)
OHIO MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and Ohio personal income tax, consistent with the preservation of
principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of Ohio and its
respective authorities, political subdivisions, agencies and instrumentalities,
the interest on which, in the opinion of issuer's counsel, is exempt from
Federal income tax and Ohio personal income tax ("Ohio Municipal Securities").
Generally, the Fund's average weighted maturity will be between five and twenty
years, although the Fund may invest in securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in Ohio Municipal Securities.
This is a fundamental policy. The Fund also may invest up to 20% of its total
assets in bonds and notes of states (other than Ohio) as well as of territories
and possessions of the United States, including the District of Columbia, and
their respective authorities, agencies, instrumentalities, and political
subdivisions, the interest on which, in the opinion of issuer's counsel, is
exempt from Federal income tax ("Municipal Securities"). The securities in which
the Fund invests may have fixed rates of return or floating or variable rates.
For a list of all securities in which the Fund may invest, please read
"Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Ohio Municipal Securities, which may be impacted by economic
and political developments in Ohio. The Ohio Municipal Securities also include
fixed-income investments. The value of these securities will change in response
to interest rate changes and other factors. Before you invest, please read "More
About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Ohio Municipal Securities and
Municipal Securities the interest on which is subject to Federal alternative
minimum tax. Shareholders who are subject to the Federal alternative minimum tax
may have all or a portion of their income from the Fund subject to Federal
income tax. In addition, corporate shareholders will be required to take the
interest on Municipal Securities and Ohio Municipal Securities into account in
determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since May, 1994.
Since 1994, Mr. Sivinski also has managed the Kentucky Municipal Bond Fund. Mr.
Sivinski began managing the Louisiana Municipal Bond Fund in 1996 and the West
Virginia Municipal Bond Fund in 1997. Mr. Sivinski has been with Banc One
Investment Advisors or its affiliates since 1975, working primarily in fixed
income portfolio management and mortgage/asset-backed research.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.27% for Class A shares, 1.92% for Class B
shares, 1.92% for Class C shares and .92% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 69 $ 90 $ 124 $207
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 29 $ 60 $ 104 $224
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 57 $ 83 $ 112 $191
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 19 $ 60 $ 104 $207
Class C $ 15 $ 48 $ 83 $181
Class C (without fee waivers) $ 19 $ 60 $ 104 $224
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 9 $ 29 $ 51 $113
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
18
THE ONE GROUP(R) OHIO MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.69 $ 10.65 $ 10.58 $ 11.11 $ 10.48 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.56 0.56 0.55 0.51 0.54 0.56
Net realized and unrealized gains
(losses) from investments 0.19 0.04 0.07 (0.50) 0.62 0.47
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.75 0.60 0.62 0.01 1.16 1.03
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.56) (0.56) (0.55) (0.52) (0.53) (0.55)
In excess of net realized gains -- -- -- (0.02) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.56) (0.55) (0.54) (0.53) (0.55)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.88 $ 10.69 $ 10.65 $ 10.58 $ 11.11 $ 10.48
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.22% 5.69% 6.07% 0.07% 11.43% 10.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $133,172 $80,611 $79,993 $93,261 $74,792 $45,199
Ratio of expenses to average net
assets 0.54% 0.57% 0.58% 0.53% 0.55% 0.63%(b)
Ratio of net investment income to
average net assets 5.24% 5.17% 5.29% 4.76% 5.14% 5.61%(b)
Ratio of expenses to average net
assets* 0.84% 0.95% 0.91% 0.86% 0.94% 1.21%(b)
Ratio of net investment income to
average net assets* 4.94% 4.79% 4.96% 4.43% 4.75% 5.03%(b)
Portfolio turnover(a) 7.45% 24.61% 77.69% 16.77% 26.67% 9.78%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Fund commenced operation on July 2, 1991.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.72 $ 10.68 $ 10.61 $ 11.13 $ 10.48 $ 10.29
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.54 0.55 0.53 0.50 0.52 0.20
Net realized and unrealized gains
(losses) from investments 0.19 0.03 0.07 (0.48) 0.64 0.21
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.58 0.60 0.02 1.16 0.41
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.54) (0.54) (0.51) (0.50) (0.51) (0.22)
In excess of net investment income -- -- (0.02) (0.02) -- --
In excess of net realized gains -- -- -- (0.02) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.54) (0.54) (0.53) (0.54) (0.51) (0.22)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.91 $ 10.72 $ 10.68 $ 10.61 $ 11.13 $ 10.48
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.95% 5.44% 5.79% (0.05)% 11.40% 10.85%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $16,114 $16,507 $12,006 $14,883 $13,092 $41
Ratio of expenses to average net
assets 0.79% 0.82% 0.82% 0.78% 0.77% 1.01%(b)
Ratio of net investment income to
average net assets 4.96% 4.92% 5.01% 4.63% 4.85% 5.16%(b)
Ratio of expenses to average net
assets* 1.19% 1.30% 1.25% 1.21% 1.25% 1.40%(b)
Ratio of net investment income to
average net assets* 4.56% 4.44% 4.58% 4.20% 4.37% 4.77%(b)
Portfolio turnover(a) 7.45% 24.61% 77.69% 16.77% 26.67% 9.78%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE>
19
THE ONE GROUP(R) OHIO MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.79 $ 10.75 $ 10.68 $ 11.31
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.47 0.48 0.43 0.17
Net realized and unrealized gains (losses) from investments 0.19 0.03 0.07 (0.62)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.51 0.50 (0.45)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.47) (0.47) (0.43) (0.17)
In excess of net investment income -- -- -- (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.47) (0.43) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.98 $ 10.79 $ 10.75 $ 10.68
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.26% 4.79% 5.17% (4.02)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $14,316 $8,854 $3,209 $2,043
Ratio of expenses to average net assets 1.44% 1.47% 1.48% 1.28%(c)
Ratio of net investment income to average net assets 4.33% 4.27% 4.40% 4.23%(c)
Ratio of expenses to average net assets* 1.84% 1.95% 1.91% 1.68%(c)
Ratio of net investment income to average net assets* 3.93% 3.79% 3.97% 3.83%(c)
Portfolio turnover(d) 7.45% 24.61% 77.69% 16.77%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
20
THE ONE GROUP(R)
KENTUCKY MUNICIPAL BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified fund that seeks current income exempt from Federal
income tax and Kentucky personal income tax, consistent with the preservation of
principal.
[ICON] INVESTMENT STRATEGY
The Fund invests in debt securities issued by or on behalf of Kentucky and its
respective authorities, political subdivisions, agencies and instrumentalities,
the interest on which, in the opinion of issuer's counsel, is exempt from
Kentucky personal income tax ("Kentucky Municipal Securities"), as well as debt
securities that, in the opinion of issuer's counsel, produce interest that is
exempt from Federal income tax ("Municipal Securities"). Generally, the Fund's
average weighted maturity will be between five and twenty years, although the
Fund may invest in securities of any maturity.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in Municipal Securities.
Alternatively, the Fund invests its assets so that at least 80% of its annual
interest income is exempt from Federal income tax. The Fund invests at least 65%
of its total assets in Kentucky Municipal Securities. Each of these investment
policies are fundamental. The Fund may also invest up to 35% of its total assets
in bonds and notes of states (other than Kentucky) as well as of territories and
possessions of the United States, including the District of Columbia, and their
respective authorities, agencies, instrumentalities, and political subdivisions,
the interest on which is exempt from Federal income tax. The securities in which
the Fund invests may have fixed rates of return or floating or variable rates.
For a list of all securities in which the Fund may invest, please read
"Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in Kentucky Municipal Securities, which may be impacted by
economic and political developments in Kentucky. The Fund's investments also
include fixed-income investments. The value of these securities will change in
response to interest rate changes and other factors. Before you invest, please
read "More About the Funds" and "Investment Risks."
[ICON] TAX CONSIDERATIONS
Up to 100% of the Fund's assets may be invested in Kentucky Municipal Securities
and Municipal Securities the interest on which is subject to Federal alternative
minimum tax. Shareholders who are subject to the Federal alternative minimum tax
may have all or a portion of their income from the Fund subject to Federal
income tax. In addition, corporate shareholders will be required to take the
interest on Municipal Securities and Kentucky Municipal Securities into account
in determining their alternative minimum taxable income.
[ICON] FUND MANAGEMENT
David M. Sivinski, CFA, has served as the manager of the Fund since December,
1994. Mr. Sivinski also has managed the Ohio Municipal Bond Fund since 1994. Mr.
Sivinski has managed the West Virginia Municipal Bond Fund since 1997 and the
Louisiana Municipal Bond Fund since 1996. Mr. Sivinski has been with Banc One
Investment Advisors or its affiliates since 1975, working primarily in fixed
income portfolio management and mortgage/asset-backed research.
As of November, 1997 Thomas S. Albright has served as co-manager of the Fund.
From 1981 until its acquisition by BANC ONE CORPORATION in 1994, Mr. Albright
served as an investment officer and portfolio manager for individual client
portfolios and other investment accounts with Liberty National Bank and Trust
Company of Kentucky or its affiliates. Since 1994, Mr. Albright has been
employed by Banc One Investment Advisors where he has been responsible for the
management of individual client portfolios.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .32% .32% .32% .32%
Total Fund Operating Expenses (after fee
waivers) (6) .97% 1.62% 1.62% .72%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense Information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .45% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.12% for Class A shares, 1.77% for Class B
shares, 1.77% for Class C shares and .77% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 66 $ 81 $ 108 $175
Class B (without fee waivers) $ 68 $ 86 $ 116 $191
Class C $ 26 $ 51 $ 88 $192
Class C (without fee waivers) $ 28 $ 56 $ 96 $207
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 75 $ 96 $159
Class A (without fee waivers) $ 56 $ 79 $ 104 $175
Class B $ 16 $ 51 $ 88 $175
Class B (without fee waivers) $ 18 $ 56 $ 96 $191
Class C $ 16 $ 51 $ 88 $192
Class C (without fee waivers) $ 18 $ 56 $ 96 $208
Fiduciary Class $ 7 $ 23 $ 40 $ 89
Fiduciary Class (without fee waiver) $ 8 $ 25 $ 43 $ 95
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
21
THE ONE GROUP(R) KENTUCKY MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. Certain information reflects financial results for a single Fund share.
The total returns in the table represent the rate a shareholder would have
earned on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR YEAR JANUARY 20, FEBRUARY 1, MARCH 12,
ENDED ENDED 1995 TO 1994, TO 1993, TO
JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JANUARY 31,
FIDUCIARY 1997 1996 1995(a) 1995(b) 1994(b)(c)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.04 $ 9.92 $ 9.49 $ 10.45 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.50 0.50 0.20 0.41 0.36
Net realized and unrealized gains (losses)
from investments 0.16 0.12 0.43 (0.95) 0.43
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.62 0.63 (0.54) 0.79
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.50) (0.50) (0.20) (0.42) (0.34)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.50) (0.50) (0.20) (0.42) (0.34)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.20 $ 10.04 $ 9.92 $ 9.49 $ 10.45
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 6.74% 6.35% 6.56%(d) (5.17)%(d) 8.05%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $116,830 $30,300 $32,520 $41,953 $64,663
Ratio of expenses to average net assets 0.59% 0.68% 0.65%(e) 1.03%(e) 0.70%(e)
Ratio of net investment income to average net
assets 5.12% 4.60% 4.70%(e) 4.27%(e) 4.19%(e)
Ratio of expenses to average net assets* 0.72% 1.02% 0.97%(e) 1.05%(e) 0.91%(e)
Ratio of net investment income to average net
assets* 4.99% 4.26% 4.38%(e) 4.25%(e) 3.98%(e)
Portfolio turnover(f) 13.30% 16.78% 19.75% 10.00% 5.00%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Prior to reorganizing as a fund of The One Group, the Fund offered
only one class of shares. (c) Period from commencement of
operations. (d) Not annualized. (e) Annualized. (f) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<TABLE>
<CAPTION>
YEAR YEAR JANUARY 20,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
CLASS A 1997 1996 1995(a)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.05 $ 9.93 $ 9.49
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.48 0.44 0.19
Net realized and unrealized gains from investments 0.16 0.12 0.44
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.64 0.56 0.63
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.48) (0.44) (0.19)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.48) (0.44) (0.19)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 10.05 $ 9.93
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.46% 5.70% 5.66%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 5,554 $ 8,178 $8,818
Ratio of expenses to average net assets 0.84% 0.93% 0.90%(c)
Ratio of net investment income to average net assets 4.66% 4.35% 4.44%(c)
Ratio of expenses to average net assets* 1.04% 1.37% 1.33%(c)
Ratio of net investment income to average net assets* 4.46% 3.91% 4.01%(c)
Portfolio turnover(d) 13.30% 16.78% 19.75%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from date reorganized as a fund of The One
Group. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
22
THE ONE GROUP(R) KENTUCKY MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR YEAR MARCH 16,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
CLASS B 1997 1996 1995(a)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.99 $ 9.87 $ 9.75
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.41 0.38 0.14
Net realized and unrealized gains from investments 0.16 0.13 0.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.57 0.51 0.26
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.41) (0.39) (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.41) (0.39) (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.15 $ 9.99 $ 9.87
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.81% 5.16% 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $2,399 $1,457 $79
Ratio of expenses to average net assets 1.47% 1.58% 1.58%(c)
Ratio of net investment income to average net assets 4.05% 3.70% 3.89%(c)
Ratio of expenses to average net assets* 1.70% 2.02% 2.21%(c)
Ratio of net investment income to average net assets* 3.82% 3.26% 3.25%(c)
Portfolio turnover(d) 13.30% 16.78% 19.75%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on March 16, 1995. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
MORE ABOUT THE FUNDS
23
WHEN THE PROSPECTUS REFERS TO "BONDS", WHAT TYPES OF INVESTMENTS ARE INCLUDED?
"Bonds" include debt instruments issued by the U.S. Treasury, U.S. Government
agencies, mortgage related securities, municipalities and zero coupon
obligations as well as debt instruments issued by states and their respective
authorities, political subdivisions, agencies and instrumentalities.
PORTFOLIO QUALITY
- ----------------------------------------------------
The Funds only purchase securities that meet certain rating criteria:
- - Municipal Securities that are bonds must be rated as investment grade.
- - Arizona Municipal Securities, West Virginia Municipal Securities, Louisiana
Municipal Securities, Ohio Municipal Securities, and Kentucky Municipal
Securities that are bonds must be rated as investment grade.
- - Other securities such as tax-exempt commercial paper, notes, and variable
demand obligations must be rated in one of the two highest investment grade
categories.
- - The Louisiana Municipal Bond Fund may also invest in short-term tax-exempt
municipal securities rated at least MIG3 (VMIG3) by Moody's or SP-2 by S&P.
These securities may have speculative characteristics.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually, changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other investments. These
include:
- - options
- - futures contracts
- - options on futures contracts
- - mortgage-backed securities, including collateralized mortgage obligations and
Real Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs)
- - structured instruments
- - swaps, caps and floors
- - new financial products
- - inverse floating rate instruments
Derivatives may be riskier than traditional investments.
NON-DIVERSIFIED FUNDS: All of the Funds (except the Intermediate Tax-Free Bond
Fund and the Municipal Income Fund) are "non-diversified" funds. This means that
the Funds may invest a more significant portion of their assets in the
securities of a single issuer than can a "diversified" fund. In addition, the
Funds' investments are concentrated geographically. These concentrations
increase the risk of loss to the Funds if an issuer fails to make interest or
principal payments or if the market value of a security declines.
MUNICIPAL SECURITIES: Because the Arizona Municipal Bond Fund, the West Virginia
Municipal Bond Fund, the Louisiana Municipal Bond Fund, the Ohio Municipal Bond
Fund, and the Kentucky Municipal Bond Fund are not diversified and because they
concentrate in securities of Arizona, West Virginia, Louisiana, Ohio and
Kentucky issuers, respectively, certain factors may have a disproportionate
negative effect on the Funds' investments. These factors may include certain
economic conditions, constitutional amendments, legislative measures, executive
orders, administrative regulations and voter initiatives. For instance, the Ohio
economy relies to a significant degree on manufacturing. As a result, economic
activity in Ohio tends to be cyclical, which may affect the market value of Ohio
Municipal Securities or the ability of issuers to make timely payments of
interest and principal. Similarly, coal mining and related industries are an
important part of the West Virginia economy. Increased government regulation
<PAGE>
HOW TO DO BUSINESS WITH THE ONE GROUP
24
and a reduced demand for coal has adversely affected that industry. The
Louisiana economy, like that of West Virginia, is heavily dependent on a single
industry, in this case energy (oil and gas). Louisiana continues to recover from
the oil price declines of the mid-1980's, although its debt burden is well above
that of other states, while wealth and income indicators are below the national
average. Both West Virginia and Louisiana post unemployment rates above the
national average.
Arizona's population growth continues to outpace the national average. However,
this growth is expensive and Arizona's economic outlook depends on its ability
to match long-term revenues with expenditures. In addition, Arizona's continued
growth depends to some extent on its ability to manage its water resources.
Unlike the municipal securities of most states, nearly all Kentucky Municipal
Securities are not general obligations of the issuer; rather, payment depends on
revenues generated by the property financed by the security.
For a more complete description of the risks of investing in state specific
securities, please see the Statement of Additional Information.
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Years Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
- - Purchase requests received by The One Group Services Company before 4 p.m.
EST, will be effective that day.
- - Purchase orders may be cancelled by the Fund's Custodian, State Street Bank
and Trust Company, if it does not receive "federal funds" by 4:00 p.m. EST (i)
on the business day after the order is placed if you are buying Fiduciary
Class shares, and (ii) on the third business day if you are purchasing Class
A, Class B or Class C shares.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - If you intend to hold your shares six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV") plus a sales charge, if any.
- - Each class of shares in each Fund has a different NAV. This is primarily
because each class has different distribution expenses.
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- - A Fund's NAV changes every day. NAV is calculated each business day at 4:00
p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000 ($100 for employees of BANC ONE
CORPORATION and its affiliates).
- Subsequent investments must be at least $100 ($25 for employees of BANC ONE
CORPORATION and its affiliates).
- You may purchase no more than $250,000 of Class B shares at one time.
<PAGE>
25
- The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means
that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10) calendar
days if purchases are made by check or under the Systematic Investment Plan
(see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check made payable to "The One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CONVERSION FEATURE
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - Because the share price of the Class A shares may be higher than that of the
Class B shares at the time of conversion, you may receive fewer Class A
shares; however, the dollar value will be the same.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from: sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips (including lodging at luxury
resorts), tickets to entertainment events, and merchandise.
<PAGE>
26
CLASS A SHARES
This table shows the amount of sales charge you pay and the commissions paid to
<TABLE>
<CAPTION>
Shareholder Servicing Agents.
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not assessed a
sales charge at the time of purchase, you will be charged the equivalent of
1% of the purchase price if you redeem any or all of the Class A shares
within one year of purchase.
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
<TABLE>
<CAPTION>
schedule:
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
<TABLE>
<CAPTION>
assessed a CDSC as follows:
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
After first year None
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the current market value or the original cost of the
shares, whichever is less.
- - A sales charge is not imposed on increases in NAV above the initial purchase
price, nor is a sales charge assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE>
27
12B-1 FEES
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily net assets of
the Fund, which is currently being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund, which is currently being waived to .90%. This will
cause expenses for Class B and Class C shares to be higher and dividends
to be lower than for Class A shares.
3. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% and 1.00% of the
average daily net assets of Class A and Class B shares, respectively.
- - The One Group Services Company may pay 12b-1 fees to its affiliates and to
Banc One Investment Advisors and its affiliates (or any sub-advisor) for
brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A, Class B
or Class C shares of a Fund (except a money market fund) that you (and your
spouse and minor children) already own of any One Group Fund (except a money
market fund) to the amount of your next Class A purchase for purposes of
calculating the sales charge. An Intermediary also may take advantage of this
option.
2. Letter of Intent: With an initial investment of $2,000, you may purchase
Class A shares of one or more Funds over the next 13 months and pay the same
sales charge that you would have paid if all shares were purchased at once. A
percentage of your investment will be held in escrow until the full amount
covered by the Letter of Intent has been invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your Shareholder
Servicing Agent. To determine if you are eligible for the accumulation
privilege, contact The One Group Services Company at 1-800-480-4111. These
programs may be terminated or amended at any time.
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Funds if the shares were:
1. Bought with the reinvestment of dividends and capital gains distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge has
been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of:
- The One Group.
- BANC ONE CORPORATION and its subsidiaries and affiliates.
- The One Group Services Company and its subsidiaries and affiliates.
- State Street Bank and Trust Company and its subsidiaries and affiliates.
- Broker/dealers who have entered into dealer agreements with The One Group
and their subsidiaries and affiliates.
- An investment sub-advisor of a fund of The One Group and such sub-advisor's
subsidiaries and affiliates.
4. Bought by:
- Affiliates of BANC ONE CORPORATION and certain accounts (other than IRA
Accounts) for which an Intermediary acts in a fiduciary, advisory, agency,
custodial or similar capacity.
- Accounts as to which a bank or broker-dealer charges an asset allocation
fee, provided the bank or broker-dealer has an agreement with The One Group
Services Company.
- Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in Sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
<PAGE>
28
- Shareholder Servicing Agents who have a dealer arrangement with The One
Group Services Company, who place trades for their own accounts or for the
accounts of their clients and who charge a management, consulting or other
fee for their services, as well as clients of such Shareholder Servicing
Agents who place trades their own accounts if the accounts are linked to
the master account of such Shareholder Servicing Agent.
5. Bought with proceeds from the sale of Fiduciary Class shares of a Fund of The
One Group or acquired in an exchange of Fiduciary Class shares of a Fund for
Class A shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund (other than a
fund of The One Group) for which a sales charge was paid, but only if the
purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee benefit
plan, but only if the purchase is made within 60 days of the sale or
distribution and, at the time of the distribution, the employee benefit plan
had plan assets invested in a Fund of The One Group.
8. Bought with assets of The One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
The One Group does not charge a fee for this privilege. In addition, The One
Group may change the terms and conditions of your exchange privileges upon 60
days written notice.
<PAGE>
29
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 4:00 p.m. EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds in which you wish
to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4 p.m.
EST will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or State Street Bank and Trust Company at the following
address:
The One Group
c/o State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
<PAGE>
30
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will be paid within seven days after receipt of the
redemption request.
WHAT WILL MY SHARES BE WORTH?
- - If you own Class A and Fiduciary Class shares and the Fund receives your
redemption request by 4:00 p.m. EST, you will receive that day's NAV.
- - If you own Class B or Class C shares and the Fund receives your redemption
request by 4:00 p.m. EST, you will receive that day's NAV, minus the amount of
any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000 you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A shares while
participating in a Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
3. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your shares. This will reduce
the amount of your investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE>
SHAREHOLDER INFORMATION
31
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940 to
control the Funds. This is because as of August 5, 1997, BANC ONE CORPORATION or
its affiliates possessed the power to vote substantially all of the Fiduciary
Class shares of the Funds.
On that same date, the following shareholders owned 25% or more of Class A,
Class B and Class C shares of the Funds. As a consequence, they are considered
<TABLE>
<CAPTION>
to be controlling persons of these classes of the Funds.
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
<S> <C> <C> <C>
Dean Witter Reynolds Arizona Municipal Bond Fund 32.61% Record
FBO Theodore Cesarano Class A
4617 E. Bernell Drive
Phoenix, AZ 85028-5520
The One Group Services Company Arizona Municipal Bond Fund 50.00% Record
Fund Administration Class B
3435 Stelzer Road
Columbus, Ohio 43219-6004
Dean Witter Funds Processing Account Arizona Municipal Bond Fund 50.00% Record
5 World Trade Center 6th Floor Class C
New York, NY 10048-0205
Dean Witter for the Benefit of West Virginia Municipal Bond Fund 61.58% Record
Stephen A. Lewis Class A
3720 Noves Ave.
5 World Trade Center 6th Floor
New York, NY 10048-0205
</TABLE>
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends daily. Dividends are distributed on the
first business day of each month. Capital gains, if any, for all Funds are
distributed at least annually.
The Funds pay dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B and Class C shares
have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
<PAGE>
32
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
FEDERAL TAXATION OF DISTRIBUTIONS
EXEMPT-INTEREST DIVIDENDS. If, at the close of each quarter of its taxable year,
at least 50% of the value of a Fund's assets consists of obligations the
interest on which is excludable from gross income, the Fund may pay
"exempt-interest dividends" to you. Generally, exempt-interest dividends are
excludable from gross income. However:
1. If you receive Social Security or Railroad Retirement benefits, you may be
taxed on a portion of such benefits if you receive exempt-interest dividends
from the Funds.
2. Receipt of exempt-interest dividends may result in liability for Federal
alternative minimum tax and for state and local taxes, both for individual
and corporate shareholders.
INTEREST ON PRIVATE ACTIVITY BONDS: The Municipal Income Fund, the Arizona
Municipal Bond Fund, the West Virginia Municipal Bond Fund, the Kentucky
Municipal Bond Fund, the Louisiana Municipal Bond Fund and the Ohio Municipal
Bond Fund may invest as much as 100% of their assets in municipal securities
issued to finance private activities the interest on which is a tax preference
item for purposes of the Federal alternative minimum tax ("Private Activity
Bonds"). The Intermediate Tax-Free Bond Fund may invest as much as 20% of its
assets in such Private Activity Bonds. As a result, Fund shareholders who are
subject to the Federal alternative minimum tax may have all or a portion of
their income from those Funds subject to Federal income tax. Additionally,
corporate shareholders will be required to take the interest on municipal
securities (including municipal securities of each Fund's respective state) into
account in determining their alternative minimum taxable income. Persons who are
substantial users of facilities financed by private activity bonds or who are
"related persons" of such substantial users should consult their tax advisors
before investing in the Funds.
INVESTMENT INCOME AND CAPITAL GAINS DIVIDENDS. Each Fund will distribute
substantially all of its net investment income (including net short-term capital
gains) on at least an annual basis. Dividends you receive from a Fund, other
than "exempt-interest dividends," will be taxable to you, whether reinvested or
received in cash. Dividends from a Fund's net investment income, if any, will be
taxable as ordinary income and capital gains dividends will be taxable to you as
such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
STATE AND LOCAL TAXATION OF DISTRIBUTIONS: Dividends that are derived from the
Funds' investments in U.S. government obligations may not be entitled to the
exemptions from state and local taxes that would be available if you purchased
U.S. government obligations directly.
The funds will notify you annually of the percentage of income and distributions
derived from U.S. government obligations. Unless otherwise discussed below,
investment income and capital gains dividends may be subject to state and local
taxes.
LOUISIANA TAXES: Distributions from the Louisiana Municipal Bond Fund, which are
derived from interest on tax-exempt obligations of the State of Louisiana or its
political subdivisions and certain obligations of the United States or its
territories, are exempt from Louisiana income tax.
ARIZONA TAXES: Exempt-interest dividends from the Arizona Municipal Bond Fund,
which are derived from interest on tax-exempt obligations of the State of
Arizona and its political subdivisions are exempt from Arizona income tax. Other
distributions from the Fund, including those related to long-term and short-term
capital gains, will be subject to Arizona income tax. Arizona law does not
permit a deduction for interest paid or accrued on indebtedness incurred or
continued to purchase or carry obligations, the interest on which is exempt from
Arizona income tax.
WEST VIRGINIA TAXES: Distributions from the West Virginia Bond Fund, which are
derived from interest or dividends on obligations or a securities of a West
Virginia state or local governmental body, generally are exempt from West
Virginia income tax. In addition, you will not pay that tax on the portion of
your income from the Fund which represents interest or dividends received from
the
<PAGE>
33
Fund on obligations or securities of the United States and some of its
authorities, commissions or instrumentalities.
KENTUCKY TAXES: Dividends received from the Kentucky Municipal Bond Fund which
are derived from interest on Kentucky Municipal Securities are exempt from the
Kentucky individual income tax. Dividends paid from interest earned on
securities that are merely guaranteed by the Federal government, repurchase
agreements collateralized by U.S. government obligations, or from interest
earned on obligations of other states are not exempt from Kentucky individual
income tax. Any distributions of net short-term and net long-term capital gain
earned by the Fund are includable in each Shareholder's Kentucky adjusted gross
income as dividend income and long-term capital gain, respectively, and are both
taxed at ordinary income tax rates.
OHIO TAXES: Dividends received from the Ohio Municipal Bond Fund which are
derived from interest on Ohio Municipal Securities are exempt from the Ohio
personal income tax. In addition, gain from the sale or transfer of certain Ohio
Municipal Securities is also exempt from Ohio income tax. Certain Ohio
municipalities may have retained the right to tax dividends from the Fund.
Corporate investors must include the Fund shares in the corporation's tax base
for purposes of the Ohio franchise tax net worth computation, but not for the
net income computation.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUNDS
FUND NAME
34
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Seven of the
Funds are described in this prospectus; the other Funds are described in
separate prospectuses. Two of the Funds described in this prospectus are
diversified, and five of the Funds described in this prospectus are
non-diversified. Each Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets.
For the fiscal year ended June 30, 1997, the Funds paid investment advisory fees
<TABLE>
<CAPTION>
at the following rates:
Annual Rate As Percentage
of Average Daily Net Assets
<S> <C> <C>
The One Group(R) Intermediate Tax-Free Bond
Fund .39%
The One Group(R) Municipal Income Fund .35%
The One Group(R) Arizona Municipal Bond Fund .34%
The One Group(R) West Virginia Municipal Bond
Fund .29%
The One Group(R) Louisiana Municipal Bond Fund .37%
The One Group(R) Ohio Municipal Bond Fund .30%
The One Group(R) Kentucky Municipal Fund .36%
</TABLE>
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory reporting and
compliance. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust company and Bank One Trust Company, N.A. Bank One Trust Company, N.A.
is paid a fee by the Funds for this service.
<PAGE>
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
35
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Intermediate Tax-Free Bond
Fund 1
The One Group(R) Municipal Income Fund 2
The One Group(R) Arizona Municipal Bond Fund 3
The One Group(R) West Virginia Municipal Bond
Fund 4
The One Group(R) Louisiana Municipal Bond Fund 5
The One Group(R) Ohio Municipal Bond Fund 6
The One Group(R) Kentucky Municipal Fund 7
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-7 Market
CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-7 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-7 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1-7 Market
maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1-7 Liquidity
exchange for the deposit of funds. Credit
Market
REPURCHASE AGREEMENTS: The purchase of a security and the 1-7 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-7 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-7 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-7 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1-7 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
CALL AND PUT OPTIONS: A call option gives the buyer the right to 1-7 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell only covered call and Leverage
secured put options.
FUTURES AND RELATED OPTIONS: A contract providing for the future 1-7 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
</TABLE>
<PAGE>
36
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1-7 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1-7 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
RESTRICTED SECURITIES: Securities not registered under the 1-7 Liquidity
Securities Act of 1933, such as privately placed commercial Market
paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-7 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to the Fund on demand. Liquidity
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1-7 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs"), and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
DEMAND FEATURES: Securities that are subject to puts and standby 1-7 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
MORTGAGE DOLLAR ROLLS: A transaction in which a Fund sells 1-7 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
SWAPS, CAPS AND FLOORS: A Fund may enter into these transactions 1-7 Management
to manage its exposure to changing interest rates and other Credit
factors. Swaps involve an exchange of obligations by two Liquidity
parties. Caps and floors entitle a purchaser to a principal Market
amount from the seller of the cap or floor to the extent that a
specified index exceeds or falls below a predetermined interest.
NEW FINANCIAL PRODUCTS: New options and futures contracts and 1-7 Management
other financial products continue to be developed and the Fund Credit
may invest in such options, contracts and products. Market
Liquidity
STRUCTURED INSTRUMENTS: Debt securities issued by agencies and 1-7 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other references indices. Foreign Investment
MUNICIPAL SECURITIES: Securities issued by a state or political 1-7 Credit
subdivision to obtain funds for various public purposes. Political
Municipal securities include private activity bonds and Tax
industrial development bonds, as well as General Obligation Market
Notes, Anticipation Notes, Bond Tax Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, participations in pools of
municipal securities, and obligations of municipal housing
authorities and single family revenue bonds.
STRIPPED MORTGAGE-BACKED SECURITIES: Derivative multi-class 1-7 Pre-payment
mortgage securities which are usually structured with two Market
classes of shares that receive different proportions of the Credit
interest and principal from a pool of mortgage assets. These Regulatory
include IO's and PO's.
ASSET-BACKED SECURITIES: Securities secured by company 1-7 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets.
ZERO-COUPON DEBT SECURITIES: Bonds and other debt that pay no 1-7 Credit
interest, but are issued at a discount from their value at Market
maturity. When held to maturity, their entire return equals the
differences between their issue price and their maturity value.
INVERSE FLOATING RATE INSTRUMENTS: Leveraged floating rate debt 1-7 Credit
instruments with interest rates that reset in the opposite Market
direction from the market rate of interest to which the inverse Leverage
floater is indexed.
LOAN PARTICIPATIONS AND ASSIGNMENTS: Participations in, or 1-7 Market
assignments of municipal securities, including municipal leases. Credit
Political
Liquidity
Tax
</TABLE>
<PAGE>
37
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risks than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise be unable to honor a financial obligation.
Credit risk is generally higher for non-investment grade securities. The price
of a security can be adversely affected prior to actual default as its credit
status deteriorates and the probability of default rises.
- - LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
- HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching between
the derivative and underlying security, and there can be no assurance that
a Fund's hedging transactions will be effective.
- SPECULATIVE. To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in the
market. The seller may have to lower the price, sell other securities instead
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There is also the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments in
foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. Risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments. This
also includes the risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may widen any losses. Exchange
rate volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
<PAGE>
38
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early prepayment, a Fund may
fail to recover any premium paid, resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. In addition to
the fundamental policies mentioned earlier, the following fundamental policies
apply to each Fund as specified. The full text of the fundamental policies can
be found in the Statement of Additional Information.
INVESTMENT POLICIES FOR SPECIFIC FUNDS
The Intermediate Tax-Free Bond Fund and the Municipal Income Fund may not:
1. Purchase the securities of an issuer if as a result more than 5% of its total
assets would be invested in the securities of that issuer, or the Fund would
own more than 10% of the outstanding voting securities of that issuer. This
does not include securities issued or guaranteed by the United States, its
agencies or instrumentalities, and repurchase agreements involving these
securities. This restriction applies to 75% of a Fund's total assets.
2. Concentrate in a particular industry or group of industries. This does not
include Municipal Securities or governmental guarantees of Municipal
Securities, and with respect to the Municipal Income Fund, housing authority
obligations. Private activity bonds that are backed only by the assets and
revenues of a non-governmental issuer are not Municipal Securities for
purposes of this restriction.
The Arizona Municipal Bond Fund, the West Virginia Municipal Bond Fund, the
Louisiana Municipal Bond Fund, the Ohio Municipal Bond Fund and the Kentucky
Municipal Bond Fund may not:
1. Purchase the securities of an issuer if as a result more than 25% of its
total assets would be invested in the securities of that issuer. This
restriction applies with respect to 50% of a Fund's total assets. With
respect to the remaining 50% of its total assets, a Fund may not purchase the
securities of an issuer if as a result more than 5% of its total assets would
be invested in the securities of that issuer. This restriction does not apply
to securities issued or guaranteed by the United States, its agencies, or
instrumentalities, securities of regulated investment companies, and
repurchase agreement involving such securities.
2. Concentrate their investment in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include:
- Obligations issued or guaranteed by the U.S. government or its agencies and
instrumentalities and repurchase agreements involving such securities;
- Municipal Securities; and
- Ohio Municipal Securities, Kentucky Municipal Securities, Arizona Municipal
Securities, West Virginia Municipal Securities, and Louisiana Municipal
Securities or governmental guarantees of such securities. With respect to
the Arizona Municipal Bond Fund and the West Virginia Municipal Bond Fund,
private activity bonds that are backed only by the assets and revenues of a
non-governmental issuer are not Arizona Municipal Securities or West
Virginia Municipal Securities for purposes of this restriction.
INVESTMENT POLICIES FOR ALL FUNDS
None of the Funds may make loans, except that a Fund may (i) purchase or hold
debt instruments in accordance with its investment objective and policies; (ii)
enter into repurchase agreements; and (iii) engage in securities lending.
Additional investment policies are set forth in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes, each Fund may invest up to 100% of its assets
in money market instruments and may hold a portion of its assets in cash for
liquidity purposes.
<PAGE>
39
The Arizona Municipal Bond Fund, the West Virginia Municipal Bond Fund, the
Louisiana Municipal Bond Fund and the Ohio Municipal Bond Fund also may invest
up to 20% of their total assets in securities other than Arizona, West Virginia,
Louisiana and Ohio Municipal Securities, respectively. The Kentucky Municipal
Bond Fund may invest up to 35% of its total assets in securities other than
Kentucky Municipal Securities.
While the Funds are engaged in a temporary defensive position, they will not be
pursuing their investment objectives. Therefore, the Funds will pursue a
temporary defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Funds and may result in additional tax consequences to you. The portfolio
turnover rate for each Fund for the fiscal year ended June 30, 1997 is shown on
the Financial Highlights.
<PAGE>
APPENDIX
40
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE>
41
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
AAA Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
AA These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF MUNICIPAL BOND RATINGS
(including mortgage and asset-backed securities)
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligations is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligations.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the
<PAGE>
42
obligation. In the event of adverse business, financial, or economic
conditions, they are not likely to have the capacity to meet its
financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
AAA Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
AA High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
BAA These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
BA These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
CAA Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
CA Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & VMIG1
Short-term municipal securities rated MIG1 or VMIG1 are of the best
quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & VMIG2
These Short-term municipal securities rated MIG2 or VMIG2 are of high
quality. Margins of protection are ample although not so large as in
the preceding group.
MIG3 & VMIG3
Favorable quality. All security elements are accounted for, but the
undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
<PAGE>
43
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
AAA Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
AA High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
A Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
BAA Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE>
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-121
<PAGE>
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
BOND FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) INTERMEDIATE BOND FUND
THE ONE GROUP(R) INCOME BOND FUND
THE ONE GROUP(R) GOVERNMENT BOND FUND
THE ONE GROUP(R) ULTRA SHORT-TERM INCOME FUND
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND
THE ONE GROUP(R) TREASURY & AGENCY FUND
This prospectus describes six mutual funds with a variety of
investment objectives, including income, capital preservation, tax-exempt
income, and low volatility. The information in this prospectus is
important.
Please read it carefully before you invest, and save it
for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: O ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; O ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; O
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................ 1
ABOUT THE FUNDS......................................... 2
The One Group(R) Intermediate Bond Fund.............. 2
The One Group(R) Income Bond Fund.................... 5
The One Group(R) Government Bond Fund................ 8
The One Group(R) Ultra Short-Term Income Fund........ 11
The One Group(R) Limited Volatility Bond Fund........ 14
The One Group(R) Treasury & Agency Fund.............. 17
MORE ABOUT THE FUNDS.................................... 20
HOW TO DO BUSINESS WITH THE ONE GROUP................... 22
Purchasing Fund Shares............................... 22
Sales Charges........................................ 23
Sales Charge Reductions and Waivers.................. 26
Exchanging Fund Shares............................... 28
Redeeming Fund Shares................................ 28
SHAREHOLDER INFORMATION................................. 31
Voting Rights........................................ 31
Dividend Policies.................................... 31
Tax Treatment of the Funds........................... 32
Tax Treatment of Shareholders........................ 32
Shareholder Inquiries................................ 32
ORGANIZATION AND MANAGEMENT OF THE FUNDS................ 33
The Funds............................................ 33
The Board of Trustees................................ 33
The Advisor.......................................... 33
The Distributor...................................... 33
The Administrator and Sub-Administrator.............. 33
The Transfer Agent, Custodian and Sub-Custodian...... 33
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES.............................................. 34
Investment Practices................................. 34
Investment Risks..................................... 37
Investment Policies.................................. 38
APPENDIX: DESCRIPTION OF RATINGS........................ 39
</TABLE>
<PAGE>
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP BOND FUNDS?
The Funds are designed for a variety of investment objectives,
including current income consistent with the preservation of
capital, current income with a primary focus on income that is
exempt from state income taxes, and current income consistent
with low volatility of principal. Each Fund pursues a
different objective and involves different risks. Please read
about each Fund before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Intermediate Bond Fund, the Limited Volatility Bond Fund,
the Ultra Short-Term Income Fund and the Income Bond Fund
invest in high and medium grade debt securities of all types
with average maturities ranging from one to fifteen years. The
Income Bond Fund also may invest in lower grade debt
securities, although it will limit its investments in such
securities to no more than 30% of its total assets. The
Government Bond Fund and the Treasury & Agency Fund invest in
obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities. Several of the Funds may
invest in preferred stock.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The Funds invest in fixed-income investments that are subject
to market fluctuations as a result of changes in interest
rates. As a result, the value of investments in the Funds may
decrease during periods of rising interest rates and increase
during periods of declining interest rates. In addition, some
of the Funds invest in mortgage-related securities which have
significantly greater price and yield volatility than
traditional fixed-income securities. Also, the Income Bond
Fund may invest up to 30% of its total assets in securities in
ANY rating category, some of which are regarded as
predominately speculative. For more information about risks,
please read "More About the Funds" and "Investment Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
The Funds currently offer four classes of Shares: Class A,
Class B, Class C and Fiduciary Class. Class A, Class B and
Class C shares are offered to the general public. Fiduciary
Class shares are offered to institutional investors, including
affiliates of BANC ONE CORPORATION and any bank, depository
institution, insurance company, pension plan or other
organization authorized to act in fiduciary, advisory, agency,
custodial or similar capacities. Fiduciary Class shares are
not available to Individual Retirement Accounts ("IRA"). The
section called "How To Do Business With The One Group" will
provide more information.
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C shares are not available
for purchase in all of the funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed on the first business day of each month. Any
capital gains are distributed at least annually. Distributions
are paid in additional shares of the same class unless you
elect to take the payment in cash. For a more detailed
discussion of dividends, see "Dividend Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE>
2
THE ONE GROUP(R)
INTERMEDIATE BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks current income consistent with the preservation of capital by
investing in high and medium-grade fixed-income securities with intermediate
maturities.
[ICON] INVESTMENT STRATEGY
Generally, the Fund invests in debt securities of all types including bonds,
notes, U.S. Government obligations, and taxable and tax-exempt municipal
securities rated as investment grade at the time of investment, (or, if unrated,
determined by Banc One Investment Advisors, to be of comparable quality). The
fund's average weighted maturity will ordinarily range between three and ten
years, taking into account expected prepayment of principal on certain
investments, although the Fund may shorten the weighted average maturity to as
little as one year for temporary defensive purposes.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in debt securities.
Debt securities include bonds, notes and other obligations. As a matter of
fundamental policy, at least 65% of the Fund's total assets will consist of
bonds and at least 50% of total assets will consist of obligations issued by the
U.S. Government or its agencies and instrumentalities, some of which may be
subject to repurchase agreements. However, the Fund intends to hold at least 65%
of its total assets in such government obligations. Up to 20% of the Fund's
total assets may be invested in preferred stock. For a list of all the
securities in which the Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund may invest in debt securities that are rated in the lowest investment
grade category. Such investments are considered to have speculative
characteristics. In addition, the Fund invests in fixed-income securities. The
value of these securities will change in response to interest rate changes and
other factors. This is especially true to the extent the Fund invests in debt
securities in the lowest investment grade category. The Fund also invests in
mortgage-related securities which may have greater price and yield volatility
than traditional fixed income securities. Before you invest, please read "More
About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
James A. Sexton, CFA, has served as the manager of the Fund since its inception
in January 1994. Since 1994, Mr. Sexton also has served as Managing Director of
Fixed Income Mutual Funds. Mr. Sexton has been employed by Banc One Investment
Advisors or its affiliates as an analyst and portfolio manager since 1980.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .22% .22% .22% .22%
Total Fund Operating Expenses (after fee
waivers) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, 1.82% for Class C shares and .82% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 68 $ 87 $ 119 $197
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 28 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 18 $ 57 $ 99 $197
Class C $ 15 $ 48 $ 83 $181
Class C (without fee waivers) $ 18 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
3
THE ONE GROUP(R) INTERMEDIATE BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(e) 1992(c)(e)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.84 $ 10.01 $ 9.72 $ 10.51 $ 10.09 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.65 0.66 0.66 0.60 0.63 0.22
Net realized and unrealized gains (losses)
from investments and futures 0.08 (0.17) 0.29 (0.67) 0.42 0.08
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.49 0.95 (0.07) 1.05 0.30
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.65) (0.66) (0.66) (0.60) (0.63) (0.21)
In excess of net investment income -- -- -- (0.02) -- --
Net realized gains -- -- -- (0.10) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.65) (0.66) (0.66) (0.72) (0.63) (0.21)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.92 $ 9.84 $ 10.01 $ 9.72 $ 10.51 $ 10.09
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.68% 4.95% 10.15% (0.74)% 10.67% 3.00%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $522,423 $230,812 $191,216 $98,483 $44,252 $23,457
Ratio of expenses to average net assets 0.54% 0.54% 0.56% 0.32% 0.39% 0.36%(b)
Ratio of net investment income to average
net assets 6.63% 6.56% 6.88% 6.04% 6.14% 6.99%(b)
Ratio of expenses to average net assets* 0.81% 0.87% 0.99% 0.87% 1.17% 1.33%(b)
Ratio of net investment income to average
net assets* 6.36% 6.23% 6.45% 5.49% 5.36% 6.02%(b)
Portfolio Turnover (a) 55.91% 101.06% 99.71% 85.62% 21.51% 11.74%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fund commenced operations February 28,
1992. (d) Not annualized. (e) Audited by other auditors.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------
CLASS A 1997 1996 1995(A)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.87 $ 10.04 $ 9.45
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.63 0.64 0.37
Net realized and unrealized gains (losses) from investments and futures 0.08 (0.17) 0.59
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.71 0.47 0.96
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.63) (0.64) (0.37)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.63) (0.64) (0.37)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.95 $ 9.87 $ 10.04
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.40% 4.77% 10.29%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $18,763 $13,706 $4,941
Ratio of expenses to average net assets 0.78% 0.79% 0.83%(c)
Ratio of net investment income to average net assets 6.35% 6.31% 6.64%(c)
Ratio of expenses to average net assets* 1.16% 1.22% 1.66%(c)
Ratio of net investment income to average net assets* 5.97% 5.88% 5.81%(c)
Portfolio Turnover (d) 55.91% 101.06% 99.71%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced operations November 30,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
4
THE ONE GROUP(R) INTERMEDIATE BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------
CLASS B 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.83 $ 10.01 $ 9.45
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.56 0.58 0.23
Net realized and unrealized gains (losses) from investments and futures 0.09 (0.18) 0.56
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.65 0.40 0.79
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.56) (0.58) (0.23)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.58) (0.23)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.92 $ 9.83 $ 10.01
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.83% 4.10% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $10,152 $6,077 $ 266
Ratio of expenses to average net assets 1.44% 1.44% 1.51%(c)
Ratio of net investment income to average net assets 5.71% 5.66% 6.15%(c)
Ratio of expenses to average net assets* 1.81% 1.87% 2.34%(c)
Ratio of net investment income to average net assets* 5.34% 5.23% 5.31%(c)
Portfolio Turnover (d) 55.91% 101.06% 99.71%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced operations on November 30, 1994. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
5
THE ONE GROUP(R)
INCOME BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income by investing primarily in a
diversified portfolio of high, medium and low grade debt securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in all types of debt securities rated as investment grade or
below investment grade, as well as convertible securities, preferred stock, and
loan participations. The Fund's average weighted maturity will normally range
between five and twenty years, although the Fund may shorten its weighted
average to as little as two years if deemed appropriate for temporary defensive
purposes.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 70% of its total assets in debt securities of all
types rated as investment grade at the time of investment or, if unrated,
determined to be of comparable quality by Banc One Investment Advisors. In
addition, up to 30% of the Fund's total assets may be invested in convertible
securities, preferred stock, loan participations and debt securities rated below
investment grade or, if unrated, determined by Banc One Investment Advisors to
be of comparable quality. Securities rated below investment grade are called
"high yield bonds," "non-investment grade bonds" and "junk bonds." These
securities are rated in the fifth or lower rating categories (for example, BB or
lower by Standard & Poor's Corporation and Ba or lower by Moody's Investors
Service, Inc.), and are considered to be speculative. Even though it may invest
in debt securities in all rating categories, the Fund will not invest more than
20% of its total assets in securities rated below the fifth rating category. As
a matter of fundamental policy, at least 65% of the Fund's total assets will
consist of bonds. The Fund also may purchase taxable or tax-exempt municipal
securities. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in debt securities rated below investment grade that are
considered speculative. While these securities generally provide a higher yield
than higher rated debt securities, they are subject to a greater degree of risk.
Issuers of these securities may include smaller, less creditworthy companies or
highly indebted firms. The credit quality of securities in the high yield bond
market can change suddenly and unexpectedly. Before you invest, please read
"More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Roger A. Craig has been the manager of the Fund since 1993. Mr. Craig has served
as a fixed income manager for Banc One Investment Advisors and its affiliates
since 1986.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .90% .90% none
Other Expenses .22% .22% .22% .22%
Total Fund Operating Expenses (after fee
waiver) (6) .87% 1.52% 1.52% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, 1.82% for Class C shares and .82% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 65 $ 78 $ 103 $164
Class B (without fee waivers) $ 68 $ 87 $ 119 $197
Class C $ 25 $ 48 $ 83 $181
Class C (without fee waivers) $ 28 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 53 $ 72 $ 91 $147
Class A (without fee waivers) $ 56 $ 80 $ 106 $181
Class B $ 15 $ 48 $ 83 $164
Class B (without fee waivers) $ 18 $ 57 $ 99 $197
Class C $ 15 $ 48 $ 83 $181
Class C (without fee waivers) $ 18 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
6
THE ONE GROUP(R) INCOME BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.33 $ 9.54 $ 9.23 $ 10.43 $ 10.18 $ 9.59 $ 9.49
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.64 0.65 0.64 0.54 0.66 0.71 0.79
Net realized and unrealized
gains (losses) from
investments and futures 0.09 (0.21) 0.35 (0.74) 0.38 0.59 0.06
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.44 0.99 (0.20) 1.04 1.30 0.85
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.64) (0.65) (0.64) (0.57) (0.66) (0.71) (0.75)
Net realized gains -- -- (0.04) (0.43) (0.13) -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.64) (0.65) (0.68) (1.00) (0.79) (0.71) (0.75)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.42 $ 9.33 $ 9.54 $ 9.23 $ 10.43 $ 10.18 $ 9.59
- --------------------------------------------------------------------------------------------------------------------------
Total Return 8.10% 4.62% 11.29% (2.54)% 10.62% 13.85% 9.20%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $730,754 $520,239 $474,124 $560,071 $483,291 $376,898 $269,856
Ratio of expenses to average
net assets 0.60% 0.59% 0.59% 0.53% 0.56% 0.49% 0.29%
Ratio of net investment income
to average net assets 6.85% 6.76% 6.94% 5.35% 6.44% 7.18% 7.88%
Ratio of expenses to average
net assets* 0.80% 0.81% 0.86% 0.85% 0.90% 1.04% 0.89%
Ratio of net investment income
to average net assets* 6.65% 6.54% 6.67% 5.03% 6.10% 6.63% 7.28%
Portfolio Turnover (a) 55.18% 95.52% 262.25% 131.04% 143.52% 32.50% 39.63%
<CAPTION>
-------------------------------------
FIDUCIARY 1990 1989 1988(c)
- ----------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.92 $ 9.88 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.80 0.64 0.54
Net realized and unrealized
gains (losses) from
investments and futures (0.20) 0.04 (0.12)
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.60 0.68 0.42
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.80) (0.64) (0.54)
Net realized gains (0.23) -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.03) (0.64) (0.54)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.49 $ 9.92 $ 9.88(b)
- --------------------------------------------------------------------------------------------------------------------------
Total Return 6.37% 7.32% 4.00%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $57,308 $49,128 $998
Ratio of expenses to average
net assets 0.40% 0.45% 1.96%(b)
Ratio of net investment income
to average net assets 8.27% 8.66% 5.88%(b)
Ratio of expenses to average
net assets* 1.00% 1.06% 2.78%(b)
Ratio of net investment income
to average net assets* 7.67% 8.05% 5.08%(b)
Portfolio Turnover (a) 119.23% 194.19% 0.00%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) The Fund commenced operations on July 2, 1987;
at that time, the Fund did not offer multiple classes of shares. Subsequently,
all shares of the Fund were redesignated as Fiduciary Class shares.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.32 $ 9.54 $ 9.22 $ 10.43 $ 10.16 $ 10.06
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.62 0.63 0.61 0.52 0.63 0.26
Net realized and unrealized gains (losses) from
investments and futures 0.09 (0.23) 0.36 (0.75) 0.41 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.71 0.40 0.97 (0.23) 1.04 0.37
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.62) (0.62) (0.60) (0.55) (0.64) (0.27)
In excess of net investment income -- -- (0.01) -- -- --
Net realized gains -- -- (0.04) (0.43) (0.13) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.62) (0.62) (0.65) (0.98) (0.77) (0.27)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.32 $ 9.54 $ 9.22 $ 10.43 $ 10.16
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.85% 4.26% 10.90% (2.33)% 10.58% 10.16%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $14,325 $10,127 $6,796 $5,347 $7,064 $188
Ratio of expenses to average net assets 0.85% 0.84% 1.01% 0.78% 0.77% 0.97%(b)
Ratio of net investment income to average net
assets 6.59% 6.51% 6.57% 5.25% 6.12% 6.58%(b)
Ratio of expenses to average net assets* 1.15% 1.16% 1.38% 1.20% 1.26% 1.27%(b)
Ratio of net investment income to average net
assets* 6.29% 6.19% 6.20% 4.83% 5.63% 6.28%(b)
Portfolio Turnover (a) 55.18% 95.52% 262.25% 131.04% 143.52% 32.50%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE>
7
THE ONE GROUP(R) INCOME BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.40 $ 9.62 $ 9.29 $ 9.97
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.56 0.56 0.56 0.17
Net realized and unrealized gains (losses) from investments and
futures 0.09 (0.21) 0.38 (0.70)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.65 0.35 0.94 (0.53)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.56) (0.57) (0.57) (0.15)
Net realized gains -- -- (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (0.57) (0.61) (0.15)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.49 $ 9.40 $ 9.62 $ 9.29
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.15% 3.65% 10.63% (5.29)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $10,873 $6,110 $1,887 $723
Ratio of expenses to average net assets 1.50% 1.49% 1.49% 1.45%(c)
Ratio of net investment income to average net assets 5.95% 5.86% 6.16% 5.20%(c)
Ratio of expenses to average net assets* 1.80% 1.81% 1.86% 1.84%(c)
Ratio of net investment income to average net assets* 5.65% 5.54% 5.80% 4.81%(c)
Portfolio Turnover(d) 55.18% 95.52% 262.25% 131.04%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 17,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
8
THE ONE GROUP(R)
GOVERNMENT BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income with liquidity and safety of
principal.
[ICON] INVESTMENT STRATEGY
The Fund limits its investments to securities issued by the U.S. Government and
its agencies and instrumentalities or related to securities issued by the U.S.
Government and its agencies and instrumentalities. The Fund's average weighted
remaining maturity will ordinarily range between three and fifteen years, taking
into account expected prepayment of principal on certain investments. However,
the Fund's average weighted remaining maturity may be outside this range if
warranted by market conditions.
[ICON] PORTFOLIO SECURITIES
At least 65% of the Fund's total assets will be invested in debt instruments
with principal and interest guaranteed by the U.S. Government or its agencies
and instrumentalities, some of which may be subject to repurchase agreements,
and other securities representing an interest in or secured by mortgages that
are issued or guaranteed by certain U.S. government agencies or
instrumentalities. For a list of all the securities in which the Fund may
invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund's ability to achieve higher income is not as great as that of funds
that invest in lower-quality instruments. In addition, the Fund invests in
fixed-income securities. The value of these securities will change in response
to interest rate changes and other factors. The Fund also invests in
mortgage-related securities which may have greater price and yield volatility
than traditional fixed income securities. Before you invest, please read "More
About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Thomas E. Donne, CFA, has been a Manager of the Fund since January, 1995. Since
1988, Mr. Donne has held various portfolio management positions with Banc One
Investment Advisors and its affiliates.
Michael J. Sais, CFA, is head of mortgage research for Banc One Investment
Advisors and has been a Manager of the Fund since November, 1996. Mr. Sais also
has managed the Ultra Short-Term Fund since 1995. Before joining Banc One
Investment Advisors in 1995, Mr. Sais was a Eurodollar trader with Citibank, a
senior portfolio manager for Valley National Bank of Arizona (now Bank One,
Arizona, N.A.), and head portfolio manager for PRIMERIT Bank FSB. Mr. Sais has
nine years of investment management experience.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 5.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees .45% .45% .45% .45%
12b-1 Fees (after fee waiver) (4) .25% .90% .90% none
Other Expenses .24% .24% .24% .24%
Total Fund Operating Expenses (after fee
waiver) (5) .94% 1.59% 1.59% .69%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current expenses.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(5) Without the voluntary reduction of 12b-1 fees, Total Operating Expenses
would be 1.04% for Class A shares and 1.69% for Class B shares and Class C
shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 74 $ 95 $155
Class A (without fee waiver) $ 55 $ 77 $ 100 $166
Class B $ 66 $ 80 $ 107 $172
Class B (without fee waiver) $ 67 $ 83 $ 112 $183
Class C $ 26 $ 50 $ 87 $189
Class C (without fee waiver) $ 27 $ 53 $ 92 $200
Fiduciary Class $ 7 $ 22 $ 38 $ 86
Fiduciary Class (without fee waiver) $ 7 $ 22 $ 38 $ 86
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 54 $ 74 $ 95 $155
Class A (without fee waiver) $ 55 $ 77 $ 100 $166
Class B $ 16 $ 50 $ 87 $172
Class B (without fee waiver) $ 17 $ 53 $ 92 $183
Class C $ 16 $ 50 $ 87 $189
Class C (without fee waiver) $ 17 $ 53 $ 92 $200
Fiduciary Class $ 7 $ 22 $ 38 $ 86
Fiduciary Class (without fee waiver) $ 7 $ 22 $ 38 $ 86
</TABLE>
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
9
THE ONE GROUP(R) GOVERNMENT BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.56 $ 9.81 $ 9.35 $ 10.15 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.62 0.62 0.62 0.51 0.20
Net realized and unrealized gains (losses) from
investments and futures 0.13 (0.25) 0.46 (0.77) 0.15
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.75 0.37 1.08 (0.26) 0.35
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.62) (0.62) (0.61) (0.50) (0.20)
In excess of net investment income -- -- (0.01) (0.02) --
In excess of net realized gains -- -- -- (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.62) (0.62) (0.62) (0.54) (0.20)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.15
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 8.10% 3.81% 12.04% (2.73)% 9.03%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 724,423 $ 677,326 $ 379,826 $ 209,692 $ 52,152
Ratio of expenses to average net assets 0.62% 0.68% 0.71% 0.68% 0.69%(b)
Ratio of net investment income to average net assets 6.45% 6.34% 6.65% 5.13% 5.43%(b)
Ratio of expenses to average net assets* 0.68% 0.69% 0.73% 0.71% 1.05%(b)
Ratio of net investment income to average net
assets* 6.39% 6.33% 6.63% 5.10% 5.07%(b)
Portfolio Turnover(c) 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced offering on February 8, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.56 $ 9.81 $ 9.35 $ 10.17 $ 10.22
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.60 0.60 0.61 0.48 0.17
Net realized and unrealized gains (losses) from
investments and futures 0.13 (0.25) 0.45 (0.79) (0.05)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.73 0.35 1.06 (0.31) 0.12
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.60) (0.60) (0.59) (0.47) (0.17)
In excess of net investment income -- -- (0.01) (0.02) --
In excess of net realized gains -- -- -- (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.60) (0.60) (0.60) (0.51) (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.83% 3.58% 11.84% (3.16)% 5.35%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 34,727 $ 38,800 $ 8,130 $ 1,690 $ 840
Ratio of expenses to average net assets 0.87% 0.93% 0.97% 0.92% 0.95%(b)
Ratio of net investment income to average net assets 6.20% 6.09% 6.46% 4.84% 5.56%(b)
Ratio of expenses to average net assets* 1.03% 1.04% 1.09% 1.05% 1.44%(b)
Ratio of net investment income to average net
assets* 6.04% 5.98% 6.34% 4.71% 5.07%(b)
Portfolio Turnover(c) 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on March 6,
1993. (b) Annualized. (c) Portfolio turnover is calculated on the basis of
the Fund as a whole without distinguishing among the classes of shares issued.
<PAGE>
10
THE ONE GROUP(R) GOVERNMENT BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.56 $ 9.81 $ 9.35 $ 10.04
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.54 0.54 0.55 0.18
Net realized and unrealized gains (losses) from investments and
futures 0.13 (0.25) 0.46 (0.69)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.67 0.29 1.01 (0.51)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.54) (0.54) (0.55) (0.16)
In excess of net investment income -- -- -- (0.02)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.54) (0.54) (0.55) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 9.56 $ 9.81 $ 9.35
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.14% 2.95% 11.20% (4.99)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $11,729 $10,782 $2,513 $ 656
Ratio of expenses to average net assets 1.52% 1.58% 1.62% 1.52%(c)
Ratio of net investment income to average net assets 5.55% 5.44% 5.76% 4.60%(c)
Ratio of expenses to average net assets* 1.68% 1.69% 1.74% 1.63%(c)
Ratio of net investment income to average net assets* 5.39% 5.33% 5.64% 4.49%(c)
Portfolio Turnover(d) 60.53% 62.70% 106.14% 377.78%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
11
THE ONE GROUP(R)
ULTRA SHORT-TERM INCOME FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income consistent with low volatility of
principal by investing in a diversified portfolio of short-term investment grade
securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in all types of debt securities, including money market
instruments, adjustable rate mortgage backed securities and taxable and
tax-exempt municipal securities. The Fund will maintain a maximum duration
approximately equal to that of a two-year U.S. Treasury security, although the
Fund's actual duration is expected to be approximately equal to that of a one
year U.S. Treasury security.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 80% of its total assets in debt securities.
In addition, up to 20% of the Fund's total assets may be invested in other
securities, including preferred stock. The Fund will invest in adjustable rate
mortgage pass-through securities and other securities representing an interest
in or secured by mortgages with periodic interest rate resets (some of which may
be subject to repurchase agreements). These securities often are issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. However,
the Fund may also purchase mortgage-backed securities that are issued by
non-governmental entities. Such securities may or may not have private insurer
guarantees of timely payments. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in fixed-income investments that are subject to market
fluctuations as a result of changes in interest rates. As a result, the value of
investments in the Fund may decrease during periods of rising interest rates. In
addition, the Fund invests in mortgage-related securities which may have greater
price and yield volatility than traditional fixed-income securities. The Fund
also uses investment management hedging techniques that may expose the Fund to
special risks. Before you invest, please read "More About the Funds" and
"Investment Risks."
[ICON] FUND MANAGEMENT
Michael J. Sais, CFA, is head of mortgage research for Banc One Investment
Advisors and has been a Manager of the Fund since 1995. Before joining Banc One
Investment Advisors in 1995, Mr. Sais was a Eurodollar trader with Citibank, a
senior portfolio manager for Valley National Bank of Arizona (now Bank One,
Arizona, N.A.), and head portfolio manager for PRIMERIT Bank FSB. Mr. Sais has
nine years of investment management experience.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 3.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net
assets) (4)
Investment Advisory Fees (after fee
waiver) (4) .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (5) .25% .75% .75% none
Other Expenses (6) .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waivers) (7) .80% 1.30% 1.30% .55%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .55% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the fee waiver, Other Expenses would be .31% for all classes of
shares.
(7) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.21% for Class A shares, 1.80% for Class B
shares, 1.80% for Class C shares, and .86% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 38 $ 55 $ 73 $126
Class A (without fee waivers) $ 42 $ 67 $ 95 $172
Class B $ 43 $ 61 $ 71 $130
Class B (without fee waivers) $ 48 $ 77 $ 97 $182
Class C $ 23 $ 41 $ 71 $157
Class C (without fee waivers) $ 28 $ 57 $ 97 $212
Fiduciary Class $ 6 $ 18 $ 31 $ 69
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 38 $ 55 $ 73 $126
Class A (without fee waivers) $ 42 $ 67 $ 95 $172
Class B $ 13 $ 41 $ 71 $130
Class B (without fee waivers) $ 18 $ 57 $ 97 $182
Class C $ 13 $ 41 $ 71 $157
Class C (without fee waivers) $ 18 $ 57 $ 97 $212
Fiduciary Class $ 6 $ 18 $ 31 $ 69
Fiduciary Class (without fee waiver) $ 9 $ 27 $ 48 $106
</TABLE>
Class B shares automatically convert to Class A shares after six (6) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
12
THE ONE GROUP(R) ULTRA SHORT-TERM INCOME FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.79 $ 9.84 $ 9.85 $ 10.03 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.62 0.62 0.55 0.36 0.17
Net realized and unrealized gains (losses) from
investments and futures 0.05 (0.07) (0.05) (0.15) 0.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.67 0.55 0.50 0.21 0.20
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.59) (0.60) (0.48) (0.37) (0.17)
In excess of net investment income -- -- (0.03) (0.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.59) (0.60) (0.51) (0.39) (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 9.79 $ 9.84 $ 9.85 $ 10.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 7.14% 5.71% 5.14% 2.16% 4.93%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $114,413 $57,276 $51,050 $139,593 $154,413
Ratio of expenses to average net assets 0.35% 0.45% 0.61% 0.65% 0.58%(b)
Ratio of net investment income to average net assets 6.02% 6.20% 5.18% 3.70% 4.71%(b)
Ratio of expenses to average net assets* 0.81% 1.06% 1.01% 0.81% 1.03%(b)
Ratio of net investment income to average net
assets* 5.56% 5.59% 4.78% 3.54% 4.26%(b)
Portfolio Turnover(c) 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced operations on February 2, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.78 $ 9.83 $ 9.84 $ 10.03 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.58 0.58 0.52 0.36 0.14
Net realized and unrealized gains (losses) from
investments and futures 0.09 (0.06) (0.06) (0.17) 0.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.67 0.52 0.46 0.19 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.58) (0.57) (0.46) (0.34) (0.14)
In excess of net investment income -- -- (0.01) (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.58) (0.57) (0.47) (0.38) (0.14)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 9.78 $ 9.83 $ 9.84 $ 10.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 7.00% 5.42% 4.84% 1.95% 4.78%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $29,643 $3,969 $4,631 $19,053 $3,106
Ratio of expenses to average net assets 0.61% 0.70% 0.86% 0.89% 0.81%(b)
Ratio of net investment income to average net assets 5.78% 5.95% 4.88% 3.54% 4.47%(b)
Ratio of expenses to average net asset* 1.17% 1.41% 1.36% 1.14% 1.34%(b)
Ratio of net investment income to average net asset* 5.22% 5.24% 4.38% 3.29% 3.95%(b)
Portfolio Turnover(c) 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced offering on March 10, 1993. (b) Annualized. (c) Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
<PAGE>
13
THE ONE GROUP(R) ULTRA SHORT-TERM INCOME FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.76 $ 9.84 $ 9.86 $ 9.98
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.54 0.52 0.47 0.12
Net realized and unrealized gains (losses) from investments and
futures 0.05 (0.07) (0.04) (0.11)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.59 0.45 0.43 0.01
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.54) (0.53) (0.45) (0.12)
In excess of net investment income -- -- -- (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.54) (0.53) (0.45) (0.13)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.81 $ 9.76 $ 9.84 $ 9.86
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.22% 4.63% 4.77% (0.09)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 2,818 $ 1,144 $ 160 $ 15
Ratio of expenses to average net assets 1.07% 1.20% 1.31% 1.41%(c)
Ratio of net investment income to average net assets 5.18% 5.45% 4.91% 3.49%(c)
Ratio of expenses to average net assets* 1.81% 2.06% 1.96% 1.83%(c)
Ratio of net investment income to average net assets* 4.44% 4.59% 4.26% 3.07%(c)
Portfolio Turnover(d) 70.36% 67.65% 2.91% 242.20%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated. (a) The
Fund commenced offering on January 14, 1994. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
14
THE ONE GROUP(R)
LIMITED VOLATILITY BOND FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks current income consistent with preservation of capital through
investment in high and medium-grade fixed-income securities.
[ICON] INVESTMENT STRATEGY
The Fund invests in all types of debt securities with short to intermediate
maturities. The Fund's average weighted maturity will ordinarily range between
one and five years taking into account expected prepayment of principal on
certain investments, although the Fund may shorten the weighted average maturity
to as little as 90 days for temporary defensive purposes.
[ICON] PORTFOLIO SECURITIES
The Fund invests at least 80% of its total assets in debt securities with short
to intermediate maturities. At least 65% of the Fund's total assets will consist
of bonds and at least 65% of total assets will consist of obligations issued by
the U.S. Government, its agencies, or instrumentalities (some of which may be
subject to repurchase agreements). The Fund also may purchase taxable or
tax-exempt municipal securities. Up to 20% the total assets may be invested in
preferred stock. For a list of all the securities in which the Fund may invest,
please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in fixed-income securities. The value of these securities will
change in response to interest rate changes and other factors. In addition, the
Fund invests in mortgage-related securities which may have greater price and
yield volatility than traditional fixed-income securities. Before you invest,
please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Roger A. Craig has been the manager of the Fund since November, 1996. Mr. Craig
has served as a fixed income manager for Banc One Investment Advisors and its
affiliates since 1986.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 3.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .40% .40% .40% .40%
12b-1 Fees (after fee waiver) (5) .25% .75% .75% none
Other Expenses .22% .22% .22% .22%
Total Fund Operating Expenses (after fee
waiver) (6) .87% 1.37% 1.37% .62%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .60% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be 1.17% for Class A shares, 1.82% for Class B
shares, 1.82% for Class C shares and .82% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 39 $ 57 $ 77 $134
Class A (without fee waivers) $ 42 $ 66 $ 92 $168
Class B $ 44 $ 63 $ 75 $138
Class B (without fee waivers) $ 48 $ 77 $ 99 $181
Class C $ 24 $ 43 $ 75 $165
Class C (without fee waivers) $ 28 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 39 $ 57 $ 77 $134
Class A (without fee waivers) $ 42 $ 66 $ 92 $168
Class B $ 14 $ 43 $ 75 $138
Class B (without fee waivers) $ 18 $ 57 $ 99 $181
Class C $ 14 $ 43 $ 75 $165
Class C (without fee waivers) $ 18 $ 57 $ 99 $214
Fiduciary Class $ 6 $ 20 $ 35 $ 77
Fiduciary Class (without fee waiver) $ 8 $ 26 $ 46 $101
</TABLE>
Class B shares automatically convert to Class A shares after six (6) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
15
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 10.42 $ 10.53 $ 10.33 $ 10.87 $ 10.72 $ 10.26 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.63 0.64 0.60 0.54 0.61 0.70 0.58
Net realized and unrealized
gains (losses) from
investments and futures 0.05 (0.11) 0.19 (0.45) 0.25 0.47 0.25
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 0.53 0.79 0.09 0.86 1.17 0.83
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.63) (0.64) (0.59) (0.55) (0.62) (0.70) (0.57)
In excess of net investment
income -- -- -- (0.02) -- -- --
Net realized gains -- -- -- (0.06) (0.09) (0.01) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.63) (0.64) (0.59) (0.63) (0.71) (0.71) (0.57)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.47 $ 10.42 $ 10.53 $ 10.33 $ 10.87 $ 10.72 $ 10.26
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 6.75% 5.13% 7.96% 0.79% 8.27% 11.75% 9.76%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000) $563,979 $604,916 $410,746 $447,394 $397,820 $301,907 $154,991
Ratio of expenses to average net
assets 0.51% 0.51% 0.52% 0.50% 0.56% 0.52% 0.32%(b)
Ratio of net investment income
to average net assets 6.06% 6.06% 5.82% 5.10% 5.70% 6.63% 7.49%(b)
Ratio of expenses to average net
assets* 0.81% 0.82% 0.85% 0.85% 0.90% 1.04% 0.92%(b)
Ratio of net investment income
to average net assets* 5.76% 5.75% 5.49% 4.75% 5.36% 6.11% 6.89%(b)
Portfolio Turnover(a) 66.61% 75.20% 76.43% 30.61% 40.28% 43.87% 24.69%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(c)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.41 $ 10.52 $ 10.32 $ 10.87 $ 10.72 $ 10.61
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.61 0.63 0.56 0.52 0.59 0.24
Net realized and unrealized gains (losses)
from investments and futures 0.05 (0.13) 0.21 (0.46) 0.24 0.13
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.66 0.50 0.77 0.06 0.83 0.37
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.61) (0.61) (0.56) (0.51) (0.59) (0.26)
In excess of net investment income -- -- (0.01) (0.04) -- --
Net realized gains -- -- -- (0.06) (0.09) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.61) (0.61) (0.57) (0.61) (0.68) (0.26)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.46 $ 10.41 $ 10.52 $ 10.32 $ 10.87 $ 10.72
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 6.47% 4.86% 7.67% 0.49% 8.04% 9.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $20,055 $21,343 $12,516 $15,216 $15,719 $ 161
Ratio of expenses to average net assets 0.76% 0.76% 0.77% 0.75% 0.76% 0.99%(b)
Ratio of net investment income to average net
assets 5.81% 5.81% 5.57% 4.92% 5.35% 5.95%(b)
Ratio of expenses to average net assets* 1.16% 1.17% 1.20% 1.20% 1.27% 1.29%(b)
Ratio of net investment income to average net
assets* 5.41% 5.40% 5.14% 4.47% 4.84% 5.65%(b)
Portfolio Turnover(a) 66.61% 75.20% 76.43% 30.61% 40.28% 43.87%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Portfolio turnover is calculated on the basis of the Fund as a
whole without distinguishing among the classes of shares
issued. (b) Annualized. (c) Class A Shares commenced offering on February
18, 1992.
<PAGE>
16
THE ONE GROUP(R) LIMITED VOLATILITY BOND FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
CLASS B 1997 1996 1995 1994(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.49 $ 10.60 $ 10.40 $ 10.78
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.55 0.55 0.53 0.17
Net realized and unrealized gains (losses) from investments and
futures 0.04 (0.10) 0.19 (0.37)
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.59 0.45 0.72 (0.20)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.55) (0.56) (0.52) (0.15)
In excess of net realized gains -- -- -- (0.03)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.55) (0.56) (0.52) (0.18)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.53 $ 10.49 $ 10.60 $ 10.40
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) 5.74% 4.28% 7.18% (1.81)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $4,920 $4,923 $2,906 $1,974
Ratio of expenses to average net assets 1.20% 1.26% 1.28% 1.26%(c)
Ratio of net investment income to average net assets 5.21% 5.31% 5.10% 4.39%(c)
Ratio of expenses to average net assets* 1.81% 1.82% 1.86% 1.86%(c)
Ratio of net investment income to average net assets* 4.60% 4.75% 4.52% 3.79%(c)
Portfolio Turnover(d) 66.61% 75.20% 76.43% 30.61%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class B Shares commenced offering on January 14,
1994. (b) Not annualized. (c) Annualized. (d) Portfolio turnover is
calculated on the basis of the Fund as a whole without distinguishing among
the classes of shares issued.
<PAGE>
17
THE ONE GROUP(R)
TREASURY & AGENCY FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks a high level of current income by investing in U.S. Treasury and
other U.S. Agency obligations with a primary, but not exclusive, focus on issues
that produce income exempt from state income taxes.
[ICON] INVESTMENT STRATEGY
The Fund invests in U.S. Treasury and other U.S. Agency obligations including
fixed-income securities and mortgage-related securities. Normally, the Fund's
average weighted maturity will range between two and five years.
[ICON] PORTFOLIO SECURITIES
The Fund normally invests at least 65% of its total assets in U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S. Treasury
("Treasury Obligations") and securities issued or guaranteed by U.S. Government
agencies and instrumentalities. Treasury Obligations may include Separately
Traded Registered Interest and Principal Securities ("STRIPS"), Coupon Under
Book Entry Safekeeping ("CUBES"), and securities of other government-only
investment companies, including other funds of The One Group. The Fund also may
invest in government mortgage-backed securities and government adjustable rate
mortgage loans ("ARMs"), as well as engage in securities lending. For a list of
all the securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in fixed-income securities. The value of these securities will
change in response to interest rate changes and other factors. Before you
invest, please read "More About the Funds" and "Investment Risks."
[ICON] FUND MANAGEMENT
Scott Grimshaw has been a manager of the Fund since 1996. Mr. Grimshaw is also
head of Derivatives Research for Banc One Investment Advisors and Manager of the
fixed income portion of the Asset Allocation Fund, having served in that
position since November 1994. Mr. Grimshaw served as the Senior Investment
Officer in the Quantitative and Analysis Group for BANC ONE CORPORATION prior to
his current position. Mr. Grimshaw has been employed by BANC ONE CORPORATION or
its affiliates since 1988.
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C FIDUCIARY CLASS
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.00% none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none(2) 3.00% 1.00% none
Redemption Fees none none none none
Exchange Fees none none none none
ANNUAL OPERATING EXPENSES (3) (as a
percentage of average daily net assets)
Investment Advisory Fees (after fee
waiver) (4) .20% .20% .20% .20%
12b-1 Fees (after fee waiver) (5) .25% .75% .75% none
Other Expenses (6) .25% .25% .25% .25%
Total Fund Operating Expenses (after fee
waiver) (7) .70% 1.20% 1.20% .45%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Except for purchases of $1 million or more. Please see "Sales Charges."
(3) Expense information has been restated to reflect current fees.
(4) Without the fee waiver, Investment Advisory Fees would be .40% for all
classes of shares.
(5) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .35% for Class A
shares and 1.00% for Class B and Class C shares.
(6) Without the voluntary reduction, Other Expenses would be .36% for all
classes of shares.
(7) Without the voluntary reduction of fees, Total Operating Expenses would be
1.11% for Class A shares, 1.76% for Class B shares, 1.76% for Class C shares
and .76% for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 37 $ 52 $ 68 $114
Class A (without fee waivers) $ 41 $ 64 $ 89 $161
Class B $ 42 $ 58 $ 66 $119
Class B (without fee waivers) $ 48 $ 75 $ 95 $174
Class C $ 22 $ 38 $ 66 $145
Class C (without fee waivers) $ 28 $ 55 $ 95 $207
Fiduciary Class $ 5 $ 14 $ 25 $ 57
Fiduciary Class (without fee waivers) $ 8 $ 24 $ 42 $ 94
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 37 $ 52 $ 68 $114
Class A (without fee waivers) $ 41 $ 64 $ 89 $161
Class B $ 12 $ 38 $ 66 $119
Class B (without fee waivers) $ 18 $ 55 $ 95 $174
Class C $ 12 $ 38 $ 66 $145
Class C (without fee waivers) $ 18 $ 55 $ 95 $207
Fiduciary Class $ 5 $ 14 $ 25 $ 57
Fiduciary Class (without fee waivers) $ 8 $ 24 $ 42 $ 94
</TABLE>
Class B shares automatically convert to Class A shares after six (6) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
18
THE ONE GROUP(R) TREASURY & AGENCY FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years or since inception, if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
FIDUCIARY JUNE 30, 1997(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.28
Net realized and unrealized gains (losses) from investments and futures (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.27
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.99
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge)(b) 2.78%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 110,084
Ratio of expenses to average net assets(c) 0.45%
Ratio of net investment income to average net assets(c) 6.44%
Ratio of expenses to average net assets*(c) 0.78%
Ratio of net investment income to average net assets*(c) 6.11%
Portfolio Turnover (d) 54.44%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
CLASS A JUNE 30, 1997(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.29
Net realized and unrealized gains (losses) from investments and futures (0.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.27
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.29)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge)(b) 2.78%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 94
Ratio of expenses to average net assets(c) 0.71%
Ratio of net investment income to average net assets(c) 6.47%
Ratio of expenses to average net assets*(c) 1.15%
Ratio of net investment income to average net assets*(c) 6.03%
Portfolio Turnover(d) 54.44%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
19
THE ONE GROUP(R) TREASURY & AGENCY FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 20, 1997
THROUGH
CLASS B JUNE 30, 1997(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26
Net realized and unrealized gains (losses) from investments and futures (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.25
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.26)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.99
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (Excludes Sales Charge) (b) 2.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 80
Ratio of expenses to average net assets (c) 1.23%
Ratio of net investment income to average net assets (c) 6.30%
Ratio of expenses to average net assets* (c) 1.81%
Ratio of net investment income to average net assets* (c) 5.72%
Portfolio Turnover (d) 54.44%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized. (d) Portfolio turnover is calculated on the
basis of the Fund as a whole without distinguishing among the classes of
shares issued.
<PAGE>
MORE ABOUT THE FUNDS
20
WHEN THE PROSPECTUS REFERS TO "BONDS," WHAT TYPES OF INVESTMENTS ARE INCLUDED?
"Bonds" include debt instruments issued by the U.S. Treasury, U.S. Government
agencies, corporations, municipalities and foreign entities, mortgage-related
securities, asset-backed securities, stripped government securities and zero
coupon obligations.
PORTFOLIO QUALITY
- ----------------------------------------------------
The Funds only purchase securities that meet the following criteria.
DEBT SECURITIES
- - The Limited Volatility Bond Fund, the Government Bond Fund and the Treasury &
Agency Fund may invest in debt securities rated in any of the three highest
investment grade rating categories.
- - The Ultra Short-Term Income Fund and the Intermediate Bond Fund may invest in
debt securities rated in any of the four investment grade rating categories.
- - The Income Bond Fund may purchase securities in ANY rating category. Please
read "Special Risk Considerations" and "High Yield/Junk Bonds" for more
information about the Income Bond Fund.
PREFERRED STOCK
- - The Ultra Short-Term Income Fund and the Intermediate Bond Fund may only
invest in preferred stock rated in one of the four highest rating categories.
- - Preferred stock purchased by the Limited Volatility Bond Fund must be rated in
one of the three highest rating categories.
- - The Income Bond Fund may invest in preferred stock in ANY rating category.
MUNICIPAL SECURITIES
- - The Intermediate Bond Fund and the Ultra Short-Term Income Fund may only
invest in municipal bonds rated in one of the four highest rating categories.
- - Municipal bonds purchased by the Limited Volatility Bond Fund must be rated in
one of the three highest rating categories.
- - The Intermediate Bond Fund and the Ultra Short-Term Income Fund may only
invest in other municipal securities, such as tax-exempt commercial paper,
notes and variable rate demand obligations that are rated in the highest or
second highest rating categories. The Limited Volatility Bond Fund may invest
in such securities only if they are rated in the highest rating category.
- - The Income Bond Fund may invest in municipal securities rated in ANY category.
If the securities are unrated, Banc One Investment Advisors must determine that
they are of comparable quality to rated securities. Banc One Investment Advisors
will look at a security's rating at the time of investment. For more information
about ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 15% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually, changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other investments. These
include:
- - options, futures contracts, and options on futures contracts
- - mortgage-backed securities, including collateralized mortgage obligations and
Real Estate Mortgage Investment Conduits (CMOs and REMICs) and stripped
mortgage-backed securities (IOs and POs)
- - asset-backed securities
- - swap, cap and floor transactions
- - new financial products
- - structured instruments
- - inverse floating rate instruments
<PAGE>
21
Derivatives may be riskier than traditional investments.
LOWER RATED SECURITIES: The Intermediate Bond Fund, the Ultra Short-Term Income
Fund and the Income Bond Fund may invest in debt securities rated in the lowest
investment grade category. Securities in this rating category are considered to
have speculative characteristics. Changes in economic conditions or other
circumstances may have a greater effect on the ability of issuers of these
securities to make principal and interest payments than they do on issuers of
higher grade securities.
HIGH YIELD/JUNK BONDS: The Income Bond Fund may invest in debt securities rated
below investment grade. These securities are regarded as predominately
speculative. Lower rated securities generally provide a higher yield than higher
rated debt securities of similar maturity, but are subject to a greater degree
of risk that the issuer may not be able to make principal and interest payments.
Issuers of these securities may not be as strong financially as those issuing
higher rated securities. Such high yield issuers may include smaller, less
creditworthy companies or highly indebted firms.
The market value of high yield securities may fluctuate more than the market
value of higher rated securities, since high yield securities tend to reflect
short-term corporate and market developments to a greater extent than higher
rated securities. Thus, periods of economic uncertainty and change can result in
the increased volatility of market prices of high yield bonds and of the
investment company's net asset value. Additional risks of high yield securities
include limited liquidity and secondary market support. As a result, the prices
of high yield securities may decline rapidly in the event that a significant
number of holders decide to sell. Issuers of high yield securities also are more
vulnerable to real or perceived economic changes, political changes or adverse
developments specific to the issuer. A projection of an economic downturn, for
example, could cause the price of these securities to decline because a
recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. In the event of a
default, the Income Bond Fund would experience a decrease in income and a
decline in the market value of its investments. In addition, a long-term track
record on bond default rates, such as that for investment grade corporate bonds,
does not exist for the high yield market. It may be that future default rates on
high-yield bonds will be more widespread and higher than in the past, especially
during periods of deteriorating economic conditions.
Finally, the market prices of debt securities generally fluctuate with changes
in interest rates so that the Income Bond Fund's net asset value can be expected
to decrease as long-term interest rates rise and to increase as long-term rates
fall. The market prices of high yield securities structured as zero coupon or
pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically.
Credit quality in the high yield bond market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, the
Income Bond Fund will not rely solely on ratings issued by established credit
rating agencies, but will use such ratings in conjunction with Banc One
Investment Advisors' independent and ongoing review of credit quality.
Because investments in lower rated securities involve greater investment risk,
achievement of the Income Bond Fund's investment objectives may be more
dependent on Banc One Advisor's credit analysis than would be the case if the
Income Bond Fund were investing in higher rated securities. The Income Bond Fund
may seek to hedge investments through transactions in options, futures contracts
and related options. The Income Bond Fund also may use swap agreements to
further manage exposure to lower rated securities.
<PAGE>
HOW TO DO BUSINESS WITH THE ONE GROUP
22
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
- - Purchase requests received by The One Group Services Company before 4 p.m.
Eastern Standard Time ("EST"), will be effective that day.
- - Purchase orders may be canceled by the Fund's Custodian, State Street Bank and
Trust Company, if it does not receive "federal funds" by 4:00 p.m. EST (i) on
the business day after the order is placed if you are buying Fiduciary Class
shares, and (ii) on the third business day if you are purchasing Class A,
Class B or Class C shares.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - If you intend to hold your shares six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
The One Group Fund Direct IRA. The One Group offers a retirement plan and, in
1998, will offer an education plan. These plans allow participants to defer
taxes while their retirement and education savings grow. The education IRA
requires a minimum investment of $500. Call The One Group Services Company at
1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV") plus a sales charge, if any.
- - Each class of shares in each Fund has a different NAV. This is primarily
because each class has different distribution expenses.
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets allocable to a class (minus class expenses) by
the number of outstanding shares in that class.
- - A Fund's NAV changes every day. NAV is calculated each business day at 4:00
p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment for all Funds except the Treasury & Agency
Fund is $1,000 ($100 for employees of BANC ONE CORPORATION and its
affiliates). The minimum initial investment for the Treasury & Agency Fund
is $50,000.
- Subsequent investments for all Funds except the Treasury & Agency Fund must
be at least $100 ($25 for employees of BANC ONE CORPORATION and its
affiliates). Subsequent investments for the Treasury & Agency Fund must be
at least $1,000.
- You may purchase no more than $250,000 of Class B shares at one time.
- The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means
that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
Contributions to Fund Direct IRAs should be made payable to "State Street
Bank and Trust Company for the Benefit of (your name)."
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions
<PAGE>
23
from a Fund will not be permitted for ten (10) calendar days if purchases are
made by check or under the Systematic Investment Plan (see below).
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes, simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check made payable to "The One Group" to State Street Bank and
Trust Company (see address above), to authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes, except for The Treasury & Agency Fund. After your Account is established,
you may purchase additional Class A, Class B and Class C shares by making
automatic monthly investments from your bank account. The minimum initial
investment is still $1,000, but minimum automatic additions are only $25. The
One Group Services Company may waive these minimums. To establish a Systematic
Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CONVERSION FEATURE
- - Your Class B shares automatically convert to Class A shares. Class B shares of
the Intermediate Bond Fund, the Income Bond Fund, and the Government Bond Fund
automatically convert to Class A shares after eight years.
- - Class B shares of the Ultra Short-Term Income Fund, the Limited Volatility
Bond Fund, and the Treasury & Agency Fund automatically convert to Class A
shares after six years.
- - Conversion periods are measured from the end of the month in which the Class B
shares were purchased.
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - Because the share price of the Class A shares may be higher than that of the
Class B shares at the time of conversion, you may receive fewer Class A
shares; however, the dollar value will be the same.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together for
purposes of calculating the six and eight year time periods.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from: sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips, (including lodging at
luxury resorts), tickets to entertainment events, and merchandise.
<PAGE>
24
CLASS A SHARES
If you buy Class A shares of THE LIMITED VOLATILITY BOND FUND, THE ULTRA
SHORT-TERM INCOME FUND and THE TREASURY & AGENCY FUND, the following table shows
the amount of sales charge and the commissions paid to Shareholder Servicing
Agents.
<TABLE>
<CAPTION>
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 3.00% 3.09% 2.70%
$100,000-$249,999 2.50% 2.56% 2.18%
$250,000-$499,999 2.00% 2.04% 1.64%
$500,000-$999,999 1.50% 1.52% 1.20%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
If you buy Class A shares of THE INTERMEDIATE BOND FUND, THE INCOME BOND FUND,
and THE GOVERNMENT BOND FUND, the following table shows the amount of sales
charge and the commissions paid to Shareholder Servicing Agents.
<TABLE>
<CAPTION>
SALES CHARGE AS A %
OF THE OFFERING SALES CHARGE AS A % COMMISSION AS A %
AMOUNT OF PURCHASE PRICE OF YOUR INVESTMENT OF OFFERING PRICE
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.05%
$100,000-$249,999 3.50% 3.63% 3.05%
$250,000-$499,999 2.50% 2.56% 2.05%
$500,000-$999,999 2.00% 2.04% 1.60%
$1,000,000* 0.00% 0.00% 0.00%
</TABLE>
* If you purchase $1 million or more of Class A shares and are not assessed a
sales charge at the time of purchase, you will be charged the equivalent of
1% of the purchase price if you redeem any or all of the Class A shares
within one year of purchase.
CLASS B SHARES
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem Class B shares of the INTERMEDIATE BOND FUND, THE INCOME BOND FUND
OR THE GOVERNMENT BOND FUND before the sixth anniversary of purchase, you will
be assessed a Contingent Deferred Sales Charge ("CDSC") according to the
following schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 None
</TABLE>
<PAGE>
25
Or if you redeem Class B shares of the ULTRA SHORT-TERM INCOME FUND, THE LIMITED
VOLATILITY BOND FUND OR THE TREASURY & AGENCY FUND prior to the fourth
anniversary of purchase, you will be assessed a CDSC according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 3.00%
1-2 3.00%
2-3 2.00%
3-4 1.00%
more than 4 None
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase to Shareholder Servicing Agents who sell Class B shares of the
Intermediate Bond Fund, the Income Bond Fund and the Government Bond Fund.
Shareholder Servicing Agents who sell Class B shares of the Ultra Short-Term
Income Fund, the Limited Volatility Bond Fund and the Treasury & Agency Fund
receive a commission of 2.75% from The One Group Services Company.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
0-1 1.00%
After first year None
</TABLE>
Shareholder Servicing Agents selling Class C shares receive a commission of
1.00% of the original purchase price from The One Group Services Company.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the current market value or the original cost of the
shares, whichever is less.
- - A sales charge is not imposed on increases in NAV above the initial purchase
price, nor is a sales charge assessed on shares acquired through reinvestment
of dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE>
26
12B-1 FEES
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to Shareholder Servicing Agents that sell
shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .35% of the average daily net assets of
the Fund, which is currently being waived to .25%.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund, which is currently being waived to .90% for the
Intermediate Bond Fund, the Income Bond Fund, and the Government Bond Fund
and to .75% for the Limited Volatility Bond Fund, the Ultra Short-Term
Income Fund, and the Treasury & Agency Fund. This will cause expenses for
Class B and Class C shares to be higher and dividends to be lower than for
Class A shares.
3. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% of the average
daily net assets of the Class A shares of the Funds. In addition, The One
Group Services Company received 12b-1 fees totaling .90% of the average daily
net assets of the Class B shares of the Intermediate Bond Fund, the Income
Bond Fund, and the Government Bond Fund, and .75% for Class B shares of the
Limited Volatility Bond Fund, the Ultra Short-Term Income Fund, and the
Treasury & Agency Fund.
- - The One Group Services Company may pay
12b-1 fees to its affiliates and to Banc One Investment Advisors and its
affiliates (or any sub-advisor) for brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
REDUCING YOUR CLASS A SALES CHARGES
There are several ways you can reduce the sales charges you pay on Class A
shares:
1. Right of Accumulation: You may add the market value of any Class A, Class B
or Class C shares of a Fund (except a money market fund) that you (and your
spouse and minor children) already own to the amount of your next Class A
purchase for purposes of calculating the sales charge. An Intermediary also
may take advantage of this option.
2. Letter of Intent: With an initial investment of $2,000, you may purchase
Class A shares of one or more Funds over the next 13 months and pay the same
sales charge that you would have paid if all shares were purchased at once. A
percentage of your investment will be held in escrow until the full amount
covered by the Letter of Intent has been invested.
To take advantage of the accumulation privilege or letter of intent, complete
the appropriate section of your fund application, or contact your Shareholder
Servicing Agent. To determine if you are eligible for the accumulation
privilege, contact The One Group Services Company at 1-800-480-4111. These
programs may be terminated or amended at any time.
WAIVER OF THE CLASS A SALES CHARGE
No sales charge is imposed on Class A shares of the Funds if the shares were:
1. Bought with the reinvestment of dividends and capital gains distributions.
2. Acquired in exchange for other Fund shares if a comparable sales charge has
been paid for the exchanged shares.
3. Bought by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of:
- The One Group.
- BANC ONE CORPORATION and its subsidiaries and affiliates.
- The One Group Services Company and its subsidiaries and affiliates.
- State Street Bank and Trust Company and its subsidiaries and affiliates.
- Broker/dealers who have entered into dealer agreements with The One Group
and their subsidiaries and affiliates.
<PAGE>
27
- An investment sub-advisor of a fund of The One Group and such sub-advisor's
subsidiaries and affiliates.
4. Bought by:
- Affiliates of BANC ONE CORPORATION and certain accounts (other than IRA
Accounts) for which an Intermediary acts in a fiduciary, advisory, agency,
custodial or similar capacity.
- Accounts as to which a bank or broker-dealer charges an asset allocation
fee, provided the bank or broker-dealer has an agreement with The One Group
Services Company.
- Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
- Shareholder Servicing Agents who have a dealer arrangement with The One
Group Services Company, who place trades for their own accounts or for the
accounts of their clients and who charge a management, consulting or other
fee for their services, as well as clients of such Shareholder Servicing
Agents who place trades for their own accounts if the accounts are linked
to the master account of such Shareholder Servicing Agent.
5. Bought with proceeds from the sale of Fiduciary Class shares of a Fund of The
One Group or acquired in an exchange of Fiduciary Class shares of a Fund for
Class A shares of the same Fund, but only if the purchase is made within 60
days of the sale or distribution.
6. Bought with proceeds from the sale of shares of a mutual fund (other than a
fund of The One Group) for which a sales charge was paid, but only if the
purchase is made within 60 days of the sale or distribution.
7. Bought in an IRA with the proceeds of a distribution from an employee benefit
plan, but only if the purchase is made within 60 days of the sale or
distribution and, at the time of the distribution, the employee benefit plan
had plan assets invested in a Fund of The One Group.
8. Bought with assets of The One Group.
9. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
The waivers described in (5), (6) and (7) above will not continue indefinitely
and may be discontinued at any time without notice.
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and you
die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distribution from an IRA Account or other
qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance of the purchase. To see if you qualify, contact The One
Group Services Company at 1-800-480-4111 or your Shareholder Servicing Agent.
<PAGE>
28
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
The One Group does not charge a fee for this privilege. In addition, The One
Group may change the terms and conditions of your exchange privileges upon 60
days written notice.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 4:00 p.m., EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds in which you wish
to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4 p.m.
EST, will be effective that day.
<PAGE>
29
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or State Street Bank and Trust Company at the following
address:
The One Group
c/o State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
(800) 480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form, you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00
- - Your redemption proceeds will be paid within seven days after receipt of the
redemption request.
WHAT WILL MY SHARES BE WORTH?
- - If you own Class A and Fiduciary Class shares and the Fund receives your
redemption request by 4:00 p.m. EST, you will receive that day's NAV.
- - If you own Class B or Class C shares and the Fund receives your redemption
request by 4:00 p.m. EST, you will receive that day's NAV, minus the amount of
any applicable CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000 you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. It may not be in your best interest to buy additional Class A shares while
participating in a Systematic Withdrawal Plan. This is because Class A
shares have an up-front sales charge.
2. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
3. If you are age 70 1/2, you may elect to receive payments to the extent
that the payment represents a minimum required distribution from an IRA or
other qualifying retirement plan. These payments may be less than $100
each.
4. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be
<PAGE>
30
made by redeeming some of your shares. This will reduce the amount of your
investment.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE>
SHAREHOLDER INFORMATION
31
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940 to
control the Funds. This is because as of August 5, 1997, BANC ONE CORPORATION or
its affiliates possessed the power to vote substantially all of the Fiduciary
Class shares of the Funds.
On the same date, the following shareholders owned 25% or more of Class A or
Class B shares of the Fund. As a consequence, they are considered to be
controlling persons of these classes of the Fund listed below.
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
<S> <C> <C> <C>
Dean Witter FBO City of Montgomery Treasury & Agency Fund 83.57% Record
10101 Montgomery Road Class A
Church St Station -- P.O. Box 250
New York, NY 10013-0250
Dean Witter FBO Helen D Johnson Treasury & Agency Fund 31.02% Record
Rt 2 Box 118 Class B
Church St Station- P.O. Box 250
New York, NY 10277-0001
Dean Witter for the Benefit of Ultra Short-Term 25.34% Record
St. Joseph Hospital Income Fund
Attn: Rick West Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
</TABLE>
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on each business day. Dividends are
distributed on the first business day of each month. Capital gains, if any, for
all Funds are distributed at least annually. To maintain a relatively even rate
of distributions from the Treasury & Agency Fund, the monthly distributions for
that Fund may be fixed from time to time at rates consistent with Banc One
Investment Advisors' long-term earnings expectations.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B and Class C shares
have higher distribution expenses.
The Funds pay dividends and distributions on a per-share basis. This means that
the value of your shares will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or the
distribution of capital gains, you will pay the full price for the shares and
receive some portion of the price back as a taxable dividend or distribution.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
<PAGE>
32
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares generally will produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
(including net short-term capital gains) on at least an annual basis. Dividends
you receive from a Fund, whether reinvested or received in cash, will be taxable
to you. Dividends from a Fund's net investment income will be taxable as
ordinary income and dividends from a Fund's long-term capital gains will be
taxable to you as such, regardless of how long you have held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans will not be taxable.
However, if shares are held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received the shares as a distribution from
a retirement plan, the distributions will be taxable to the plan or individual
as described in "Taxation of Distributions." If you are considering purchasing
shares with qualified retirement plan assets, you should consult your tax
advisor for a more complete explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In September and March you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUNDS
33
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Each Fund
described in this prospectus is diversified. Six of the Funds are described in
this prospectus; the other Funds are described in separate prospectuses. Each
Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable Banc One Investment Advisors makes the
day-to-day investment decisions for the Funds and continuously and retirement
accounts. As of June 30, 1997, Banc One Investment Advisors, an indirect,
wholly-owned subsidiary of BANC ONE CORPORATION, managed over $47 billion in
assets.
For the fiscal year ended June 30, 1997, the Funds paid investment advisory
fees at the following rates:
<TABLE>
<CAPTION>
ANNUAL RATE AS PERCENTAGE
FUND NAME OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
The One Group(R) Intermediate Bond Fund .33%
The One Group(R) Income Bond Fund .40%
The One Group(R) Government Bond Fund .41%
The One Group(R) Ultra Short-Term Income
Fund .20%
The One Group(R) Limited Volatility Bond
Fund .30%
The One Group(R) Treasury & Agency Fund .20%
</TABLE>
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory reporting and
compliances. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations.
Banc One Investment Advisors, the Sub-Administrator, provides office space,
equipment and facilities, as well as legal and regulatory support.
THE TRANSFER AGENT, CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500, or
your Shareholder Servicing Agent if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust Company, Bank One Trust Company, N.A. is paid a fee paid by the Funds
for this service.
<PAGE>
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
34
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Intermediate Bond Fund 1
The One Group(R) Income Bond Fund 2
The One Group(R) Government Bond Fund 3
The One Group(R) Ultra Short-Term Income Fund 4
The One Group(R) Limited Volatility Bond Fund 5
The One Group(R) Treasury & Agency Fund 6
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-6 Market
CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-5 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-6 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1, 2, 4, 5 Credit
maturity. Market
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1, 2, 4, 5 Market
exchange for the deposit of funds. Liquidity
Credit
REPURCHASE AGREEMENTS: The purchase of a security and the 1-5 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-5 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-6 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-5 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1, 2, 4-6 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. The
Treasury & Agency Fund will only purchase shares of investment
companies which invest exclusively in U.S. Treasury and other
U.S. Agency obligations. Banc One Investment Advisors will waive
certain fees when investing in funds for which it serves as
investment advisor.
CONVERTIBLE SECURITIES: Bonds or preferred stock that convert to 1, 2, 4 Market
common stock. Credit
CALL AND PUT OPTIONS: A call option gives the buyer the right to 1-4 Management
buy, and obligates the seller of the option to sell, a security Liquidity
at a specified price. A put option gives the buyer the right to Credit
sell, and obligates the seller of the option to buy, a security Market
at a specified price. The Funds will sell covered call and Leverage
secured put options.
</TABLE>
<PAGE>
35
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
FUTURES AND RELATED OPTIONS: A contract providing for the future 1-4 Management
sale and purchase of a specified amount of a specified security, Market
class of securities, or an index at a specified time in the Credit
future and at a specified price. Liquidity
Leverage
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled investment 1-6 Liquidity
vehicles which invest primarily in income producing real estate Management
or real estate related loans or interest. Market
Pre-payment
Tax
Regulatory
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1, 2, 4, 5 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1, 2, 4, 5 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
FOREIGN SECURITIES: Debt issued by foreign governments, foreign 1, 2, 4, 5 Market
corporations, domestic subsidiaries of foreign corporations, and Political
foreign banks, as well as commercial paper of foreign issuers Liquidity
and obligations of foreign banks and overseas branches of U.S. Foreign Investment
banks and of foreign issuers and supranational entities.
RESTRICTED SECURITIES: Securities not registered under the 1, 2, 4, 5 Liquidity
Securities Act of 1933, such privately placed commercial paper Market
and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-6 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to the Fund on demand. The Liquidity
Treasury & Agency Fund will invest in these securities only if
they are issued by the U.S. Treasury or another U.S. Government
Agency.
WARRANTS: Securities, typically issued with preferred stock or 2 Market
bonds that give the holder the right to buy a proportionate Credit
amount of common stock at a specified price.
PREFERRED STOCK: A class of stock that generally pays a dividend 1, 2, 4, 5 Market
at a specified rate and has preference over common stock in the
payment of dividends and in liquidation.
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1-6 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs") and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
CORPORATE DEBT SECURITIES: Corporate bonds and non-convertible 1, 2, 4, 5 Market
debt securities. Credit
DEMAND FEATURES: Securities that are subject to puts and standby 1, 2, 4, 5 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
ASSET-BACKED SECURITIES: Securities secured by company 1, 2, 4, 5 Pre-payment
receivables, home equity loans truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets.
MORTGAGE DOLLAR ROLLS: A transaction in which a Fund sells 1-5 Pre-payment
securities for delivery in a current month and simultaneously Market
contracts with the same party to repurchase similar but not Regulatory
identical securities on a specified future date.
ADJUSTABLE RATE MORTGAGE LOANS ("ARMS"): Loans in a mortgage 1-6 Pre-payment
pool which provide for a fixed initial mortgage interest rate Market
for a specified period of time, after which the rate may be Credit
subject to periodic adjustments. The Treasury & Agency Fund will Regulatory
only buy Government ARMs.
SWAPS, CAPS AND FLOORS: A Fund may enter into these transactions 1-4 Management
to manage its exposure to changing interest rates and other Credit
factors. Swaps involve an exchange of obligations by two Liquidity
parties. Caps and floors entitle a purchaser to a principal Market
amount from the seller of the cap or floor to the extent that a
specified index exceeds or falls below a predetermined interest
rate or amount.
</TABLE>
<PAGE>
36
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
NEW FINANCIAL PRODUCTS: New options and futures contracts and 1-4 Management
other financial products continue to be developed and the Fund Credit
may invest in such options, contracts and products. Market
Liquidity
STRUCTURED INSTRUMENTS: Debt securities issued by agencies and 1-4 Market
instrumentalities of the U.S. government, banks, municipalities, Liquidity
corporations and other businesses whose interest and/or Management
principal payments are indexed to foreign currency exchange Credit
rates, interest rates, or one or more other references indices. Foreign Investment
MUNICIPAL SECURITIES: Securities issued by a state or political 1, 2, 4, 5 Credit
subdivision to obtain funds for various public purposes. Political
Municipal securities include private activity bonds and Tax
industrial development bonds, as well as General Obligation Market
Notes, Anticipation Notes, Bond Tax Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
ZERO COUPON DEBT SECURITIES: Bonds and other debt that pay no 1, 2, 4, 5 Credit
interest, but are issued at a discount from their value at Market
maturity. When held to maturity, their entire return equals the
difference between their issue price and their maturity value.
ZERO-FIXED-COUPON DEBT SECURITIES: Zero coupon debt securities 1, 2, 4, 5 Credit
which convert on a specified date to interest bearing debt Market
securities.
STRIPPED MORTGAGE-BACKED SECURITIES: Derivative multi-class 1-4 Pre-payment
mortgage securities which are usually structured with two Market
classes of shares that receive different proportions of the Credit
interest and principal from a pool of mortgage assets. These Regulatory
include IOs and POs. The Funds only invest in Stripped
Mortgage-Backed Securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
INVERSE FLOATING RATE INSTRUMENTS: Leveraged floating rate debt 1-4 Market
instruments with interest rates that reset in the opposite Leverage
direction from the market rate of interest to which the inverse Credit
floater is indexed.
LOAN PARTICIPATIONS AND ASSIGNMENTS: Participations in, or 1, 2, 4, 5 Credit
assignments of all or a portion of loans to corporations or to Political
governments, including governments of the less developed Liquidity
countries ("LDC's"). Foreign Investment
Market
FIXED RATE MORTGAGE LOANS: Investments in fixed rate mortgage 1, 2, 4, 5 Credit
loans or mortgage pools which bear simple interest at fixed Pre-payment
annual rates and have original terms ranging from 5 to 40 years. Regulatory
Market
SHORT-TERM FUNDING AGREEMENTS: Investments in short-term funding 1, 2, 4, 5 Credit
agreements issued by banks and highly rated U.S. insurance Liquidity
companies such as Guaranteed Investment Contracts ("GIC's") and Market
Bank Investment Contracts ("BIC's").
</TABLE>
<PAGE>
37
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risk than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices (such as
borrowing) that multiply small index or market movements into large changes in
value. Leverage is often associated with investments in derivatives, but also
may be embedded directly in the characteristics of other securities.
- HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching between
the derivative and underlying security, and there can be no assurance that
a Fund's hedging transactions will be effective.
- SPECULATIVE. To the extent that a derivative is not used as a hedge, the
fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that would normally prevail in
the market. The seller may have to lower the price, sell other securities
instead or forego an investment opportunity, any of which could have a
negative effect on fund management or performance. This includes the risk of
missing out on an investment opportunity because the assets necessary to take
advantage of it are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There is also the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable. This is particularly relevant to investments in
foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. Associated with higher transaction costs, delayed
settlements, currency controls and adverse economic developments. This
includes the risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment. Adverse
changes in exchange rates may erode or reverse any gains produced by foreign
currency denominated investments and may widen any losses. Exchange rate
volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in
<PAGE>
38
greater price and yield volatility. When mortgage and other obligations are
pre-paid, a Fund may have to reinvest in securities with a lower yield.
Further, with early prepayment, a Fund may fail to recover any premium paid,
resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. In addition to
the fundamental policies mentioned earlier, the following fundamental policies
apply to each Fund as specified. The full text of the fundamental policies can
be found in the Statement of Additional Information.
Each Fund may not:
1. Purchase the securities of an issuer if as a result more than 5% of its total
assets would be invested in the securities of that issuer or the Fund would
own more than 10% of the outstanding voting securities of that issuer. This
does not include securities issued or guaranteed by the United States, its
agencies or instrumentalities, securities of registered investment companies,
and repurchase agreements involving these securities. This restriction
applies with respect to 75% of a Fund's total assets.
2. Concentrate their investment in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities and repurchase
agreements involving such securities.
3. Make loans, except that a Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending.
Additional investment policies are set forth in the Statement of Additional
Information.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes as determined by Banc One Investment Advisors,
the Funds may invest up to 100% of their assets in money market instruments, and
may hold a portion of their assets in cash for liquidity purposes. While the
Funds are engaged in a temporary defensive position, they will not be pursuing
their investment objectives. Therefore, the Funds will pursue a temporary
defensive position only when market conditions warrant.
PORTFOLIO TURNOVER
Portfolio turnover may vary greatly from year to year, as well as within a
particular year.
Higher portfolio turnover rates will likely result in higher transaction costs
to the Funds and may result in additional tax consequences to you. The portfolio
turnover rate for each Fund for the fiscal year ended June 30, 1997 is shown on
the Financial Highlights.
<PAGE>
APPENDIX
39
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE>
40
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF MUNICIPAL BOND RATINGS
(including foreign, mortgage and asset-backed securities)
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligations.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligations.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the
<PAGE>
41
obligation. In the event of adverse business, financial, or economic
conditions, they are not likely to have the capacity to meet its
financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & Short-term municipal securities rated MIG1 or VMIG1 are of the best
VMIG1 quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & These Short-term municipal securities are of high quality. Margins of
VMIG2 protection are ample although not so large as in the preceding group.
MIG3 & Favorable quality. All security elements are accounted for, but the
VMIG3 undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
<PAGE>
42
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE>
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-122
<PAGE>
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
MONEY MARKET FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) PRIME MONEY MARKET FUND
THE ONE GROUP(R) MUNICIPAL MONEY MARKET FUND
THE ONE GROUP(R) OHIO MUNICIPAL MONEY MARKET FUND
THE ONE GROUP(R) U.S. TREASURY SECURITIES MONEY MARKET FUND
This prospectus describes four money market mutual funds with a variety of
investment objectives, including current income, interest
income exempt from Federal Income Tax, and interest income exempt from
Federal Income Tax and Ohio Personal Income Tax.
The information in this prospectus is important. Please read it carefully
before you invest, and save it for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: o ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; o ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; o
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THE ONE GROUP OHIO MUNICIPAL MONEY MARKET FUND MAY INVEST A
SIGNIFICANT PORTION OF ITS ASSETS IN THE SECURITIES OF A SINGLE
ISSUER. AS A RESULT, AN INVESTMENT IN THE FUND MAY ENTAIL MORE RISKS
THAN AN INVESTMENT IN ANOTHER TYPE OF MONEY MARKET FUND.
THERE IS NO ASSURANCE THAT THE FUNDS WILL MEET THEIR
INVESTMENT OBJECTIVES OR BE ABLE TO MAINTAIN A NET
ASSET VALUE OF $1.00 PER SHARE ON A CONTINUOUS BASIS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS.............................. 1
ABOUT THE FUNDS........................................... 2
The One Group(R) Prime Money Market Fund............... 2
The One Group(R) Municipal Money Market Fund........... 5
The One Group(R) Ohio Municipal Money Market Fund...... 7
The One Group(R) U.S. Treasury Securities Money Market
Fund................................................. 9
MORE ABOUT THE FUNDS...................................... 12
HOW TO DO BUSINESS WITH THE ONE GROUP..................... 13
Purchasing Fund Shares................................. 13
Sales Charges.......................................... 15
Sales Charge Reductions and Waivers.................... 16
Exchanging Fund Shares................................. 16
Redeeming Fund Shares.................................. 17
SHAREHOLDER INFORMATION................................... 20
Voting Rights.......................................... 20
Dividend Policies...................................... 20
Tax Treatment of the Funds............................. 21
Tax Treatment of Shareholders.......................... 21
Shareholder Inquiries.................................. 22
ORGANIZATION AND MANAGEMENT OF THE FUNDS.................. 23
The Funds.............................................. 23
The Board of Trustees.................................. 23
The Advisor............................................ 23
The Distributor........................................ 23
The Administrator and Sub-Administrator................ 23
The Transfer Agent, Custodian and Sub-Custodian........ 23
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES................................................ 24
Investment Practices................................... 24
Investment Risks....................................... 26
Investment Policies.................................... 27
APPENDIX: DESCRIPTION OF RATINGS.......................... 29
</TABLE>
<PAGE>
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP MONEY MARKET FUNDS?
The Funds are designed for a variety of investment objectives,
including current income, interest income exempt from Federal
Income Tax, and interest income exempt from Federal Income Tax
and Ohio Personal Income Tax. Each Fund pursues a different
objective and involves different risks. All of the Funds will
use their best efforts to maintain a constant net asset value
of $1.00 per share, although there is no guarantee that the
Funds will be able to do so. Please read about each Fund
before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds will invest only in U.S. dollar-denominated
securities, will maintain an average maturity on a dollar-
weighted basis of 90 days or less, and will acquire only
"eligible securities" that present minimal credit risks and
have a maturity of 397 days or less. The Funds intend to
comply with Rule 2a-7 under the Investment Company Act of
1940.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
The Funds invest in securities that are backed by "credit
enhancements" such as letters of credit. The value of
investments in the Funds could decrease if the credit quality
of the credit enhancement provider declines. The Prime Money
Market Fund invests in mortgage-related securities which have
significantly greater price and yield volatility than
traditional fixed income securities. In addition, the Prime
Money Market Fund invests in U.S. dollar denominated foreign
securities which may expose the Fund to risks that are
different from investments in U.S. Securities. The Ohio
Municipal Money Market Fund is a nondiversified fund which
exposes investors to special risks. For more information about
risks, please read "More About the Funds" and "Investment
Risks."
WHAT CLASSES OF SHARES ARE AVAILABLE?
Each Fund currently offers Class A, Class C and Fiduciary
Class shares. Class A and Class C shares are offered to the
general public. Fiduciary Class shares are offered to
institutional investors, including affiliates of BANC ONE
CORPORATION and any bank, depository institution, insurance
company, pension plan or other organization authorized to act
in fiduciary, advisory, agency, custodial or similar
capacities. Fiduciary Class shares are not available to
Individual Retirement Accounts ("IRA").
The Prime Money Market Fund and the U.S. Treasury Securities
Money Market Fund also offer Class B and Service Class shares.
Class B shares are offered to the general public. Service
Class shares are offered to entities purchasing such shares on
behalf of investors requiring additional administrative or
accounting services such as sweep processing. The section
called "How To Do Business With The One Group" will provide
more information.
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Class C Shares are not available
for purchase in all of the Funds. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed periodically. Any capital gains are distributed at
least annually. Distributions are paid in additional shares of
the same class unless you elect to take the payment in cash.
For a more detailed discussion of dividends, see "Dividend
Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE>
2
THE ONE GROUP(R)
PRIME MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified money market fund that seeks current income with
liquidity and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund invests exclusively in high quality money market instruments. These
instruments include U.S. Treasury obligations, obligations issued or guaranteed
by U.S. agencies or instrumentalities, mortgage-backed securities, commercial
paper, bank obligations and deposit notes. The Fund also may invest in
commercial paper issued by foreign issuers. The Fund may invest up to 10% of its
net assets in illiquid investments such as certain restricted securities and
private placements. The Fund also engages in securities lending. For a list of
all of the securities in which the Fund may invest, please read "Investment
Policies."
[ICON] RISK CONSIDERATIONS
The Fund invests in securities that are backed by "credit enhancements" such as
letters of credit. The value of your investment in the Fund could decrease if
the value of the securities in the portfolio decreases in response to declining
credit quality of a credit enhancement provider. The fund also invests in U.S.
dollar denominated foreign investments which involve risks that are different
from investments in U.S. companies. In addition, the Fund invests in
mortgage-related securities which have significantly greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SERVICE FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C CLASS CLASS
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) none none none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none 5.00% 1.00% none none
Redemption Fees none none none none none
Exchange Fees none none none none none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily
net assets)
Investment Advisory Fees (after fee
waiver) (3) .30% .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% .55% none
Other Expenses .20% .20% .20% .20% .20%
Total Fund Operating Expenses (after fee
waivers) (5) .75% 1.50% 1.50% 1.05% .50%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .35% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A, Class B, Class C and Service Class
shareholders may pay more than the equivalent of the maximum front-end sales
charges permitted under the rules of the National Association of Securities
Dealers. Without the voluntary waiver of fees, 12b-1 fees would be .75% for
Service Class shares.
(5) Without a voluntary reduction of Investment Advisory and 12b-1 fees, Total
Operating Expenses would be .80% for Class A shares, 1.55% for Class B
shares, 1.55% for Class C shares, 1.30% for Service Class shares and .55%
for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 8 $ 26 $ 44 $ 99
Class B $ 65 $ 77 $ 102 $159
Class B (without fee waiver) $ 66 $ 79 $ 104 $164
Class C $ 25 $ 47 $ 82 $179
Class C (without fee waiver) $ 26 $ 49 $ 84 $185
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 69
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 8 $ 26 $ 44 $ 99
Class B $ 15 $ 47 $ 82 $159
Class B (without fee waiver) $ 16 $ 49 $ 84 $164
Class C $ 15 $ 47 $ 82 $179
Class C (without fee waiver) $ 16 $ 49 $ 84 $185
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 69
</TABLE>
Class B shares automatically convert to Class A shares after eight years.
Therefore, the "10 years" examples above reflect this conversion.
Because of the nature of the shares, shareholders are not expected to remain in
Service Class shares for more than a very limited period of time. However, a
shareholder investing in the Service Class shares on a continual basis for a
period of one month would pay $1, three months would pay $3, one year would pay
$11. Without the voluntary fee reduction, that shareholder would pay $1 after
one month, $3 after three months, and $13 after one year.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
3
THE ONE GROUP(R) PRIME MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.051 0.054 0.052 0.031 0.030 0.045
- ----------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.051) (0.054) (0.052) (0.031) (0.030) (0.045)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 5.20% 5.49% 5.34% 3.19% 3.09% 4.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 2,563,768 $ 2,186,562 $ 1,965,416 $ 1,600,876 $ 979,275 $ 946,504
Ratio of expenses to average net assets 0.48% 0.44% 0.41% 0.40% 0.44% 0.59%
Ratio of net investment income to
average net assets 5.08% 5.34% 5.27% 3.18% 3.05% 4.49%
Ratio of expenses to average net assets* 0.56% 0.55% 0.57% 0.59% 0.62% 0.76%
Ratio of net investment income average
net assets* 5.00% 5.23% 5.12% 2.99% 2.87% 4.32%
<CAPTION>
---------------------------
FIDUCIARY 1991 1990
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
- -----------------------------------------------------------------------
Investment Activities
Net investment income 0.069 0.080
- -----------------------------------------------------------------------
Less: Distributions
Net investment income (0.069) (0.080)
- -----------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
- -----------------------------------------------------------------------
Total Return 7.12% 8.33%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 760,726 $ 562,680
Ratio of expenses to average net assets 0.68% 0.64%
Ratio of net investment income to
average net assets 6.86% 8.02%
Ratio of expenses to average net assets* 0.83% 0.79%
Ratio of net investment income average
net assets* 6.71% 7.87%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.048 0.051 0.050 0.027 0.030 0.013
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.048) (0.051) (0.050) (0.027) (0.030) (0.013)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 4.94% 5.22% 5.08% 2.93% 2.83% 3.51%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 332,646 $ 315,374 $ 201,968 $ 74,759 $ 61,106 $ 511
Ratio of expenses to average net assets 0.73% 0.69% 0.67% 0.65% 0.65% 0.79%(b)
Ratio of net investment income to
average net assets 4.83% 5.09% 5.02% 2.92% 2.67% 3.40%(b)
Ratio of expenses to average net
assets* 0.91% 0.90% 0.92% 0.90% 0.99% 0.94%(b)
Ratio of net investment income to
average net assets* 4.65% 4.88% 4.77% 2.67% 2.33% 3.25%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A Shares commenced offering on February 18,
1992. (b) Annualized.
<PAGE>
4
THE ONE GROUP(R) PRIME MONEY MARKET FUND FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 21,
1996 TO
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.026
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.026)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 618
Ratio of expenses to average net assets 1.51%(c)
Ratio of net investment income to average net assets 4.16%(c)
Ratio of expenses to average net assets* 1.59%(c)
Ratio of net investment income to average net assets* 4.08%(c)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Not
annualized. (c) Annualized.
<PAGE>
5
THE ONE GROUP(R)
MUNICIPAL MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified fund that seeks as high a level of current interest
income exempt from Federal income tax as is consistent with capital preservation
and stability of principal.
[ICON] PORTFOLIO SECURITIES
As a matter of fundamental policy, the Fund will invest at least 80% of its
total assets in municipal securities. These are securities issued by or on
behalf of the states, territories and possessions of the United States,
including the District of Columbia, and their political subdivisions, agencies,
instrumentalities and authorities. These municipal securities produce interest
that, in the opinion of bond counsel for the issuer, is exempt from Federal
income tax. However, the Fund may invest as much as 100% of its assets in
municipal securities that produce income that is subject to the Federal
alternative minimum tax. If you are subject to the Federal alternative minimum
tax, please read the section of this prospectus entitled "Tax Treatment of
Shareholders" before you invest. The Fund also may invest up to 20% of its total
assets in other types of securities, such as taxable money market instruments,
including repurchase agreements. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
The Fund invests in securities that are backed by "credit enhancements" such as
letters of credit. The value of your investment in the Fund could decrease if
the value of the securities in the portfolio decreases in response to declining
credit quality of a credit enhancement provider. In addition, the Fund invests
in mortgage-related securities which have significantly greater price and yield
volatility than traditional fixed-income securities. Before you invest, please
read "More Information about the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS C FIDUCIARY CLASS
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) none none none
Maximum Contingent Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) none 1.00% none
Redemption Fees none none none
Exchange Fees none none none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waiver) (3) .25% .25% .25%
12b-1 Fees (4) .25% 1.00% none
Other Expenses .25% .25% .25%
Total Fund Operating Expenses (after fee
waiver) (5) .75% 1.50% .50%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .35% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A and Class C shareholders may pay more
than the equivalent of the maximum front-end sales charges permitted under
the rules of the National Association of Securities Dealers.
(5) Total Operating Expenses have been revised to reflect fee waivers. Without a
voluntary reduction of Investment Advisory fees, Total Operating Expenses
would be .85% for Class A shares, 1.60% for Class C shares and .60% for
Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 9 $ 27 $ 47 $105
Class C $ 25 $ 47 $ 82 $179
Class C (without fee waiver) $ 26 $ 50 $ 87 $190
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 19 $ 33 $ 75
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 93
Class A (without fee waiver) $ 9 $ 27 $ 47 $105
Class C $ 15 $ 47 $ 82 $179
Class C (without fee waiver) $ 16 $ 50 $ 87 $190
Fiduciary Class $ 5 $ 16 $ 28 $ 63
Fiduciary Class (without fee waiver) $ 6 $ 19 $ 33 $ 75
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
6
THE ONE GROUP(R) MUNICIPAL MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.031 0.033 0.032 0.021 0.021 0.034 0.050 0.057
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.031) (0.033) (0.032) (0.021) (0.021) (0.034) (0.050) (0.057)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 3.19% 3.34% 3.28% 2.16% 2.15% 3.47% 5.17% 5.82%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000) $ 467,420 $ 459,807 $ 437,743 $ 352,702 $ 175,277 $ 170,961 $ 166,200 $ 145,712
Ratio of expenses to
average net assets 0.43% 0.41% 0.41% 0.40% 0.46% 0.43% 0.32% 0.36%
Ratio of net investment
income to average net
assets 3.16% 3.29% 3.26% 2.13% 2.12% 3.41% 5.04% 5.66%
Ratio of expenses to
average net assets* 0.55% 0.59% 0.59% 0.60% 0.66% 0.80% 0.67% 0.76%
Ratio of net investment
income to average net
assets* 3.04% 3.11% 3.08% 1.93% 1.92% 3.04% 4.69% 5.26%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.029 0.030 0.030 0.021 0.019 0.009
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.029) (0.030) (0.030) (0.021) (0.019) (0.009)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.97% 3.08% 3.02% 1.96% 1.89% 2.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 48,185 $ 50,720 $ 56,518 $ 41,595 $ 18,932 $ 122
Ratio of expenses to average net assets 0.68% 0.66% 0.66% 0.65% 0.66% 0.84%(b)
Ratio of net investment income to average net
assets 2.91% 3.04% 3.01% 1.92% 1.82% 2.44%(b)
Ratio of expenses to average net assets* 0.90% 0.94% 0.94% 0.91% 1.01% 0.99%(b)
Ratio of net investment income to average net
assets* 2.69% 2.76% 2.73% 1.66% 1.47% 2.29%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Class A shares commenced offering on February 18,
1992. (b) Annualized.
<PAGE>
7
THE ONE GROUP(R)
OHIO MUNICIPAL MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a non-diversified money market fund that seeks as high a level of
current interest income exempt from Federal income tax and Ohio personal income
tax as is consistent with capital preservation and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund will invest at least 80% of its total assets in Ohio municipal
securities. These are securities issued by or on behalf of the State of Ohio and
its political subdivisions, agencies, instrumentalities and authorities. Ohio
municipal securities produce interest that, in the opinion of bond counsel for
the issuer, is exempt from both Federal income tax and Ohio personal income tax.
The Fund also may invest up to 20% of its total assets in non-Ohio municipal
securities, i.e., municipal securities issued by states, territories and
possessions of the United States, including the District of Columbia, other than
Ohio, as well as their political subdivisions, agencies, instrumentalities and
authorities that produce interest exempt from Federal income tax. The Fund has
the ability to invest as much as 100% of its assets in non-Ohio municipal
securities that produce income that is subject to the Federal alternative
minimum tax. If you are subject to the Federal alternative minimum tax, please
read the section of this prospectus entitled "Tax Treatment of Shareholders"
before you invest. Finally, the Fund also may invest up to 20% of its total
assets in other types of securities, such as taxable money market instruments,
including repurchase agreements. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
[ICON] RISK CONSIDERATIONS
Because of the relatively small number of issuers of Ohio municipal securities,
the Fund's performance is effected to a greater extent by the success of one or
a few issuers than is the performance of a diversified fund. In addition, the
Fund invests in mortgage-related securities which have significantly greater
price and yield volatility than traditional fixed-income securities. Before you
invest, please read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS C FIDUCIARY CLASS
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) none none none
Maximum Contingent Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) none 1.00% none
Redemption Fees none none none
Exchange Fees none none none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily net assets)
Investment Advisory Fees (after fee waiver) (3) .25% .25% .25%
12b-1 Fees(4) .25% 1.00% none
Other Expenses (after fee waiver) (5) .24% .24% .24%
Total Fund Operating Expenses (after fee
waivers) (6) .74% 1.49% .49%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .30% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A and Class C shareholders may pay more
than the equivalent of the maximum front-end sales charges permitted under
the rules of the National Association of Securities Dealers.
(5) Without a fee waiver, other expenses would be .29% for all classes of
shares.
(6) Total Operating Expenses have been revised to reflect fee waivers. Without a
voluntary reduction of Investment Advisory and 12b-1 fees, Total Operating
Expenses would be .84% for Class A shares, 1.59% for Class C shares and .59%
for Fiduciary Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 41 $ 92
Class A (without fee waivers) $ 9 $ 27 $ 47 $104
Class C $ 25 $ 47 $ 81 $178
Class C (without fee waivers) $ 26 $ 50 $ 87 $189
Fiduciary Class $ 5 $ 16 $ 27 $ 62
Fiduciary Class (without fee waivers) $ 6 $ 19 $ 33 $ 74
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 41 $ 92
Class A (without fee waivers) $ 9 $ 27 $ 47 $104
Class C $ 15 $ 47 $ 81 $178
Class C (without fee waiver) $ 16 $ 50 $ 87 $189
Fiduciary Class $ 5 $ 16 $ 27 $ 62
Fiduciary Class (without fee waivers) $ 6 $ 19 $ 33 $ 74
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
8
THE ONE GROUP(R) OHIO MUNICIPAL MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, JUNE 9,
1993 TO
------------------------------------------------ JUNE 30,
FIDUCIARY 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.032 0.033 0.032 0.022 0.013
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.032) (0.032) (0.032) (0.022) (0.013)
In excess of net investment income -- (0.001) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.032) (0.033) (0.032) (0.022) (0.013)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 3.22% 3.34% 3.20% 2.25% 2.14%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 56,442 $ 55,915 $ 51,806 $ 55,375 $ 3,500
Ratio of expenses to average net assets 0.40% 0.41% 0.41% 0.34% 0.08%(b)
Ratio of net investment income to average net
assets 3.17% 3.19% 3.13% 2.29% 2.07%(b)
Ratio of expenses to average net assets* 0.53% 0.71% 0.60% 0.57% 0.51%(b)
Ratio of net investment income to average net
assets* 3.04% 2.89% 2.94% 2.06% 1.64%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, JANUARY 26,
1993 TO
------------------------------------------------ JUNE 30,
CLASS A 1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.029 0.030 0.029 0.021 0.009
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.029) (0.029) (0.029) (0.021) (0.009)
In excess of net investment income -- (0.001) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.029) (0.030) (0.029) (0.021) (0.009)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 2.96% 3.08% 2.98% 2.09% 2.34%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 30,479 $ 41,132 $ 35,790 $ 37,356 $ 25,125
Ratio of expenses to average net assets 0.65% 0.66% 0.63% 0.44% 0.26%(b)
Ratio of net investment income to average net
assets 2.90% 2.94% 2.91% 2.05% 2.03%(b)
Ratio of expenses to average net assets* 0.88% 1.06% 0.95% 0.94% 0.92%(b)
Ratio of net investment income to average net
assets* 2.67% 2.54% 2.59% 1.55% 1.37%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
<PAGE>
9
THE ONE GROUP(R)
U.S. TREASURY SECURITIES MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund is a diversified money market fund that seeks current income with
liquidity and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund will invest exclusively in short-term U.S. Treasury obligations
including repurchase agreements collateralized by such Treasury obligations and
when-issued securities. The Fund also engages in securities lending. For a list
of all the securities in which the Fund may invest, please read "Investment
Practices."
[ICON] RISK CONSIDERATIONS
Before you invest, please read "More About the Funds" and "Investment Risks."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SERVICE FIDUCIARY
SHAREHOLDER TRANSACTION EXPENSES (1) CLASS A CLASS B CLASS C CLASS CLASS
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) none none none none none
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) none 5.00% 1.00% none none
Redemption Fees none none none none none
Exchange Fees none none none none none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily
net assets)
Investment Advisory Fees (after fee
waiver) (3) .30% .30% .30% .30% .30%
12b-1 Fees (after fee waiver) (4) .25% 1.00% 1.00% .55% none
Other Expenses .21% .21% .21% .21% .21%
Total Fund Operating Expenses
(after fee waivers) (5) .76% 1.51% 1.51% 1.06% .51%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
(3) Without a fee waiver, Investment Advisory Fees would be .35% for all classes
of shares.
(4) Due to 12b-1 fees, long-term Class A, Class B and Class C shareholders may
pay more than the equivalent of the maximum front-end sales charges
permitted under the rules of the National Association of Securities Dealers.
Without the voluntary waiver of fees, 12b-1 fees would be .75% for Service
Class shares.
(5) Total Operating Expenses have been revised to reflect fee waivers. Without a
voluntary reduction of Investment Advisory and 12b-1 fees, Total Operating
Expenses would be .81% for Class A shares, 1.56% for Class B shares, 1.56%
for Class C shares, 1.31% for Service Class shares and .56% for Fiduciary
Class shares.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) payment of the maximum sales charge; (2) 5% annual return; and (3)
redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 94
Class A (without fee waiver) $ 8 $ 26 $ 45 $100
Class B $ 65 $ 78 $ 102 $160
Class B (without fee waiver) $ 66 $ 79 $ 105 $180
Class C $ 25 $ 48 $ 82 $186
Class C (without fee waiver) $ 26 $ 49 $ 85 $147
Fiduciary Class $ 5 $ 16 $ 29 $ 64
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 70
</TABLE>
Assuming no redemption at the end of each time period, the dollar amounts in the
above example would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 8 $ 24 $ 42 $ 94
Class A (without fee waiver) $ 8 $ 26 $ 45 $100
Class B $ 15 $ 48 $ 82 $160
Class B (without fee waiver) $ 16 $ 49 $ 85 $165
Class C $ 15 $ 48 $ 82 $180
Class C (without fee waiver) $ 16 $ 49 $ 85 $186
Fiduciary Class $ 5 $ 16 $ 29 $ 64
Fiduciary Class (without fee waiver) $ 6 $ 18 $ 31 $ 70
</TABLE>
Because of the nature of the shares, shareholders are not expected to remain in
Service Class shares for more than a very limited period of time. However, a
shareholder investing in the Service Class shares on a continual basis for a
period of one month would pay $1, three months would pay $3, and one year would
pay $11. Without the voluntary fee reduction, that shareholder would pay $1
after one month, $3 after three months, and $13 after one year.
Class B shares automatically convert to Class A shares after eight (8) years.
Therefore, the "10 years" examples above reflect this conversion.
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
10
THE ONE GROUP(R) U.S. TREASURY SECURITIES MONEY MARKET FUND FINANCIAL
HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------------------------------------------------------------
FIDUCIARY 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.050 0.052 0.050 0.030 0.029 0.043
- ----------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.050)(a) (0.052) (0.050) (0.030) (0.029) (0.043)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 5.07% 5.34% 5.07% 3.01% 2.89% 4.40%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 2,243,376 $ 1,844,590 $ 1,178,091 $ 969,326 $ 492,862 $ 410,146
Ratio of expenses to average net assets 0.46% 0.42% 0.41% 0.40% 0.45% 0.55%
Ratio of net investment income to
average net assets 4.95% 5.17% 4.96% 3.02% 2.85% 4.25%
Ratio of expenses to average net assets* 0.57% 0.56% 0.59% 0.58% 0.67% 0.77%
Ratio of net investment income to
average net assets* 4.84% 5.03% 4.78% 2.84% 2.63% 4.04%
<CAPTION>
---------------------------
FIDUCIARY 1991 1990
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.062 0.078
- ------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.062) (0.078)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 6.63% 8.10%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 339,987 $ 119,544
Ratio of expenses to average net assets 0.60% 0.59%
Ratio of net investment income to
average net assets 6.20% 7.82%
Ratio of expenses to average net assets* 0.80% 0.79%
Ratio of net investment income to
average net assets* 6.00% 7.62%
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Includes $.000002 short term capital gain.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------------------------
CLASS A 1997 1996 1995 1994 1993 1992(b)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.047 0.050 0.047 0.027 0.026 0.012
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.047)(a) (0.050) (0.047) (0.027) (0.026) (0.012)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 4.81% 5.08% 4.81% 2.76% 2.63% 3.38%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 530,164 $ 110,864 $ 98,723 $ 53,423 $ 30,759 $ 6
Ratio of expenses to average net assets 0.72% 0.67% 0.66% 0.63% 0.65% 0.59%(c)
Ratio of net investment income to
average net assets 4.71% 4.92% 4.71% 2.81% 2.52% 2.51%(c)
Ratio of expenses to average net
assets* 0.93% 0.91% 0.94% 0.87% 1.02% 0.71%(c)
Ratio of net investment income to
average net assets* 4.50% 4.68% 4.43% 2.57% 2.15% 2.39%(c)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Includes $.000002 short term capital gain. (b) Class A Shares
commenced offering on February 18, 1992. (c) Annualized.
<PAGE>
11
THE ONE GROUP(R) U.S. TREASURY SECURITIES MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 21,
1996 TO
JUNE 30,
CLASS B 1997(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.024
- ----------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income (0.024)(b)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 2.44%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 49
Ratio of expenses to average net assets 1.48%(d)
Ratio of net investment income to average net assets 3.97%(d)
Ratio of expenses to average net assets* 1.59%(d)
Ratio of net investment income to average net assets* 3.86%(d)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Includes $.000002
short term capital gain. (c) Not annualized. (d) Annualized.
<PAGE>
12
MORE ABOUT THE FUNDS
PORTFOLIO QUALITY
- ----------------------------------------------------
Securities will be purchased by the Funds only if Banc One Investment Advisors
determine that they present minimal credit risk under guidelines adopted by the
Board of Trustees. In addition, unless a more specific rating is specified, all
investments of the Funds must be rated in one of the two highest rating
categories described in "Description of Ratings" in the Appendix. If an
investment is unrated, Banc One Investment Advisors must determine that it is of
comparable quality to a rated security. Banc One Investment Advisors will look
at a security's rating at the time of investment. For more information about
ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 10% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK
CONSIDERATIONS
- ----------------------------------------------------
NET ASSET VALUE: There is no assurance that the Funds will meet their investment
objectives or be able to maintain a net asset value of $1.00 per share on a
continuous basis.
NON-DIVERSIFIED FUNDS: The Ohio Municipal Money Market Fund is a
"non-diversified" fund. This means that the Fund may invest a significantly
greater portion of its assets in the securities of a single issuer than can a
"diversified" fund. In addition, the Fund's investments are concentrated
geographically. These concentrations increase the risk of loss to the Fund if
the issuer of a security fails to make interest or principal payments or if the
market value of a security declines. Investment in the Fund may entail more
risks than an investment in another type of money market fund.
THE OHIO ECONOMY: The Ohio Municipal Money Market Fund's investments are
concentrated in the State of Ohio. While Ohio's economy has become increasingly
diversified, it continues to rely to a significant degree on durable goods
manufacturing, such as automobiles, tires, steel and household appliances. These
industries tend to be cyclical. Agriculture also is an important part of the
Ohio economy, and the state has several programs that provide financial
assistance to farmers. Although obligations issued by the state and its
political subdivisions are payable from specific sources or taxes, future
economic difficulties and the impact on state and local government finances may
negatively affect the market value of the Ohio municipal securities held by the
Ohio Municipal Money Market Fund.
FIXED INCOME SECURITIES: Investments in fixed income securities (for example,
bonds) will increase or decrease in value based on changes in interest rates. If
rates increase, the value of a Fund's investments generally declines. On the
other hand, if rates fall, the value of the investments generally increases. The
value of your investment in a Fund will increase and decrease as the value of a
Fund's investments increase and decrease. While securities with longer duration
and maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
DERIVATIVES: Some of the Funds invest in securities that are considered to be
derivatives. These securities may be more volatile than other securities. These
include mortgage-backed securities, including collateralized mortgage
obligations and Real Estate Mortgage Investment Conduits (CMOs and REMICs) and
asset-backed securities. Derivatives may be riskier than traditional
investments.
<PAGE>
13
HOW TO DO BUSINESS WITH THE ONE GROUP
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving, and Christmas.
- - Purchase requests will be effective on the day received by The One Group
Services Company and you will be eligible to receive dividends declared the
same day, if such purchase orders are received by The One Group Services
Company:
(i) before 11:00 a.m., Eastern Standard Time ("EST"), for the Ohio
Municipal Money Market Fund;
(ii) before 12:00 noon, EST, for the Municipal Money Market Fund; and
(ii) before 2:00 p.m., EST, for the Prime Money Market Fund and the U.S.
Treasury Securities Money Market Fund.
In addition, the Fund's custodian, State Street Bank and Trust Company, must
receive "federal funds" before 4:00 p.m., EST on such day. If State Street
Bank and Trust Company does not receive federal funds by the cut-off time,
the purchase order will not be effective until the next business day on which
federal funds are timely received by State Street Bank and Trust Company.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or its shareholders to
accept the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
WHAT KIND OF SHARES CAN I BUY?
The One Group offers the following classes of shares:
- - Class A, Class B and Class C shares are available to the general public.
- - Fiduciary Class shares are available to institutional investors and any
organization authorized to act in a fiduciary, advisory, custodial or agency
capacity. We will refer to these entities as "Intermediaries."
- - Service Class shares are available to Intermediaries purchasing shares on
behalf of investors requiring additional administrative or accounting services
such as sweep processing.
- - If you intend to hold your shares six or more years, Class B shares may be
appropriate for you. If you intend to hold your shares for less than six
years, you may want to consider Class A or Class C shares.
The One Group Fund Direct IRA. The One Group offers a retirement plan and, in
1998, will offer an education plan. These plans allow participants to defer
taxes while their retirement and education savings grow. The education IRA
requires a minimum investment of $500. Call The One Group Services Company at
1-800-480-4111 for an Adoption Agreement.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV").
- - NAV per share is calculated by dividing the total market value of a Fund's
investment and other assets allocable to a class (minus class expenses) by the
number of outstanding shares in that class. The Funds use their best efforts
to maintain their NAV at $1.00, although there is no guarantee that they will
be able to do so.
- - NAV is calculated each business day as of 11:00 a.m. and 4:00 p.m., EST, for
the Ohio Municipal Money Market Fund, as of 12:00 noon and 4:00 p.m., EST, for
the Municipal Money Market Fund, and as of 2:00 p.m. and 4:00 p.m., EST, for
the Prime Money Market Fund and the U.S. Treasury Securities Money Market
Fund.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
<PAGE>
14
2. Decide how much you want to invest. The minimum initial investment is $1,000
($100 for employees of BANC ONE CORPORATION and its affiliates).
- Subsequent investments must be at least $100 ($25 for employees of BANC ONE
CORPORATION and its affiliates).
- The One Group Services Company may waive these minimums.
3.Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means that
you will not have to complete additional paperwork later.
4.Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
Contributions to Fund Direct IRAs should be made payable to "State Street
Bank and Trust Company for the Benefit of (your name)."
5.All checks should be in U.S. dollars. Third party checks will not be accepted.
Redemptions from a Fund will not be permitted for ten (10) calendar days if
purchases are made by check or under the Systematic Investment Plan (see
below).
6.If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases, exchanges
and redemptions.
7.If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Send a personal check payable to "The One Group" to State Street Bank and
Trust Company (see address above), authorize a bank transfer or initiate a
wire transfer.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
CAN I AUTOMATICALLY INVEST ON A
SYSTEMATIC BASIS?
Yes. After your Account is established, you may purchase additional Class A,
Class B and Class C shares by making automatic monthly investments from your
bank account. The minimum initial investment is still $1,000, but minimum
automatic additions are only $25. The One Group Services Company may waive these
minimums. To establish a Systematic Investment Plan:
- - Select the "Systematic Investment Plan" option on the Account Application
Form.
- - Provide the necessary information about the bank account from which your
investments will be made.
- - Shares purchased under a Systematic Investment Plan may not be redeemed for
ten (10) calendar days.
- - The One Group currently does not charge for this service, but may impose a
charge in the future. However, your bank may impose a charge for debiting your
bank account.
- - You may revoke your right to make systematic investments by sending a letter
to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
MAY I WRITE CHECKS ON MY ACCOUNT?
Class A and Class C shareholders may write checks for $250 or more.
- - Checks may be payable to any person and your account will continue to earn
dividends until the check clears.
- - Checks are free, but your bank or the payee may charge you for stop payment
orders, insufficient funds, or other valid reasons.
- - You can not use this option to close your account because of the difficulty of
determining the exact value of your account.
- - You must wait ten (10) calendar days before you can write a check against
shares purchased by a check.
TO SELECT THIS OPTION:
- - Select the "Check Writing" option on the Account Application Form.
<PAGE>
15
- - Complete, sign and return a signature card and other forms sent to you by
State Street Bank and Trust Company. You will receive a supply of checks that
will be drawn on State Street Bank and Trust Company.
CONVERSION FEATURE.
Your Class B shares automatically convert to Class A shares after eight years
(measured from the end of the month in which they were purchased).
- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares.
- - You will not be assessed any sales charges or fees for conversion of shares,
nor will you be subject to any tax.
- - If you have exchanged Class B shares of one Fund for Class B shares of
another, the time you held the shares in each Fund will be added together.
SALES CHARGES
- ----------------------------------------------------
The One Group Services Company compensates Shareholder Servicing Agents who sell
shares of The One Group. Compensation comes from: sales charges, 12b-1 fees and
payments by The One Group Services Company from its own resources. The One Group
Services Company, at its own expense, also will provide promotional incentives
in the form of travel expenses, lodging and bonuses to licensed individuals who
sell shares of the Funds, as well as vacation trips (including lodging at luxury
resorts), tickets to entertainment events, and merchandise.
CLASS B SHARES.
Class B shares are offered at NAV, without any up-front sales charges. However,
if you redeem these shares within six years of the purchase date, you will be
assessed a Contingent Deferred Sales Charge ("CDSC") according to the following
schedule:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
more than 6 0.00%
</TABLE>
The One Group Services Company pays a commission of 4.00% of the original
purchase price to Shareholder Servicing Agents who sell Class B shares.
CLASS C SHARES
Class C shares are offered at NAV, without any up-front sales charge. However,
if you redeem your shares within one year of the purchase date, you will be
assessed a CDSC as follows:
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C> <C>
0-1 1.00%
After first year none
</TABLE>
The One Group Services Company pays a commission of 1.00% of the original
purchase price to Shareholder Servicing Agents who sell Class C shares.
How the CDSC is Calculated
- - The Fund assumes that all purchases made in a given month were made on the
first day of the month.
- - The CDSC is based on the net amount redeemed.
- - A sales charge is not assessed on shares acquired through reinvestment of
dividends or capital gains distributions.
- - To keep your CDSC as low as possible, the Fund first will redeem any shares in
your account that carry no CDSC, starting with Class A Shares. After that, the
Fund will redeem the shares you have held for the longest time and thus have
the lowest CDSC.
<PAGE>
16
12B-1 FEES.
12b-1 fees are paid by The One Group to The One Group Services Company as
compensation for its services and expenses. The One Group Services Company in
turn pays all or part of the 12b-1 fee to brokers and other Shareholder
Servicing Agents that sell shares of The One Group.
- - The 12b-1 fees vary by share class as follows:
1. Class A shares pay a 12b-1 fee of .25% of the average daily net assets of
the Fund.
2. Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund. This will cause expenses for Class B and Class C
shares to be higher and dividends to be lower than for Class A shares.
3. Service Class shares pay a 12b-1 fee of .75% of the average daily net
assets of the Fund, which is currently being waived to .55%.
4. There are no 12b-1 fees for Fiduciary Class shares.
- - 12b-1 fees, together with the CDSC, help The One Group Services Company sell
Class B and Class C shares without an "up-front" sales charge by defraying the
costs of advancing brokerage commissions and other expenses paid to
Shareholder Servicing Agents.
- - The One Group Services Company may use up to .25% of the fees for shareholder
servicing and up to .75% for distribution. During the last fiscal year, The
One Group Services Company received 12b-1 fees totaling .25% and 1.00% of the
average daily net assets of Class A and Class B shares, respectively.
- - The One Group Services Company may pay 12b-1 fees to its affiliates and to
Banc One Investment Advisors and its affiliates (or any sub-advisor) for
brokerage and other agency transactions.
SALES CHARGE
REDUCTIONS
AND WAIVERS
- ----------------------------------------------------
WAIVER OF THE CLASS B SALES CHARGE
No sales charge is imposed on redemptions of Class B shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and
you die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distributions from an IRA Account or
other qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class B shares of other Funds of The One Group.
WAIVER OF THE CLASS C SALES CHARGE
No sales charge is imposed on redemptions of Class C shares of the Funds:
1. Provided that you withdraw no more than 10% of the account value annually.
2. If you buy the shares in connection with certain retirement plans, such as
401(k) and similar qualified plans.
3. If you are a participant or beneficiary of certain retirement plans and
you die or become disabled (as defined in the Tax Code), but only if the
redemption is made within one year of such death or disability.
4. That represent a minimum required distributions from an IRA Account or
other qualifying retirement plan, but only if you are at least age 70 1/2.
5. Bought in connection with plans of reorganizations of a Fund, such as
mergers, asset acquisitions and exchange offers to which a Fund is a
party.
6. Acquired in exchange for Class C shares of other Funds of The One Group.
To take advantage of any of these sales charge waivers, you must qualify for
such waiver in advance. To see if you qualify, contact The One Group Services
Company at 1-800-480-4111 or your Shareholder Servicing Agent.
EXCHANGING FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
You may make the following exchanges:
- - Fiduciary Class shares of a Fund may be exchanged for Class A shares of that
Fund or for Class A or Fiduciary Class shares of another Fund of The One
Group.
- - Class A shares of a Fund may be exchanged for Fiduciary Class shares of that
Fund or for Class A or Fiduciary Class shares of another
<PAGE>
17
Fund of The One Group, but only if you are eligible to purchase those shares.
- - Class B shares of a Fund may be exchanged for Class B shares of another Fund
of The One Group.
- - Class C shares of a Fund may be exchanged for Class C shares of another Fund
of The One Group.
- - Service Class shares do not have exchange privileges.
The One Group may change the terms and conditions of your exchange privileges
upon 60 days written notice.
The One Group does not charge a fee for this privilege.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by:
(i) 11:00 a.m. EST, for the Ohio Municipal Money Market Fund,
(ii) 12:00 noon EST, for the Municipal Money Market Fund, and
(iii) 2:00 p.m. EST, for the Prime Money Market Fund and the U.S. Treasury
Securities Money Market Fund.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds into which you
wish to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
DO I PAY A SALES CHARGE ON AN EXCHANGE?
Generally, you will not pay a sales charge on an exchange. However:
- - You will pay a sales charge if you own Fiduciary Class shares of a Fund and
you want to exchange those shares for Class A shares, unless you qualify for a
sales charge waiver (see above).
- - You will pay a sales charge if you bought Class A shares of a Fund:
1. That does not charge a sales charge and you want to exchange them for
shares of a Fund that does, in which case you would pay the sales charge
applicable to the Fund into which you are exchanging.
2. That charged a lower sales charge than the Fund into which you are
exchanging, in which case you would pay the difference between that Fund's
sales charge and all other sales charges you have already paid.
- - If you exchange Class B or Class C shares of a Fund, you will not pay a sales
charge at the time of the exchange, however:
1. Your new Class B or Class C shares will be subject to the higher CDSC of
either the Fund from which you exchanged, the Fund into which you
exchanged, or any Fund from which you previously exchanged.
2. The current holding period for your exchanged Class B or Class C shares is
carried over to your new shares.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between classes of shares of the same Fund is not taxable.
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short-term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4:00
p.m. EST, will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and Trust Company at the
following address:
<PAGE>
18
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
- - All requests for redemptions from IRA accounts must be in writing.
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will ordinarily be paid within seven days after
receipt of the redemption request. However, the Funds will attempt to honor
requests for next day payment on redemptions, if the request is received
before:
(i)11:00 a.m. EST, for the Ohio Municipal Money Market Fund,
(ii)12:00 noon EST, for the Municipal Money Market Fund, and
(iii)2:00 p.m. EST, for the Prime Money Market Fund and the U.S. Treasury
Securities Money Market Fund.
- - The Funds also will attempt to honor requests for payments in two business
days, if the redemption request is received after the times listed above.
WHAT WILL MY SHARES BE WORTH?
- - The NAV of shares of the Funds are expected to remain constant at $1.00 per
share, although there is no assurance that this will always be the case.
- - If you own Class A, Service Class or Fiduciary Class shares, you will receive
the NAV calculated after your redemption request is received. Please read "How
Much Do Shares Cost?"
- - If you own Class B or Class C shares, you will receive the NAV calculated
after your redemption request is received, minus the amount of any applicable
CDSC.
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge you a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - REDEMPTIONS FROM YOUR IRA ACCOUNT MAY NOT BE MADE BY TELEPHONE.
CAN I REDEEM ON A SYSTEMATIC BASIS?
If you have an account value of at least $10,000 you may elect to receive
monthly, quarterly or annual payments of not less than $100 each.
- - Select the "Systematic Withdrawal Plan" option on the Account Application
Form.
- - Specify the amount you wish to receive and the frequency of the payments.
- - You may designate a person other than yourself as the payee.
- - There is no charge for this service.
- - If you select this option, please keep in mind that:
1. If you own Class B or Class C shares, you or your designated payee may
receive systematic payments provided the payments are limited to no more
than 10% of your account value annually, measured from the date the
redemption request is received.
2. If you are age 70 1/2, you may elect to receive payments to the extent
that the payment represents a minimum required distribution from an IRA or
other qualifying retirement plan. You also may elect to receive payments
of less than $100 each.
3. If the amount of the systematic payment exceeds the income earned by your
account since the previous payment under the Systematic Withdrawal Plan,
payments will be made by redeeming some of your shares. This will reduce
the amount of your investment.
<PAGE>
19
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash. The redemption price of shares is expected
to remain constant at $1.00 per share, although there is no assurance that
this will always be the case.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $1,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $1,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE>
20
SHAREHOLDER INFORMATION
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund,
and each class of shares within each Fund, vote separately on matters relating
solely to that Fund or class, or which affect that Fund or class differently.
However, all shareholders will have equal voting rights on matters that affect
all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of The Investment Company Act of 1940, to
control the Prime Money Market Fund, the Ohio Municipal Money Market Fund and
the Municipal Money Market Fund. This is because as of August 5, 1997, BANC ONE
CORPORATION or its affiliates possessed the power to vote substantially all of
the Fiduciary Class shares of the Funds. On the same date, the following
shareholders owned 25% or more of Class A and Class B shares of the Funds. As a
consequence, they are considered to be controlling persons of those classes of
the Funds.
<TABLE>
<CAPTION>
PERCENTAGE OF TYPE OF
NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
<S> <C> <C> <C>
BISYS Fund Services, Inc. Municipal Money 35.79% Record
FBO Bank One Corporate Sweep Market Fund
Attn: Linda Zerbe Class A
First and Market Building Suite 300
Pittsburgh, PA 15222
BISYS Fund Services, Inc. U.S. Treasury 39.89% Record
FBO Bank One Corporate Sweep Securities Money
Attn: Linda Zerbe Market Fund
First and Market Bldg., Suite 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. U.S. Treasury 47.03% Record
Cust for the IRA of Securities
Edward Hillman III Money Market Fund
121 S. Walnut Street Class B
Troy, OH 45373-3530
</TABLE>
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on each business day. Dividends are
distributed on the first business day of each month. Capital gains, if any, for
all Funds are distributed at least annually.
Dividends payable on Fiduciary Class shares will be more than those payable on
other classes of shares. This is because Class A, Class B, Class C and Service
Class shares have higher distribution expenses.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund and class, unless you have
elected to take such payment in cash. The price of the shares is the NAV
determined immediately following the dividend record date. Reinvested dividends
and distributions receive the same tax treatment as dividends and distributions
paid in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
SPECIAL DIVIDEND RULES FOR CLASS B SHARES
Class B shares received as dividends and capital gains distributions will be
accounted for separately. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, a percentage of the Class B shares in
the sub-account will also convert to Class A shares. (See "Conversion Feature.")
<PAGE>
21
TAX TREATMENT
OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT
OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares will generally produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS -- PRIME MONEY MARKET FUND AND U.S. TREASURY
SECURITIES MONEY MARKET FUND
Each Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to investors on at
least an annual basis. Dividends you receive from a Fund, whether reinvested or
received in cash, will be taxable to you. Dividends from a Fund's net investment
income will be taxable as ordinary income and dividends from a Fund's long-term
capital gains will be taxable to you as such, regardless of how long you have
held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
TAXATION OF DIVIDENDS -- THE OHIO MUNICIPAL MONEY MARKET FUND AND THE MUNICIPAL
MONEY MARKET FUND
Each Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to investors on at
least an annual basis. These Funds may pay "exempt-interest dividends" if at
least 50% of the value of Fund assets at the end of each quarter of the Fund's
taxable year consists of obligations the interest on which is excludable from
gross income. Exempt-interest dividends are generally excludable from an
investor's gross income for regular Federal income tax purposes. However, the
receipt of exempt-interest dividends may cause recipients of Social Security or
Railroad Retirement benefits to be taxed on a portion of such benefits. In
addition, the receipt of exempt-interest dividends may result in liability for
Federal alternative minimum tax and for state and local taxes. Corporate
shareholders will be required to take the interest on municipal securities into
account in determining their alternative minimum taxable income.
OHIO TAXATION OF DIVIDENDS FROM THE OHIO MUNICIPAL MONEY MARKET FUND
Dividends received from the Ohio Municipal Money Market Fund that result from
interest on Ohio municipal securities are exempt from the Ohio personal income
tax. Some Ohio statutes provide that interest on and gain from the sale of Ohio
municipal securities is exempt from all taxation in Ohio. Dividends that are
attributable to interest on or gain from the sale of obligations issued under
such statutes should be exempt from Ohio personal income tax. Ohio
municipalities may not impose income taxes on dividends on any intangible
property (including such property of the Fund) unless the intangible income was
not exempt from municipal income taxation before April 2, 1986 and the tax was
approved in an election held on November 8, 1988. Corporate shareholders will be
required to include the interest on Ohio municipal securities in their
alternative minimum-taxable income. Information in this paragraph is based on
current statutes and regulations as well as current policies of the Ohio
Department of Taxation, all of which may change.
TAXATION OF RETIREMENT PLANS
Distributions by the Funds to qualified retirement plans will not be taxable.
However, if shares are held by a plan that ceases to qualify for tax-exempt
treatment or by an individual who has received shares as a distribution from a
retirement plan, the distributions will be taxable to the plan or individual as
described in "Taxation of Distributions." If you are considering purchasing
shares with qualified retirement plan assets, you should consult your tax
advisor for a more complete explanation of the Federal, state, local and (if
applicable) foreign tax consequences of making such an investment.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
<PAGE>
22
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In September and March you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE>
ORGANIZATION AND MANAGEMENT OF THE FUNDS
23
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Four of the
Funds are described in this prospectus; the other Funds are described in
separate prospectuses. Each Fund is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets.
For the fiscal year ended June 30, 1997, the Funds paid investment advisory fees
at the following rate:
<TABLE>
<CAPTION>
FUND ANNUAL RATE AS PERCENTAGE
OF AVERAGE DAILY NET ASSETS
<S> <C> <C>
The One Group(R) Prime Money Market Fund .29%
The One Group(R) Municipal Money Market
Fund .25%
The One Group(R) Ohio Municipal Money
Market Fund .25%
The One Group(R) U.S. Treasury Securities
Money Market Fund .25%
</TABLE>
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives a fee
based on the total assets of The One Group. For the first $1.5 billion in One
Group assets, The One Group Services Company receives an annual fee of .20% of
each Fund's average daily net assets. The annual rate declines to .18% on assets
up to $2 billion, and to .16% when assets exceed $2 billion. The fee is
calculated daily and paid monthly. Some Funds are not included in the
calculations. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN AND THE SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500 or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust Company. Bank One Trust Company, N.A. is paid a fee for this service.
<PAGE>
24
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND FUND CODE
<S> <C> <C>
The One Group(R) Prime Money Market Fund 1
The One Group(R) Municipal Money Market Fund 2
The One Group(R) Ohio Municipal Money Market
Fund 3
The One Group(R) U.S. Treasury Securities
Money Market Fund 4
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, STRIPS, and 1-4 Market
CUBES. The U.S. Treasury Securities Money Market Fund does not
buy STRIPS and CUBES.
TREASURY RECEIPTS: TRS, TIGRS, and CATS. 1-3 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1-3 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated 1-3 Market
maturity. Credit
Liquidity
TIME DEPOSITS: Non-negotiable receipts issued by a bank in 1-3 Liquidity
exchange for the deposit of funds. Credit
Market
REPURCHASE AGREEMENTS: The purchase of a security and the 1-4 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
REVERSE REPURCHASE AGREEMENT: The sale of a security and the 1-2 Market
simultaneous commitment to buy the security back at an agreed Leverage
upon price on an agreed upon date. This is treated as a
borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33% of the securities 1-4 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1-4 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1-3 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on 1-3 Credit
and accepted by a commercial bank. Maturities are generally six Liquidity
months or less. Market
COMMERCIAL PAPER: Secured and unsecured short-term promissory 1-3 Credit
notes issued by corporations and other entities. Maturities Liquidity
generally vary from a few days to nine months. Market
FOREIGN SECURITIES: Commercial paper of foreign issuers and 1 Market
obligations of foreign banks, overseas branches of U.S. banks Political
and supranational entities. Liquidity
Foreign Investment
</TABLE>
<PAGE>
25
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
RESTRICTED SECURITIES: Securities not registered under the 1-3 Liquidity
Securities Act of 1933, such as privately placed commercial Market
paper and Rule 144A securities.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1-3 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to the Fund on demand. Liquidity
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1-3 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs") and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
DEMAND FEATURES: Securities that are subject to puts and standby 1-3 Market
commitments to purchase the securities at a fixed price (usually Liquidity
with accrued interest) within a fixed period of time following Management
demand by a Fund.
MUNICIPAL SECURITIES: Securities issued by a state or political 1-3 Market
subdivision to obtain funds for various public purposes. Credit
Municipal securities include private activity bonds and Political
industrial development bonds, as well as General Obligation Tax
Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue
Anticipation Notes, Project Notes, other short-term tax-exempt
obligations, municipal leases, and obligations of municipal
housing authorities and single family revenue bonds.
SHORT-TERM FUNDING AGREEMENTS: Agreements issued by banks and 1 Market
highly rated insurance companies such as Guaranteed Investment Credit
Contracts ("GICs") and Bank Investment Contracts ("BICs"). Liquidity
PARTICIPATION INTERESTS: Interests in municipal securities, 1-3 Credit
including municipal leases, from financial institutions such as Tax
commercial and investment banks, savings and loan associations Market
and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows
the Funds to treat the income from the investment as exempt from
Federal Income Tax.
ASSET-BACKED SECURITIES: Securities secured by company 1, 2 Pre-payment
receivables, home equity loans, truck and auto loans, leases, Market
credit card receivables and other securities backed by other Credit
types of receivables or other assets. Regulatory
</TABLE>
<PAGE>
26
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities held by the Funds may fluctuate, as will the value of
your investment in the Funds. Certain investments are more susceptible to these
risks than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices (such as
borrowing) that multiply small index or market movements into large changes in
value.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in the
market. The seller may have to lower the price, sell other securities instead
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. For fixed income
securities, market risk is largely, but not exclusively, influenced by changes
in interest rates. A rise in interest rates typically causes a fall in values,
while a fall in rates typically causes a rise in values. Finally, key
information about a security or market may be inaccurate or unavailable. This
is particularly relevant to investments in foreign securities.
- - POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
- - FOREIGN INVESTMENT RISK. Risks associated with higher transaction costs,
delayed settlements, currency controls, and adverse economic developments.
This also includes the risk that fluctuations in the exchange rates between
the U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may widen any losses. Exchange
rate volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early repayment, a Fund may
fail to recoup any premium paid, resulting in an unexpected capital loss.
- - TAX RISK. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
<PAGE>
27
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. In addition to
the fundamental policies mentioned earlier, the following fundamental policies
apply to each Fund as specified. The full text of the fundamental policies can
be found in the Statement of Additional Information.
FUNDAMENTAL POLICIES OF EACH FUND
Each Fund:
1. Will use its best efforts to maintain a constant net asset value of $1.00 per
share, although there is no guarantee that the Funds will be able to do so.
2. Will not make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii)
enter into repurchase agreements; and (iii) engage in securities lending.
FUNDAMENTAL POLICIES OF SPECIFIC FUNDS
The Prime Money Market Fund:
1. Will not concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include obligations issued or guaranteed by the
U.S. government or its agencies and instrumentalities, domestic bank
certificates of deposit or bankers' acceptances, and repurchase agreements
involving such securities, municipal securities or governmental guarantees of
municipal securities. In addition, private activity bonds backed only by the
revenues and assets of a non-governmental user will not be deemed to be
municipal securities.
The Prime Money Market Fund, the Municipal Money Market Fund and the U.S.
Treasury Securities Money Market Fund:
1. Will not purchase an issuer's securities if as a result more than 5% of a
Fund's total assets would be invested in the securities of that issuer or the
Fund would own more than 10% of the outstanding voting securities of that
issuer. This does not include securities issued or guaranteed by the United
States, its agencies or instrumentalities, and repurchase agreements
involving these securities. This restriction applies with respect to 75% of a
Fund's total assets. The Funds may invest the remaining 25% of their total
assets without restriction.
The U.S. Treasury Securities Money Market Fund:
1. Will invest only in U.S. Treasury obligations and repurchase agreements
collateralized by such obligations.
The Ohio Municipal Money Market Fund:
1. Will not purchase an issuer's securities if as a result more than 25% of its
total assets would be invested in the securities of that issuer or the Fund
would own more than 10% of the outstanding voting securities of that issuer.
This does not include securities issued or guaranteed by the United States,
its agencies or instrumentalities, securities of registered investment
companies, and repurchase agreements involving these securities. This
restriction applies with respect to 50% of the Fund's total assets. With
respect to the remaining 50% of its total assets, the Fund will not purchase
an issuer's securities if as a result more then 5% of its total assets would
be invested in the securities of that issuer.
2. Will not concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include municipal securities or governmental
guarantees of municipal securities. In addition, private activity bonds
backed only by the assets and revenues of a non-governmental user will not be
deemed to be Ohio municipal securities.
The Municipal Money Market Fund:
1. Will not concentrate its investments in the securities of one or more issuers
conducting their principal business in a particular industry or group of
industries. This does not include municipal securities or governmental
guarantees of municipal securities. In addition, private activity bonds
backed only by the revenues and assets of a non-governmental user will not be
deemed to be municipal securities.
Additional investment policies can be found in the Statement of Additional
Information.
<PAGE>
28
TEMPORARY DEFENSIVE POSITION
Sometimes the Ohio Municipal Money Market Fund and the Municipal Money Market
Fund may temporarily invest up to 100% of their total assets in securities that
are not municipal securities, such as taxable money market instruments
(including repurchase agreements) and may hold uninvested cash pending
investment. While the Funds are engaged in a temporary defensive position, they
will not be pursuing their investment objectives. Therefore, the Funds will
pursue a temporary defensive position only when market conditions warrant.
<PAGE>
29
APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety and
soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE>
30
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF CORPORATE/MUNICIPAL BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligations is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligations.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the obligation. In the event of adverse
<PAGE>
31
business, financial, or economic conditions will likely impair the
capacity to meet its financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
Ba These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & Short-term municipal securities rated MIG1 or VMIG1 are of the best
VMIG1 quality. They have strong protection from established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2 & These Short-term municipal securities are of high quality. Margins of
VMIG2 protection are ample although not so large as in the preceding group.
MIG3 & Favorable quality. All security elements are accounted for, but the
VMIG3 undeniable strength of the preceding grades is lacking. Liquidity and
cash flow protection may be narrow and marketing access for
refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
<PAGE>
32
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
aaa Top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within the
universe of preferred stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE>
Investment Advisor and Sub-Administrator
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
Distributor
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Administrator
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
Transfer Agent and Custodian
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
Legal Counsel
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION
ABOUT THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT
CHARGE BY CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES
COMPANY AT 3435 STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL
INFORMATION IS INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC
MAINTAINS A WEB SITE (WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL
INFORMATION, MATERIALS INCORPORATED BY REFERENCE AND OTHER INFORMATION
REGARDING THE ONE GROUP(R).
TOG-F-123
<PAGE>
THE ONE GROUP(R) FAMILY OF MUTUAL FUNDS
INSTITUTIONAL MONEY MARKET FUNDS
COMBINED PROSPECTUS
NOVEMBER 1, 1997
THE ONE GROUP(R) GOVERNMENT MONEY MARKET FUND
THE ONE GROUP(R) TREASURY ONLY MONEY MARKET FUND
This prospectus describes two money market mutual funds. The
Funds are offered only to certain institutional and accredited
investors. The information in this prospectus is important.
Please read it carefully before you invest, and save it
for future reference.
PLEASE REMEMBER THAT SHARES OF THE FUNDS: O ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY BANC ONE CORPORATION OR ITS AFFILIATES; o ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY FEDERAL OR STATE GOVERNMENTAL AGENCY; o
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THERE IS NO ASSURANCE THAT THE FUNDS WILL MEET THEIR
INVESTMENT OBJECTIVES OR BE ABLE TO MAINTAIN A NET
ASSET VALUE OF $1.00 PER SHARE ON A CONTINUOUS BASIS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A BRIEF PREVIEW OF THE FUNDS............................ 1
ABOUT THE FUNDS......................................... 2
The One Group(R) Government Money Market Fund........ 2
The One Group(R)Treasury Only Money Market Fund...... 4
MORE ABOUT THE FUNDS.................................... 6
HOW TO DO BUSINESS WITH THE ONE GROUP................... 7
Purchasing Fund Shares............................... 7
Exchanging Fund Shares............................... 8
Redeeming Fund Shares................................ 8
SHAREHOLDER INFORMATION................................. 10
Voting Rights........................................ 10
Dividend Policies.................................... 10
Tax Treatment of the Funds........................... 10
Tax Treatment of Shareholders........................ 10
Shareholder Inquiries................................ 10
ORGANIZATION & MANAGEMENT OF THE FUNDS.................. 11
The Funds............................................ 11
The Board of Trustees................................ 11
The Advisor.......................................... 11
The Distributor...................................... 11
The Administrator and Sub-Administrator.............. 11
The Transfer Agent, Custodian and Sub-Custodian...... 11
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND
POLICIES.............................................. 12
Investment Practices................................. 12
Investment Risks..................................... 13
Investment Policies.................................. 13
APPENDIX: DESCRIPTION OF RATINGS........................ 15
</TABLE>
<PAGE>
1
A BRIEF PREVIEW OF THE FUNDS
WHAT ARE THE GOALS OF THE ONE GROUP INSTITUTIONAL MONEY MARKET
FUNDS?
The Funds are designed to produce high current income with
liquidity and stability of principal. Each of the Funds will
use their best efforts to maintain a constant net asset value
of $1.00 per share, although there is no guarantee that the
Funds will be able to do so. Please read about each Fund
before investing.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
The Funds will invest only in U.S. dollar-denominated
securities, will maintain an average maturity on a dollar-
weighted basis of 90 days or less, and will acquire only
"eligible securities" that present minimal credit risks and
have a maturity of 397 days or less. The Funds intend to
comply with Rule 2a-7 under The Investment Company Act of
1940.
WHO CAN BUY SHARES?
The Funds are offered only to institutional and other
accredited investors. For more details, please see the section
of this prospectus entitled "Purchasing Fund Shares."
HOW DO I PURCHASE AND REDEEM SHARES?
You may buy and redeem shares of the Funds on any day that the
Funds are open for business. Purchase and redemption
procedures are explained in greater detail in "How To Do
Business With The One Group." For additional information, call
The One Group Services Company at 1-800-480-4111.
HOW ARE DIVIDENDS PAID?
Generally, dividends are declared on each business day and are
distributed periodically. Any capital gains are distributed at
least annually. Distributions are paid in additional shares of
the same class unless you elect to take the payment in cash.
For a more detailed discussion of dividends, see "Dividend
Policies."
WHO MANAGES THE FUNDS?
Banc One Investment Advisors Corporation ("Banc One Investment
Advisors"), an indirect subsidiary of BANC ONE CORPORATION,
serves as the advisor of the Funds. Banc One Investment
Advisors is paid a fee for its services. A more detailed
discussion regarding Banc One Investment Advisors, its
services and compensation can be found in the Prospectus under
the headings "The Advisor" and "Expense Summary."
<PAGE>
2
THE ONE GROUP(R)
GOVERNMENT MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks high current income with liquidity and stability of principal.
[ICON] PORTFOLIO SECURITIES
The Fund invests exclusively in securities that are issued or guaranteed by the
U.S. government or by select U.S. government agencies and instrumentalities,
some of which are subject to repurchase agreements, as well as variable and
floating rate instruments, mortgage-backed securities, and puts. The Fund may
invest in other money market funds if those funds have similar investment
policies and objectives and invest only in securities with short-term ratings
that are equal to or higher than those in which the Fund invests. The Fund also
engages in securities lending. For a list of all the securities in which the
Fund may invest, please read "Investment Practices."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1)
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily net assets)
Investment Advisory Fees .08%
Other Expenses .10%
Total Fund Operating Expenses .18%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) 5% annual return; and (2) redemption at the end of each time
period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$ 2 $ 6 $10 $ 23
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
3
THE ONE GROUP(R) GOVERNMENT MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception
if less than 10 years. The total returns in the table represent the rate a
shareholder would have earned on an investment in the Fund
(assuming reinvestment of all dividends and distributions). This information has
been derived from financial statements audited by Coopers & Lybrand L.L.P.,
whose report, along with the Fund's financial statements, is included in the
Statement of Additional Information, which is available upon request.
<TABLE>
<CAPTION>
JUNE 14,
1993 TO
YEARS ENDED JUNE 30, JUNE 30,
------------------------------------------------------------------
1997 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.053 0.055 0.053 0.033 0.001
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.053) (0.055) (0.053) (0.033) (0.001)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 5.43% 5.61% 5.41% 3.40% 3.28%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 1,083,438 $ 855,613 $ 720,699 $ 692,253 $ 244,991
Ratio of expenses to average net
assets 0.14% 0.18% 0.21% 0.11% 0.07%(b)
Ratio of net investment income to
average net assets 5.31% 5.46% 5.28% 3.41% 3.13%(b)
Ratio of expenses to average net
assets* 0.14% 0.18% 0.22% 0.20% 0.33%(b)
Ratio of net investment income to
average net assets* 5.31% 5.46% 5.27% 3.32% 2.87%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
3
<PAGE>
4
THE ONE GROUP(R)
TREASURY ONLY MONEY MARKET FUND
[ICON] INVESTMENT OBJECTIVE
The Fund seeks high current income with liquidity and stability of principal
with the added assurance of a Fund that does not purchase securities that are
subject to repurchase agreements.
[ICON] PORTFOLIO SECURITIES
The Fund invests exclusively in U.S. Treasury bills, notes, bonds and other U.S.
obligations issued or guaranteed by the U.S. Treasury. The Fund also engages in
securities lending. For a list of all the securities in which the Fund may
invest, please read "Investment Practices."
SHAREHOLDER EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (1)
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) none
ANNUAL OPERATING EXPENSES (2)
(as a percentage of average daily net assets)
Investment Advisory Fees .08%
Other Expenses .10%
Total Fund Operating Expenses .18%
</TABLE>
(1) If you buy or sell shares through a Shareholder Servicing Agent, you may be
charged separate transaction fees by the Shareholder Servicing Agent. In
addition, a $7.00 charge is deducted from redemption amounts paid by wire.
(2) Expense information has been restated to reflect current fees.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming: (1) 5% annual return; and (2) redemption at the end of each time
period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$ 2 $ 6 $10 $ 23
</TABLE>
These examples are designed to assist you in understanding the various costs and
expenses that may be directly or indirectly paid by investors in the Fund. THESE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
5
THE ONE GROUP(R) TREASURY ONLY MONEY MARKET FUND FINANCIAL HIGHLIGHTS
The Financial Highlights are intended to help you understand the Fund's
financial performance for the past 10 years, or since inception if less than 10
years. The total returns in the table represent the rate a shareholder would
have earned on an investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
APRIL 16,
YEARS ENDED JUNE 30, 1993 TO
--------------------------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net investment income 0.051 0.052 0.051 0.032 0.006
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net investment income (0.051) (0.052) (0.051) (0.032) (0.006)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 5.24% 5.38% 5.22% 3.23% 2.96%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 480,860 $ 415,961 $ 288,697 $ 217,725 $ 60,330
Ratio of expenses to average net assets 0.15% 0.17% 0.20% 0.15% 0.07%(b)
Ratio of net investment income to average
net assets 5.12% 5.23% 5.14% 3.23% 2.95%(b)
Ratio of expenses to average net assets* 0.15% 0.17% 0.21% 0.22% 0.33%(b)
Ratio of net investment income to average
net assets* 5.12% 5.23% 5.13% 3.16% 2.69%(b)
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as
indicated. (a) Period from commencement of operations. (b) Annualized.
<PAGE>
6
MORE ABOUT THE FUNDS
PORTFOLIO QUALITY
- ----------------------------------------------------
Securities will be purchased by the Funds only if Banc One Investment Advisors
determines that they present minimal credit risk under guidelines adopted by the
Board of Trustees. In addition, unless a more specific rating is specified, all
investments of the Funds must be rated in one of the two highest rating
categories described in "Description of Ratings" in the Appendix. If an
investment is unrated, Banc One Investment Advisors must determine that it is of
comparable quality to a rated security. Banc One Investment Advisors will look
at a security's rating at the time of investment. For more information about
ratings, please see "Description of Ratings" in the Appendix.
ILLIQUID INVESTMENTS
- ----------------------------------------------------
Each Fund may invest up to 10% of its net assets in illiquid investments. A
security is illiquid if it cannot be sold at approximately the value assessed by
the Fund within seven (7) days. Banc One Investment Advisors will follow
guidelines adopted by The One Group Board of Trustees in determining whether an
investment is illiquid.
SPECIAL RISK CONSIDERATIONS
- ----------------------------------------------------
NET ASSET VALUE: There is no assurance that the Funds will meet their investment
objectives or be able to maintain a net asset value of $1.00 per share on a
continuous basis.
PORTFOLIO TURNOVER: The Funds attempt to increase yield by taking advantage of
short-term market variations. This policy is expected to result in high
portfolio turnover. However, this should not adversely affect the Funds because
they usually do not pay brokerage commissions when purchasing U.S. government
securities.
FIXED INCOME SECURITIES: The value of the securities held by the Funds will
increase or decrease based on changes in interest rates. If rates increase, the
value of the Funds' investments generally decline. On the other hand, if rates
fall, the value of the investments generally increases. The value of your
investment in a Fund will increase or decrease as the value of a Fund's
investments increase and decrease. While securities with longer duration and
maturities tend to produce higher yields, they also are subject to greater
fluctuations in value when interest rates change. Usually changes in the value
of fixed income securities will not affect cash income generated, but may affect
the value of your investment.
<PAGE>
7
HOW TO DO BUSINESS WITH THE ONE GROUP
PURCHASING
FUND SHARES
- ----------------------------------------------------
WHERE CAN I BUY SHARES?
You may purchase Fund shares from the following sources:
- - The One Group Services Company, and
- - Shareholder Servicing Agents. These include investment advisors, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
sponsors, or other intermediaries. Shares purchased this way will be held for
you by the Shareholder Servicing Agent.
WHO MAY PURCHASE FUND SHARES?
Fund shares may be purchased by:
- - Commercial and retail institutional investors, including affiliates of BANC
ONE CORPORATION, that have opened accounts with the Fund's transfer agent,
State Street Bank and Trust Company, either directly or through a Shareholder
Servicing Agent.
- - Individuals with a net worth, or joint net worth with their spouse, at the
time of purchase in excess of $1 million.
- - Individuals with annual income, or joint annual income with their spouse, at
the time of purchase in excess of $200,000.
- - If you have questions about eligibility, please call The One Group Services
Company at 1-800-480-4111.
WHEN CAN I BUY SHARES?
- - Purchases may be made on any business day. This includes any day that the
Funds are open for business, other than weekends and the following holidays:
New Years Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving, and Christmas.
- - Purchase requests will be effective on the day received by The One Group
Services Company and you will be eligible to receive dividends declared the
same day, if (i) such purchase orders are received by The One Group Services
Company before 2:00 p.m., Eastern Standard Time ("EST"), and (ii) the Fund's
custodian, State Street Bank and Trust Company, receives "federal funds"
before 4:00 p.m., EST. If State Street Bank and Trust Company does not receive
federal funds by the cut-off time, the purchase order will not be effective
until the next business day on which federal funds are timely received by
State Street Bank and Trust Company.
- - If your shares are held by a Shareholder Servicing Agent, it is the
responsibility of the Shareholder Servicing Agent to send your purchase or
redemption order to the Fund. Your Shareholder Servicing Agent may have an
earlier cut-off time for purchase and redemption requests.
- - The One Group Services Company can reject a purchase order if it does not
think that it is in the best interests of a Fund and/or shareholders to accept
the order.
- - Shares are electronically recorded. Therefore, certificates will not be
issued.
HOW MUCH DO SHARES COST?
- - Shares are sold at net asset value ("NAV").
- - NAV per share is calculated by dividing the total market value of a Fund's
investments and other assets (minus expenses) by the number of outstanding
shares. The Funds use their best efforts to maintain their NAV at $1.00,
although there is no guarantee that they will be able to do so.
- - NAV is calculated each business day as of 2:00 p.m. and 4:00 p.m. EST.
HOW DO I OPEN AN ACCOUNT?
1. Read the prospectus carefully, and select the Fund or Funds most appropriate
for you.
2. Decide how much you want to invest.
- The minimum initial investment is $1,000,000.
- Subsequent investments must be at least $5,000.
- The One Group Services Company may waive these minimums.
3. Complete the Account Application Form. Be sure to sign up for all of the
Account privileges that you plan to take advantage of. Doing so now means
that you will not have to complete additional paperwork later.
4. Send the completed application and a personal check (unless you choose to pay
by wire or bank transfer) payable to "The One Group" to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
5. All checks should be in U.S. dollars. Third party checks will not be
accepted. Redemptions from a Fund will not be permitted for ten (10) calendar
days if purchases are made by check.
<PAGE>
8
6. If you purchase shares through a Shareholder Servicing Agent, you may be
required to complete additional forms or follow additional procedures. You
should contact your Shareholder Servicing Agent regarding purchases,
exchanges and redemptions.
7. If you have any questions, contact your Shareholder Servicing Agent or call
The One Group Services Company at 1-800-480-4111.
CAN I PURCHASE SHARES OVER THE TELEPHONE?
Yes. Simply select this option on your Account Application Form and then:
- - Contact your Shareholder Servicing Agent or The One Group Services Company at
1-800-480-4111 to relay your purchase instructions.
- - Authorize a bank transfer or initiate a wire transfer payable to "The One
Group" to State Street Bank and Trust Company (see address above).
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
- - You may revoke your right to make purchases over the telephone by sending a
letter to:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
EXCHANGING
FUND SHARES
- ----------------------------------------------------
WHAT ARE MY EXCHANGE PRIVILEGES?
- - You may exchange your shares for shares of the other Fund described in this
prospectus. You may also exchange your shares for shares of any institutional
money market fund that The One Group may offer.
- - The One Group may change the terms and conditions of your exchange privileges
upon 60 days written notice.
- - The One Group does not charge a fee for this privilege.
WHEN ARE EXCHANGES PROCESSED?
Exchanges are processed the same business day they are received, provided:
- - State Street Bank and Trust Company receives the request by 12:30 p.m. EST.
- - You have provided The One Group with all of the information necessary to
process the exchange.
- - You have received a current prospectus of the Fund or Funds into which you
wish to invest.
- - You have contacted your Shareholder Servicing Agent, if necessary.
ARE EXCHANGES TAXABLE?
Generally:
- - An exchange between Funds is considered a sale and generally results in a
capital gain or loss for Federal income tax purposes.
- - You should talk to your tax advisor before making an exchange.
ARE THERE LIMITS ON EXCHANGES?
Yes. The exchange privilege is not intended as a way for you to speculate on
short term movements in the market. Therefore:
- - To prevent disruptions in the management of the Funds, The One Group limits
excessive exchange activity.
- - Exchange activity is excessive if it EXCEEDS TWO SUBSTANTIVE EXCHANGE
REDEMPTIONS (WITHIN 30 DAYS OF EACH OTHER) WITHIN A TWELVE MONTH PERIOD.
- - In addition, The One Group reserves the right to reject any exchange request
(even those that are not excessive) if the Fund reasonably believes that the
exchange will result in excessive transaction costs or otherwise adversely
affect other shareholders.
REDEEMING
FUND SHARES
- ----------------------------------------------------
WHEN CAN I REDEEM SHARES?
- - You may redeem all or some of your shares on any day that the Funds are open
for business.
- - Redemption requests received by The One Group Services Company before 4:00
p.m. EST, will be effective that day.
HOW DO I REDEEM SHARES?
- - Unless you have selected the telephone option on your Account Application
Form, you must send a written redemption request to your Shareholder Servicing
Agent, if applicable, or to State Street Bank and Trust Company at the
following address:
State Street Bank and Trust Company
c/o The One Group
P.O. Box 8500
Boston, MA 02266-8500
- - You may request redemption forms by calling The One Group Services Company at
1-800-480-4111.
<PAGE>
9
- - State Street Bank and Trust Company may require that the signature on your
redemption request be guaranteed by a commercial bank, a member of a domestic
stock exchange, or a member of the Securities Transfer Association Medallion
Program or the Stock Exchange Medallion Program, unless:
1. the redemption is for $50,000 worth of shares or less;
2. the redemption is payable to the shareholder of record; and
3. the redemption check is mailed to the shareholder at the record address.
- - On the Account Application Form you may elect to have the redemption proceeds
mailed or wired to:
1. a designated commercial bank; or
2. State Street Bank and Trust Company or your Shareholder Servicing Agent.
- - State Street Bank and Trust Company may charge a wire redemption fee. The
current charge is $7.00.
- - Your redemption proceeds will ordinarily be paid within seven days after
receipt of the redemption request. However, the Funds will attempt to honor
requests for next day payment on redemptions, if the request is received
before 12:30 p.m., EST.
- - The Funds will attempt to honor requests for payments in two business days, if
the redemption request is received after the time listed above.
WHAT WILL MY SHARES BE WORTH?
- - The NAV of shares of the Funds is expected to remain constant at $1.00 per
share, although there is no assurance that this will always be the case.
- - You will receive the NAV calculated after your redemption request is received.
Please read "How Much Do Shares Cost?"
CAN I REDEEM BY TELEPHONE?
Yes, if you selected this option on your Account Application Form.
- - Call your Shareholder Servicing Agent or State Street Bank and Trust Company
at 1-800-480-4111 to relay your redemption request.
- - Your redemption proceeds will be mailed or wired to the commercial bank
account you designated on your Account Application Form.
- - State Street Bank and Trust Company may charge a wire redemption fee. The
current charge is $7.00.
- - The One Group uses reasonable procedures to confirm that instructions given by
telephone are genuine. These procedures include recording telephone
instructions and asking for personal identification. If these procedures are
followed, The One Group will not be responsible for any loss, liability, cost
or expense of acting upon unauthorized or fraudulent instructions; you bear
the risk of loss.
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
- - All redemptions will be for cash. The redemption price of shares is expected
to remain constant at $1.00 per share, although there is no assurance that
this will always be the case.
- - If you redeem shares for which you paid by check, and The One Group has not
yet received payment on the check, The One Group will delay forwarding your
redemption proceeds for 10 or more days until payment has been collected from
your bank.
- - Because of the high cost of handling small investments, The One Group will
automatically redeem shares in accounts which, because of shareholder
redemptions, have values of less than $50,000. No sales charges will be
assessed and you will be given 60 days to make additional investments in the
Fund to increase the value of your account to at least $50,000.
- - The One Group may suspend your ability to redeem, or will redeem your shares
involuntarily, when it seems appropriate to do so in light of its
responsibilities under the Federal securities laws. The Statement of
Additional Information offers more details about this process.
<PAGE>
10
SHAREHOLDER INFORMATION
VOTING RIGHTS
- ----------------------------------------------------
The Funds do not hold annual shareholder meetings, but may hold special
meetings. The special meetings are held, for example, to elect or remove
Trustees, change a Fund's fundamental investment objective, or approve an
investment advisory contract.
As a Fund shareholder, you have one vote for each share that you own. Each Fund
votes separately on matters relating solely to that Fund, or which affect that
Fund differently. However, all shareholders will have equal voting rights on
matters that affect all shareholders equally.
BANC ONE CORPORATION (100 East Broad Street, Columbus, Ohio, 43271), through its
affiliates, may be deemed for purposes of the Investment Company Act of 1940, to
control the Government Money Market Fund. This is because as of August 5, 1997,
BANC ONE CORPORATION or its affiliates possessed the power to vote substantially
all of the shares of that Fund.
DIVIDEND POLICIES
- ----------------------------------------------------
DIVIDENDS
The Funds generally declare dividends on each business day. Dividends are
distributed on the first business day of each month. Capital gains, if any, for
all Funds are distributed at least annually.
DIVIDEND REINVESTMENT
You automatically will receive all income dividends and capital gain
distributions in additional shares of the same Fund, unless you have elected to
take such payment in cash. The price of the shares is the NAV determined
immediately following the dividend record date. Reinvested dividends and
distributions receive the same tax treatment as dividends and distributions paid
in cash.
If you want to change the way in which you receive dividends and distributions,
you must write to State Street Bank & Trust Company at P.O. Box 8500, Boston, MA
02266-8500, at least 15 days prior to the distribution. The change is effective
upon receipt by State Street.
TAX TREATMENT OF THE FUNDS
- ----------------------------------------------------
TAX STATUS OF THE FUND
Each Fund intends to qualify as a "regulated investment company" for Federal
income tax purposes. If the Funds qualify, as they have in the past, they will
pay no federal income tax on the earnings they distribute to shareholders.
TAX TREATMENT OF SHAREHOLDERS
- ----------------------------------------------------
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange, or redemption of Fund shares will generally produce either a
taxable gain or a loss. You are responsible for any tax liabilities generated by
your transactions.
TAXATION OF DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gain) to investors on at
least an annual basis. Dividends you receive from a Fund, whether reinvested or
received in cash, will be taxable to you. Dividends from a Fund's net investment
income will be taxable as ordinary income and dividends from a Fund's long-term
capital gains will be taxable to you as such, regardless of how long you have
held the shares.
Dividends paid in January, but declared in October, November or December of the
previous year, will be considered to have been paid the previous December.
TAX INFORMATION
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category. Even though the Funds provide you with this
information, you are responsible for verifying your tax liability with your tax
professional. For additional tax information see the Statement of Additional
Information. Please note that this tax discussion is general in nature; no
attempt has been made to present a complete explanation of the Federal, state,
local or foreign tax treatment of the Funds or their shareholders.
SHAREHOLDER INQUIRIES
- ----------------------------------------------------
If you have any questions or need additional information, please write The One
Group Services Company at 3435 Stelzer Road, Columbus, OH 43219 or call
1-800-480-4111.
REPORTING
In March and September you will receive a financial report from The One
Group. In addition, The One Group will periodically send you proxy
statements and other reports.
<PAGE>
11
ORGANIZATION AND MANAGEMENT OF THE FUNDS
THE FUNDS
Each Fund is a series of The One Group, an open-end management investment
company. The One Group currently consists of 40 separate Funds. Two of the Funds
are described in this prospectus; the other Funds are described in separate
prospectuses. Each Fund described in this prospectus is diversified. Each Fund
is supervised by the Board of Trustees.
THE BOARD OF TRUSTEES
The Trustees oversee the management and administration of the Funds. The
Trustees are responsible for making major decisions about each Fund's investment
objectives and policies, but delegate the day-to-day administration of the Funds
to the officers of The One Group.
THE ADVISOR
Banc One Investment Advisors makes the day-to-day investment decisions for the
Funds and continuously reviews, supervises and administers the Funds' investment
programs. Banc One Investment Advisors has served as investment advisor to The
One Group since 1993. Prior to that time, The One Group was advised by
affiliates of Banc One Investment Advisors. In addition to The One Group, Banc
One Investment Advisors serves as investment advisor to other mutual funds and
individual, corporate, charitable and retirement accounts. As of June 30, 1997,
Banc One Investment Advisors, an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, managed over $47 billion in assets. For the fiscal year ended June
30, 1997, the Funds paid investment advisory fees of .08% of each Fund's average
daily net assets.
THE DISTRIBUTOR
The One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, a
wholly-owned subsidiary of The BISYS Group, Inc., markets the Funds and
distributes shares through selling brokers, financial institutions, investment
advisors, and other financial representatives.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The One Group Services Company also serves as the Funds' administrator. The One
Group Services Company is responsible for responding to shareholder inquiries
and requests for information, as well as providing regulatory compliance and
reporting. For these services, The One Group Services Company receives an annual
fee of .05% of each Fund's average daily net assets. The fee is calculated daily
and paid monthly. Banc One Investment Advisors, the Sub-Administrator, provides
office space, equipment, and facilities, as well as legal and regulatory
support.
THE TRANSFER AGENT, CUSTODIAN, AND SUB-CUSTODIAN
State Street Bank and Trust Company, P.O. Box 8500, Boston, MA 02266-8500, or
your Shareholder Servicing Agent, if appropriate, handles shareholder
recordkeeping and statements, distributes dividends, and processes buy and sell
requests. As the Funds' custodian, State Street holds the Funds' assets, settles
all portfolio trades and assists in calculating the Funds' net asset values.
Bank One Trust Company, N.A. serves as sub-custodian in connection with the
Funds' securities lending activities under an agreement with State Street Bank
and Trust Company. Bank One Trust Company, N.A. is paid a fee for this service.
<PAGE>
12
DETAILS ABOUT THE FUNDS' INVESTMENT PRACTICES AND POLICIES
INVESTMENT PRACTICES
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. What follows is
a list of the securities and techniques utilized by the Funds, as well as the
risks inherent in their use. Fixed income securities are primarily influenced by
market, credit and prepayment risks, although certain securities may be subject
to additional risks. For a more complete discussion, please see the Statement of
Additional Information. Following the table is a more complete discussion of
risk.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
<S> <C> <C>
The One Group(R) Government Money Market Fund 1
The One Group(R) Treasury Only Money Market
Fund 2
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
<S> <C> <C>
U.S. TREASURY OBLIGATIONS: Bills, notes, and bonds. 1, 2 Market
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies 1 Market
and instrumentalities of the U.S. Government. These include Credit
Ginnie Mae, Fannie Mae, and Freddie Mac.
REPURCHASE AGREEMENTS: The purchase of a security and the 1 Credit
simultaneous commitment to return the security to the seller at Market
an agreed upon price on an agreed upon date. This is treated as Liquidity
a loan.
PUT OPTIONS: A put option gives the buyer the right to sell, and 1 Liquidity
obligates the seller to buy, a security at a specified price. Management
The Fund will sell only secured put options. Market
Credit
Leverage
SECURITIES LENDING: The lending of up to 33% of the securities 1, 2 Credit
owned by a Fund. In return the Fund will receive cash and/or Market
other securities as collateral. Leverage
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Purchase or 1, 2 Market
contract to purchase securities at a fixed price for delivery at Leverage
a future date. Liquidity
INVESTMENT COMPANY SECURITIES: Shares of other mutual funds, 1 Market
including money market funds of The One Group and shares of
other investment companies for which Banc One Investment
Advisors serves as investment advisor or administrator. Banc One
Investment Advisors will waive certain fees when investing in
funds for which it serves as investment advisor.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with 1 Market
interest rates which are reset daily, weekly, quarterly or some Credit
other period and which may be payable to Credit the Fund on Liquidity
demand.
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real 1 Pre-payment
estate loans and pools of loans. These include collateralized Market
mortgage obligations ("CMOs") and Real Estate Mortgage Credit
Investment Conduits ("REMICs"). Regulatory
</TABLE>
<PAGE>
13
INVESTMENT RISKS
- ----------------------------------------------------
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above. Because of these risks, the
value of the securities in the Funds may fluctuate, as will the value of your
investment in the Funds. Certain investments are more susceptible to these risks
than others.
- - CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default
rises.
- - LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
- - LIQUIDITY RISK. The risk that certain securities may be difficult or
impossible to sell at the time and the price that normally prevails in the
market. The seller may have to lower the price, sell other securities instead
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
- - MANAGEMENT RISK. The risk that a strategy used by a fund's management may fail
to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks.
- - MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than
it was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy or the market as a whole. There also is the
risk that the current interest rate may not accurately reflect existing market
rates. For fixed income securities, market risk is largely, but not
exclusively, influenced by changes in interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Finally, key information about a security or market may be
inaccurate or unavailable.
- - PRE-PAYMENT RISK. The risk that the principal repayment of a security will
occur at an unexpected time, especially that the repayment of a mortgage or
asset-backed security occurs either significantly sooner or later than
expected. Changes in pre-payment rates can result in greater price and yield
volatility. Pre-payments generally accelerate when interest rates decline.
When mortgage and other obligations are pre-paid, a Fund may have to reinvest
in securities with a lower yield. Further, with early repayment, a Fund may
fail to recover any premium paid, resulting in an unexpected capital loss.
- - REGULATORY RISK. The risk associated with Federal and state laws which may
restrict the remedies that a mortgage lender has when a borrower defaults on
mortgage loans. These laws include restrictions on foreclosures, redemption
rights after foreclosure, Federal and state bankruptcy and debtor relief laws,
restrictions on "due on sale" clauses, and state usury laws.
INVESTMENT POLICIES
- ----------------------------------------------------
Each Fund's investment objective and the following investment policies
summarized below are fundamental. This means that they cannot be changed without
the consent of a majority of the outstanding shares of the Funds. The full text
of the fundamental policies can be found in the Statement of Additional
Information.
FUNDAMENTAL POLICIES OF EACH FUND
Each Fund:
1. Will use its best efforts to maintain a constant net asset value of $1.00 per
share, although there is no guarantee that the Funds will be able to do so.
2. Will not purchase the securities of an issuer if as a result more than 5% of
its total assets would be invested in the securities of that issuer or the
Fund would own more than 10% of the outstanding voting securities of that
issuer. This does not include securities issued or guaranteed by the United
States, its agencies or instrumen-
<PAGE>
14
talities, and repurchase agreements involving these securities. This
restriction applies with respect to 75% of a Fund's total assets. The Funds
may invest the remaining 25% of their total assets without restriction.
3. Will not purchase securities while borrowings (including reverse repurchase
agreements) exceed 5% of the respective Fund's assets.
4. Will not borrow money or issue senior securities, except that the Funds may
borrow from banks for temporary purposes in amounts not exceeding 10% of
their total assets at the time of the borrowing.
5. Will not mortgage, pledge or hypothecate any assets, except in connection
with borrowing specified in 4 above and in amounts not in excess of the
lesser of the dollar amount borrowed or 10% of the value of the respective
Fund's total assets at the time of its borrowing.
FUNDAMENTAL POLICIES OF SPECIFIC FUNDS
The Treasury Only Money Market Fund:
1. Will not purchase securities other than U.S. Treasury bills, notes and other
U.S. obligations issued or guaranteed by the U.S. Treasury.
2. Will not invest in any securities subject to repurchase agreements.
The Government Money Market Fund:
1. Will not purchase securities other than those issued or guaranteed by the
U.S. government or its agencies or instrumentalities, some of which may be
subject to repurchase agreements.
Additional investment policies can be found in the Statement of Additional
Information.
<PAGE>
15
APPENDIX
DESCRIPTION OF RATINGS
The following is a summary of published ratings by major credit rating agencies.
Credit ratings evaluate only the safety of principal and interest payments, not
the market value risk of lower quality securities. Credit rating agencies may
fail to change credit ratings to reflect subsequent events on a timely basis.
Although Banc One Investment Advisors considers security ratings when making
investment decisions, it also performs its own investment analysis and does not
rely solely on the ratings assigned by credit agencies.
Unrated securities will be treated as non-investment grade securities unless
Banc One Investment Advisors determines that such securities are the equivalent
of investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
DUFF & PHELPS CREDIT RATING CO. ("DUFF")
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free U.S. Treasury
obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
STANDARD & POOR'S CORPORATION ("S&P")
A-1 Highest category of commercial paper. Capacity to meet financial
commitment is strong. Obligations designated with a plus sign (+)
indicate that capacity to meet financial commitment is extremely
strong.
A-2 Issues somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than obligations in higher rating
categories. However, the capacity to meet financial commitments is
satisfactory.
FITCH'S INVESTORS SERVICE, L.P. ("FITCH")
F-1+ Exceptionally strong credit quality. Strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Assurance of timely payment is only
slightly less in degree than issues rated F-1+.
F-2 Good credit quality. Satisfactory degree of assurance for timely
payment, but the margin of safety is not as good as for issues assigned
F-1+ and F-1 ratings.
IBCA LIMITED ("IBCA")
A1 Highest capacity for timely repayment. Those issues rated A1+ possess a
particularly strong credit feature.
A2 Satisfactory capacity for timely repayment although such capacity may
be susceptible to adverse changes in business, economic or financial
conditions.
MOODY'S INVESTORS SERVICE ("MOODY'S")
PRIME-1 Superior ability for repayment.
PRIME-2 Strong ability for repayment.
DESCRIPTION OF BANK RATINGS
MOODY'S
These ratings represent Moody's opinion of a bank's intrinsic safety
and soundness.
A These banks possess exceptional intrinsic financial strength. Typically
they will be major financial institutions with highly valuable and
defensible business franchises, strong financial fundamentals, and a
very attractive and stable operating environment.
B These banks possess strong intrinsic financial strength. Typically,
they will be important institutions with valuable and defensible
business franchises, good financial fundamentals, and an attractive and
stable operating environment.
C These banks possess good intrinsic financial strength. Typically, they
will be institutions with valuable and defensible business franchises.
These banks will demonstrate either acceptable financial fundamentals
within a stable operating environment, or better than average financial
fundamentals within an unstable operating environment.
<PAGE>
16
S&P
S&P's credit rating is a current opinion of an obligor's overall financial
capacity (its creditworthiness) to pay its financial obligation.
AAA The highest rating assigned by S&P. The obligor's capacity to meet its
financial commitment on the obligation is extremely strong.
AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A The obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
DESCRIPTION OF INSURANCE RATINGS
MOODY'S
These ratings represent Moody's opinions of the ability of insurance companies
to pay punctually senior policyholder claims and obligations.
Aaa Insurance companies rated in this category offer exceptional financial
security. While the financial strength of these companies is likely to
change, such changes as can be visualized are most unlikely to impair
their fundamentally strong position.
Aa These insurance companies offer excellent financial security. Together
with the Aaa group, they constitute what are generally known as high
grade companies. They are rated lower than Aaa companies because
long-term risks appear somewhat larger.
A Insurance companies rated in this category offer good financial
security. However, elements may be present which suggest a
susceptibility to impairment sometime in the future.
S&P
S&P's credit rating is a current opinion of the creditworthiness of an obligor
with respect to a specific financial obligation, a specific class of financial
obligations, or a specific financial program.
AAA This is the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.
AA AA The obligor's capacity to meet its financial commitments on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
DESCRIPTION OF CORPORATE/MUNICIPAL BOND RATINGS
S&P
Investment Grade
AAA The highest rating. The rating indicates an extremely strong capacity to
meet its financial commitment.
AA Differs from AAA issues only in a small degree. The obligor's capacity
to meet its financial commitment is very strong.
A These bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories. However, capacity to meet its financial commitment on
the obligation is still strong.
BBB Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to meet its financial commitment on the obligation.
Speculative Grade
BB Less vulnerable to non-payment than other speculative issues. However,
these bonds face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to
inadequate capacity to meet financial commitment on the obligation.
B More vulnerable to non-payment than obligations rated BB, but currently
has the capacity to meet its financial commitment on the obligation.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to meet its financial commitment on the
obligation.
CCC Currently vulnerable to non-payment, and is dependent upon favorable
business, financial, and economic conditions to meet its financial
commitment on the obligation. In the event of adverse busi-
<PAGE>
17
ness, financial, or economic conditions, they are not likely to have the
capacity to meet its financial commitment on the obligation.
CC Currently highly vulnerable to non-payment.
C This rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.
D Bonds in payment default.
Ratings from AA to CCC may be modified by a plus (+) or minus (-) to show
relative standing within the major rating categories.
MOODY'S
Investment Grade
Aaa Best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large, or an exceptionally stable, margin and principal is secure.
Aa High quality by all standards. Margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be
greater, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A These bonds possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa These bonds are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Non-Investment Grade
BA These bonds have speculative elements; their future cannot be
considered as well assured. The protection of interest and principal
payments may be very moderate and thereby not well safeguarded during
good and bad times over the future.
B These bonds lack the characteristics of a desirable investment (i.e.,
potentially low assurance of timely interest and principal payments or
maintenance of other contract terms over any long period of time may be
small).
Caa Bonds in this category have poor standing and may be in default. These
bonds carry an element of danger with respect to principal and interest
payments.
Ca Speculative to a high degree and could be in default or have other
marked shortcomings. Ca is the lowest rating.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S
MIG1 & VMIG1 Short-term municipal securities rated MIG1 or VMIG1 are of
the best quality. They have strong protection from established cash
flows, superior liquidity support or demonstrated broad-based access
to the market for refinancing.
MIG2 & VMIG2 These Short-term municipal securities are of high quality.
Margins of protection are ample although not so large as in the
preceding group.
MIG3 & VMIG3 Favorable quality. All security elements are accounted for,
but the undeniable strength of the preceding grades is lacking.
Liquidity and cash flow protection may be narrow and marketing
access for refinancing is likely to be less well established.
S&P
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S
Aaa Top-quality preferred stock. This rating indicates good asset
protection and the
<PAGE>
18
least risk of dividend impairment within the universe of preferred
stocks.
aa High-grade preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will remain
relatively well maintained in the foreseeable future.
a Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classification, earnings
and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa Medium-grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but
may be questionable over any great length of time.
S&P
S&P's preferred stock rating is an assessment of the capacity and willingness of
an issuer to pay preferred stock dividends and any applicable sinking fund
obligations.
AAA Highest rating. This rating indicates an extremely strong capacity to
pay the preferred stock obligations.
AA High-quality, fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated "AAA."
A Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB Backed by an adequate capacity to pay the preferred stock obligations.
Whereas the issuer normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
SHORT-TERM DEBT RATINGS
Thompson Bank Watch, Inc. ("TBW") assigns ratings to specific debt instruments
with original maturities of one year or less. The TBW Short-Term ratings
specifically assess the likelihood of an untimely payment of principal and
interest.
TBW-1 Very high degree of likelihood that principal and interest will be paid
on a timely basis.
TBW-2 While degree of safety regarding timely repayment of principal and
interest is strong, the relative degree is not as high as for issues
rated TBW-1.
TBW-3 Lowest investment grade category. While more susceptible to adverse
developments than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.
TBW-4 Non-investment grade and, therefore, speculative.
<PAGE>
INVESTMENT ADVISOR AND SUB-ADMINISTRATOR
Banc One Investment Advisors Corporation
1111 Polaris Parkway
P.O. Box 710211
Columbus, OH 43271-0211
DISTRIBUTOR
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
ADMINISTRATOR
The One Group Services Company
3435 Stelzer Road
Columbus, OH 43219
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8500
Boston, MA 02266-8500
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT
THE FUNDS. THE CURRENT STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE WITHOUT CHARGE BY
CALLING 1-800-480-4111 OR BY WRITING TO THE ONE GROUP SERVICES COMPANY AT 3435
STELZER ROAD, COLUMBUS, OHIO 43219. THE STATEMENT OF ADDITIONAL INFORMATION IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE. THE SEC MAINTAINS A WEB SITE
(WWW.SEC.COM) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIALS
INCORPORATED BY REFERENCE AND OTHER INFORMATION REGARDING THE ONE GROUP(R).
TOG-F-124
<PAGE>
EXHIBIT (17)(c)
STATEMENT OF ADDITIONAL INFORMATION FOR MARQUIS FUNDS AND THE ONE GROUP
<PAGE>
MARQUIS FUNDS-REGISTERED TRADEMARK-
STATEMENT OF ADDITIONAL INFORMATION
Investment Adviser:
First National Bank of Commerce in New Orleans
This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus. It provides
information about the activities and operations of Marquis Funds (the "Trust")
in addition to the information provided in the Trust's prospectuses dated
February 1, 1998 (the "Prospectuses") and should be read in conjunction with a
Prospectus. Prospectuses may be obtained through the Trust's shareholder
servicing and transfer agent, DST Systems, Inc., 1004 Baltimore Street, Kansas
City, Missouri 64105, or by calling 1-800-471-1144.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust............................................................................ B- 2
Additional Description of Permitted Investments...................................... B- 2
Investment Limitations............................................................... B-17
The Adviser and Sub-Adviser.......................................................... B-22
SIMC and The Money Managers.......................................................... B-23
The Administrator.................................................................... B-25
The Distributor...................................................................... B-26
The Portfolios' Administrator and Shareholder Servicing Agent........................ B-28
Trustees and Officers................................................................ B-28
Computation of Yield................................................................. B-32
Calculation of Total Return.......................................................... B-34
Purchase and Redemption of Shares.................................................... B-36
Conversion Feature................................................................... B-37
Letter of Intent..................................................................... B-37
Determination of Net Asset Value..................................................... B-37
Taxes................................................................................ B-38
Fund Transactions.................................................................... B-42
Trading Practices and Brokerage...................................................... B-43
Portfolio Turnover................................................................... B-49
Description of Shares................................................................ B-49
Shareholder Liability................................................................ B-50
Limitation of Trustees' Liability.................................................... B-50
5% Shareholders...................................................................... B-50
Financial Statements................................................................. B-54
</TABLE>
February 1, 1998
MRQ-F-004-07
B-1
<PAGE>
THE TRUST
Marquis Funds-Registered Trademark- is an open-end management investment
company established under Massachusetts law as a "Massachusetts business trust"
under an Agreement and Declaration of Trust dated June 29, 1993 (the
"Declaration of Trust"). The Declaration of Trust permits the Trust to offer
separate series of units of beneficial interest ("shares") and different classes
of shares of each series. The Trust consists of eleven series: the Government
Securities Fund, the Louisiana Tax-Free Income Fund (the "Louisiana Fund"), the
Strategic Income Bond Fund, the Balanced Fund, the Value Equity Fund, the Growth
Equity Fund, the Small Cap Equity Fund, and the International Equity Fund (the
"Non-Money Market Funds"); and the Treasury Securities Money Market Fund, the
Institutional Money Market Fund and the Tax Exempt Money Market Fund (the "Money
Market Funds") (collectively, the "Funds"). Each Fund is a diversified mutual
fund, except the Louisiana Fund, which is non-diversified. Except for (i)
differences between the Class A and Class B shares of the Government Securities
Fund, the Louisiana Fund, the Strategic Income Bond Fund (together, the "Fixed
Income Funds"), the Balanced Fund, the Value Equity Fund, the Growth Equity
Fund, the Small Cap Equity Fund and the International Equity Fund (together, the
"Equity Funds"), pertaining to sales loads, service fees, dividends, voting
rights and distribution plans, (ii) differences between the Trust Class, Retail
Class and Cash Sweep Class shares of the Treasury Securities Money Market Fund
and (iii) differences between Retail Class and Cash Sweep Class shares of the
Tax Exempt Money Market Fund pertaining to distribution costs, distribution
plans, dividends and voting rights, each share of each Fund represents an equal
proportionate interest in that Fund. See "Description of Shares." Capitalized
terms not defined herein are defined in the Prospectuses. No investment in
shares of a Fund should be made without first reading that Fund's Prospectus
carefully.
Under a "Corporate Master-Feeder-TM-" structure, (i) the Small Cap Equity
Fund expects to invest up to 100% of its assets in the Small Cap Growth
Portfolio, a separate series of SEI Institutional Managed Trust ("SIMT") and
(ii) the International Equity Fund expects to invest up to 100% of its assets in
the International Equity Portfolio, a separate series of SEI International Trust
("SIT"). The Small Cap Growth Portfolio and the International Equity Portfolio
are referred to herein as the "Portfolios."
The investment policies of the Small Cap Equity Fund and the International
Equity Fund will be substantially similar to those of the Small Cap Growth
Portfolio and International Equity Portfolio, respectively, should the Funds
withdraw from the Corporate Master-Feeder-TM- structure and the Adviser manage
their assets directly.
Unless otherwise indicated, policies with respect to "a Fund," "all Funds"
or "Equity Funds" includes the Portfolios.
ADDITIONAL DESCRIPTION OF PERMITTED INVESTMENTS
VARIABLE AND FLOATING RATE NOTES
All Funds may invest in variable rate notes and floating rate notes
(together, "adjustable interest rate notes"). The Fixed Income Funds may invest
in adjustable interest rate notes issued by or on behalf of states (including
the District of Columbia), territories and possessions of the United States and
their respective authorities, agencies, instrumentalities and political
subdivisions; such notes constitute a form of Municipal Securities. A VARIABLE
RATE NOTE is a note whose terms provide for the adjustment of its interest rate
on set dates and which, upon such adjustment, can reasonably be expected to have
a market value that approximates its par value; the degree to which a variable
rate note's market value approximates its par value will depend on the frequency
of the readjustment of the note's interest rate and the length of time that must
elapse before the next readjustment. A FLOATING RATE NOTE is a note whose terms
provide for the adjustment of its interest rate whenever a specified interest
rate changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. Although there may be no active secondary
market with respect to a particular variable or floating rate note purchased by
a Fund, the Fund may seek to resell the note at any time to a third party. The
absence of an active secondary market,
B-2
<PAGE>
however, could make it difficult for the Fund to dispose of a variable or
floating rate note in the event the issuer of the note defaulted on its payment
obligations, and the Fund could, as a result or for other reasons, suffer a loss
to the extent of the default. In addition, a variable or floating rate demand
note with a demand notice exceeding seven days may be considered illiquid if
there is no secondary market for such securities. Variable or floating rate
notes may be secured by bank letters of credit.
For the Money Market Funds only, variable and floating rate notes will be
deemed to have maturities as follows:
1. A variable rate note, the principal amount of which is scheduled on the face
of the instrument to be paid in 397 calendar days or less, will be deemed by
a Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
2. A variable rate note that is subject to a demand feature will be deemed by a
Fund to have a maturity equal to the longer of the period remaining until
the next readjustment of the interest rate or the period remaining until the
principal amount can be recovered through demand.
3. A floating rate note that is subject to a demand feature will be deemed by a
Fund to have a maturity equal to the period remaining until the principal
amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund is
entitled to receive the principal amount of the note either at any time on no
more than thirty days' notice or at specified intervals not exceeding 397 days
and upon no more than thirty days' notice.
The Fixed Income Funds and the Equity Funds may invest in variable amount
master demand notes, which may or may not be backed by bank letters of credit.
These variable rate notes permit the investment of fluctuating amounts at
varying market rates of interest pursuant to direct arrangements between the
Trust, as lender, and the borrower. Such notes provide that the interest rate on
the amount outstanding varies on a daily, weekly or monthly basis depending upon
a stated short-term interest rate index. Both the lender and the borrower have
the right to reduce the amount of outstanding indebtedness at any time. There is
no secondary market for the notes. It is not generally contemplated that such
instruments will be traded.
BANK OBLIGATIONS
The Funds are not prohibited from investing in obligations of banks that are
clients of SEI Investments Company ("SEI Investments"). However, the purchase of
shares of the Funds by such banks or by their customers will not be a
consideration in determining which bank obligations the Funds will purchase. The
Funds will not purchase obligations of the Adviser.
FORWARD FOREIGN CURRENCY CONTRACTS
The International Equity Portfolio may invest in forward foreign currency
contracts. Forward foreign currency contracts involve an obligation to purchase
or sell a specified currency at a future date at a price set at the time of the
contract. Forward currency contracts do not eliminate fluctuations in the values
of portfolio securities but rather allow the Portfolio to establish a rate of
exchange for a future point in time.
When entering into a contract for the purchase or sale of a security in a
foreign currency, the Portfolio may enter into a foreign forward currency
contract for the amount of the purchase or sale price to protect against
variations, between the date the security is purchased or sold and the date on
which payment is made or received, in the value of the foreign currency relative
to the United States dollar or other foreign currency.
Also, when a Money Manager anticipates that a particular foreign currency
may decline substantially relative to the United States dollar or other leading
currencies, in order to reduce risk, the Portfolio may enter into a forward
contract to sell, for a fixed amount, the amount of foreign currency
approximating the
B-3
<PAGE>
value of its securities denominated in such foreign currency. With respect to
any such forward foreign currency contract, it will not generally be possible to
match precisely the amount covered by that contract and the value of the
securities involved due to changes in the values of such securities resulting
from market movements between the date the forward contract is entered into and
the date it matures. In addition, while forward currency contracts may offer
protection from losses resulting from declines in value of a particular foreign
currency, they also limit potential gains which might result from increases in
the value of such currency. The Portfolio will also incur costs in connection
with forward foreign currency contracts and conversions of foreign currencies
into United States dollars.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES
The Fixed Income Funds and the Equity Funds may invest in securities issued
by GNMA, a wholly-owned U.S. Government corporation which guarantees the timely
payment of principal and interest. The market value and interest yield of these
instruments can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in a
pool of federally insured mortgage loans. GNMA certificates consist of
underlying mortgages with a maximum maturity of 30 years. However, due to
scheduled and unscheduled principal payments, GNMA certificates have a shorter
average maturity and, therefore, less principal volatility than a comparable
30-year bond. Since prepayment rates vary widely, it is not possible to predict
accurately the average maturity of a particular GNMA pool. The scheduled monthly
interest and principal payments relating to mortgages in the pool will be
"passed through" to investors. GNMA securities differ from conventional bonds in
that principal is paid back to the certificate holders over the life of the loan
rather than at maturity. As a result, there will be monthly scheduled payments
of principal and interest. In addition, there may be unscheduled principal
payments representing prepayments on the underlying mortgages. Although GNMA
certificates may offer yields higher than those available from other types of
U.S. Government securities, GNMA certificates may be less effective than other
types of securities as a means of "locking in" attractive long-term rates
because of the prepayment feature. For instance, when interest rates decline,
the value of a GNMA certificate likely will not rise as much as comparable debt
securities due to the prepayment feature. In addition, these prepayments can
cause the price of a GNMA certificate originally purchased at a premium to
decline in price to its par value, which may result in a loss.
SWAPS, CAPS, FLOORS AND COLLARS
The International Equity Portfolio may enter into swap, cap, floor and
collar arrangements. In a typical cap or floor agreement, one party agrees to
make payments only under specified circumstances, usually in return for payment
of a fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a specific interest
rate exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate falls
below an agreed-upon level. An interest rate collar combines elements of buying
a cap and selling a floor.
Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risk assumed. As a
result, swaps can be highly volatile and have a considerable impact on the
Portfolio's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. The Portfolio may also suffer
losses if it is unable to terminate outstanding swap agreements or reduce its
exposure through offsetting transactions. Any obligation the Portfolio may have
under these types of arrangements will be covered by setting aside liquid high
grade securities in a segregated account. The Portfolio will enter into swaps
only with counterparties believed to be creditworthy.
B-4
<PAGE>
MORTGAGE-BACKED SECURITIES
The Government Securities Fund, the Balanced Fund and Strategic Income Bond
Fund may, in addition to investing in GNMA securities, invest in other
mortgage-backed securities, principally collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs"). CMOs are
securities collateralized by mortgages, mortgage pass-throughs and
mortgage-backed bonds (general obligations of the issuers payable out of the
issuers' general funds and additionally secured by a first lien on a pool of
single-family detached properties).
Many CMOs are issued with a number of classes or series that have different
maturities and are retired in sequence. Investors purchasing such CMOs in the
shortest maturities receive or are credited with their pro rata portion of the
scheduled payments of interest and principal on the underlying mortgages plus
all unscheduled prepayments of principal up to a predetermined portion of the
total CMO obligation. Until that portion of such CMO obligation is repaid,
investors in the longer maturities receive interest only. Accordingly, the CMOs
in the longer maturity series are less likely than other mortgage pass-throughs
to be prepaid prior to their stated maturity. Although some of the mortgages
underlying CMOs may be supported by various types of insurance, and some CMOs
may be backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by U.S. Government agencies or instrumentalities, the CMOs themselves
generally are not guaranteed.
REMICs, which were authorized under the Internal Revenue Code of 1986, as
amended (the "Code"), are private entities formed for the purpose of holding a
fixed pool of mortgages secured by an interest in real property. REMICs are a
form of CMO, and issue multiple classes of securities.
ASSET-BACKED SECURITIES
The Government Securities, Balanced and Strategic Income Bond Funds may
invest in asset-backed securities including company receivables, truck and auto
loans, leases, and credit card receivables. Asset-backed securities, like
mortgage-backed securities, represent ownership of a pool of obligations. The
payment of principal and interest on non-mortgage asset-backed securities may be
guaranteed up to certain amounts and for a certain time period by a letter of
credit issued by a financial institution (such as a bank or insurance company)
unaffiliated with the issuers of such securities. In addition, these issues
typically have a short-intermediate maturity structure depending on the paydown
characteristics of the underlying financial assets which are passed through to
the security holder. The purchase of non-mortgage asset-backed securities raises
risk considerations peculiar to the financing of the instruments underlying such
securities. For example, due to the manner in which the issuing organizations
may perfect their interests in their respective obligations, there is a risk
that another party could acquire an interest in the obligations superior to that
of the holders of the asset-backed securities. Also, in most states the security
interest in a motor vehicle must be noted on the certificate of title to perfect
a security interest against competing claims of other parties. Due to the large
number of vehicles involved, however, the certificate of title to each vehicle
financed, pursuant to the obligations underlying the asset-backed securities,
usually is not amended to reflect the assignment of the seller's security
interest for the benefit of the holders of the asset-backed securities.
Therefore, the possibility exists that recoveries on repossessed collateral may
not, in some cases, be available to support payments on those securities. In
addition, various state and Federal laws give the motor vehicle owner the right
to assert against the holder of the owner's obligation certain defenses such
owner would have against the seller of the motor vehicle. The assertion of such
defenses could reduce payments on the related asset-backed securities. Insofar
as credit card receivables are concerned, credit card holders are entitled to
the protection of a number of state and Federal consumer credit laws, many of
which give such holders the right to set off certain amounts against balances
owed on the credit card, thereby reducing the amounts paid on such receivables.
In addition, unlike most other asset-backed securities, credit card receivables
are unsecured obligations of the card holder. Asset-backed securities entail
prepayment risk, which may vary depending on the type of asset but is generally
less than the prepayment risk associated with mortgage-backed securities.
B-5
<PAGE>
The development of non-mortgage asset-backed securities is at an early stage
compared to mortgage-backed securities. While the market for asset-backed
securities is becoming increasingly liquid, the market for non-mortgage
asset-backed securities is not as well developed as that for mortgage-backed
securities guaranteed by government agencies or instrumentalities. The Adviser
intends to limit its purchases of non-mortgage asset-backed securities to
securities that are readily marketable at the time of purchase.
SEPARATELY TRADED INTEREST AND PRINCIPAL SECURITIES ("STRIPS")
Each Fund may invest in STRIPS which are component parts of U.S. Treasury
Securities traded through the Federal Book-Entry System. The Adviser will only
purchase STRIPS that it determines are liquid or, if illiquid, do not violate
the Fund's investment policy concerning investments in illiquid securities.
Consistent with Rule 2a-7 of the Investment Company Act of 1940 (the "1940
Act"), the Adviser will purchase for the Money Market Funds only those STRIPS
that have a remaining maturity of 397 days or less; therefore, the Money Market
Funds currently may only purchase interest component parts of U.S. Treasury
Securities. While there is no limitation on the percentage of a Fund's assets
that may be comprised of STRIPS, the Adviser will monitor the level of such
holdings to avoid the risk of impairing shareholders' redemption rights and of
deviations in the value of shares of the Money Market Funds.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements with primary securities
dealers recognized by the Federal Reserve Bank of New York or with national
member banks as defined in Section 3(d)(1) of the Federal Deposit Insurance Act,
as amended. The repurchase agreement will have an agreed-upon price (including
principal and interest) and an agreed-upon repurchase date within a number of
days (usually not more than seven) from the date of purchase. The resale price
reflects the purchase price plus an agreed-upon market rate of interest which is
unrelated to the coupon rate or maturity of the underlying security. A
repurchase agreement involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value of the underlying
security.
The repurchase agreements entered into by the Funds will provide that the
underlying security at all times shall have a value at least equal to 100% of
the resale price stated in the agreement; the Adviser monitors compliance with
this requirement. Under all repurchase agreements entered into by a Fund, the
Custodian or its agent must take possession of the underlying collateral.
However, if the seller defaults, the Fund could realize a loss on the sale of
the underlying security to the extent that the proceeds of sale including
accrued interest are less than the resale price provided in the agreement
including interest. In addition, even though the Federal Bankruptcy Code
provides protection for proceedings, the Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if the Fund is treated as an unsecured creditor and required to return the
underlying security to the seller's estate.
MUNICIPAL SECURITIES
MUNICIPAL SECURITIES--The two principal classifications of Municipal
Securities are "general obligation" and "revenue" issues. General obligation
issues are issues involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues, although the
characteristics and method of enforcement of general obligation issues may vary
according to the law applicable to the particular issuer. Revenue issues are
payable only from the revenues derived from a particular facility or class of
facilities or other specific revenue source. The Louisiana Fund may also invest
in "moral obligation" issues, which are normally issued by special purpose
authorities. Moral obligation issues are not backed by the full faith and credit
of the state and are generally backed by the agreement of the issuing authority
to request appropriations from the state legislative body. Municipal Securities
include debt obligations issued by governmental entities to obtain funds for
various public purposes, such as the construction of a wide range of public
facilities, the refunding of outstanding obligations, the payment of
B-6
<PAGE>
general operating expenses, and the extension of loans to other public
institutions and facilities. Certain private activity bonds that are issued by
or on behalf of public authorities to finance various privately-owned or
operated facilities are included within the term "Municipal Securities." Private
activity bonds and industrial development bonds are generally revenue bonds, the
credit and quality of which are directly related to the credit of the private
user of the facilities.
Municipal Securities may also include general obligation notes, tax
anticipation notes, bond anticipation notes, revenue anticipation notes, project
notes, certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are sold by the Department of
Housing and Urban Development. While the issuing agency has the primary
obligation with respect to its project notes, they are also secured by the full
faith and credit of the United States through agreements with the issuing
authority which provide that, if required, the Federal government will lend the
issuer an amount equal to the principal of and interest on the project notes.
The quality of Municipal Securities, both within a particular classification
and between classifications, will vary, and the yields on Municipal Securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating(s)
of the issue. In this regard, it should be emphasized that the ratings of any
NRSRO are general and are not absolute standards of quality. Municipal
Securities with the same maturity, interest rate and rating(s) may have
different yields, while Municipal Securities of the same maturity and interest
rate with different rating(s) may have the same yield.
An issuer's obligations under its Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.
MUNICIPAL LEASES--The Louisiana Fund and Tax Exempt Money Market Fund may
invest in instruments, or participations in instruments, issued in connection
with lease obligations or installment purchase contract obligations of
municipalities ("municipal lease obligations"). Although municipal lease
obligations do not constitute general obligations of the issuing municipality, a
lease obligation is ordinarily backed by the municipality's covenant to budget
for, appropriate funds for, and make the payments due under the lease
obligation. However, certain lease obligations contain "non-appropriation"
clauses, which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose in the relevant years. Municipal lease obligations are a relatively
new form of financing, and the market for such obligations is still developing.
Municipal leases will be treated as liquid only if they satisfy criteria set
forth in guidelines established by the Board of Trustees, and there can be no
assurance that a market will exist or continue to exist for any municipal lease
obligation.
PUTS ON MUNICIPAL SECURITIES--The Louisiana Fund and Tax Exempt Money Market
Fund may acquire "puts" with respect to its acquisition of Municipal Securities.
A put is a right to sell a specified security (or securities) within a specified
period of time at a specified exercise price. A Fund may sell, transfer, or
assign the put only in conjunction with the sale, transfer, or assignment of the
underlying security or securities.
B-7
<PAGE>
The amount payable upon the exercise of a put is normally (i) the Fund's
acquisition cost of the Municipal Securities (excluding any accrued interest
which the Fund paid on the acquisition), less any amortized market premium or
plus any amortized market or original issue discount during the period the Fund
owned the securities, plus (ii) all interest accrued on the securities since the
last interest payment date during that period.
Puts on Municipal Securities may be acquired to facilitate the liquidity of
portfolio assets and the reinvestment of assets at a rate of return more
favorable than that of the underlying security. A Fund will generally acquire
puts only where the puts are available without the payment of any direct or
indirect consideration. However, if necessary or advisable, the Fund may pay for
puts either separately in cash or by paying a higher price for portfolio
securities which are acquired subject to the puts (thus reducing the yield to
maturity otherwise available for the same securities).
TAXABLE MUNICIPAL SECURITIES--The Louisiana Fund and Tax Exempt Money Market
Fund may invest up to 20% of their net assets in Municipal Securities, such as
certain private activity or industrial revenue bonds, the interest on which is
not tax-exempt for Federal income tax purposes but which otherwise meet the
Fund's investment criteria.
SPECIAL CONSIDERATIONS REGARDING LOUISIANA MUNICIPAL SECURITIES
All general obligations of the State of Louisiana, secured by the full faith
and credit of the State, are payable from the Bond Security and Redemption Fund
of the State and enjoy a first lien and privilege upon the funds in the Bond
Security and Redemption Fund. The State Constitution provides that, subject to
contractual obligations existing on January 1, 1975, all State money deposited
in the State Treasury is to be credited to the Bond Security and Redemption Fund
(except certain enumerated accepted monies) and that in each fiscal year, an
amount be allocated from the Bond Security and Redemption Fund sufficient to pay
all obligations that are secured by the full faith and credit of the State and
that become due and payable within the current fiscal year. For fiscal year
1997-98, the State Constitution prevents the State from issuing net State tax
supported debt in excess of 10.2% of projected State revenue.
HISTORY AND STATUS OF THE LOUISIANA GENERAL FUND. The State ended the
Fiscal Year 1992-93 with a positive undesignated fund balance in its General
Fund of approximately $101 million. During the First Extraordinary Session of
1994, $30.6 million of the surplus funds were utilized to cover known shortfalls
in current year program operations as follows: $23 million for sheriffs' housing
of State prisoners, $6 million for correctional programs, and $1.6 million for
the Office of Elderly Affairs.
The State ended the Fiscal Year 1993-94 with an operating surplus of $129
million. This amount, together with the prior year fund balance of $101 million
and reserve changes, left an undesignated General Fund balance of approximately
$212.9 million.
The State began Fiscal Year 1994-95 with a General Fund balance of $594
million. At the time the Comprehensive Annual Financial Report (the "CAFR") for
Fiscal Year 1993-94 was published, the undesignated fund balance was reflected
at $212 million. Subsequent to publication, it was determined that $106 million
of the $212 million was, in fact, designated for other mandated purposes and was
not available for general operating purposes. The remaining $106 million was
subsequently utilized prior to June 30, 1995 to structure a current portfolio
that was utilized to defease a portion of the State's Fiscal Year 1995-96
general obligation debt service requirements, which permitted an equivalent
amount of projected general fund revenues for Fiscal Year 1995-96 to be utilized
to cover normal operating costs.
The State's General Fund had an operating loss (on a generally accepted
accounting principles basis) of $181 million in Fiscal Year 1994-95 (on a
budgetary basis, this balance would be reduced by those fund balances utilized
to structure the aforementioned portfolio). As a result of operations and
inventory valuation changes, the State General Fund balance, as of June 30,
1995, declined to $430 million, with an undesignated General Fund balance of
approximately $145 million. The $145 million was utilized prior to
B-8
<PAGE>
June 30, 1996, to structure a current portfolio that was utilized to defease a
portion of the State's Fiscal Year 1996-97 general obligation debt service
requirement, which permitted an equivalent amount of projected general fund
revenue for Fiscal Year 1996-97 to be utilized in the defeasance of the
Louisiana Recovery District Bonds.
The State's General Fund ended Fiscal Year 1995-96 with an undesignated fund
balance of approximately $318 million. Various options regarding the utilization
of this $318 million are being considered by the Administration.
GENERAL FUND FISCAL YEAR 1996-97 BUDGET PROJECTIONS. The current General
Fund expenditure authorization necessary to continue all existing programs
through Fiscal Year 1996-97 is approximately $5,271.9 million, inclusive of
currently known supplemental appropriations needs.
The Revenue Estimating Conference met on January 29, 1997, and adopted its
revised estimate of revenues for Fiscal Year 1996-97 of $5,487.5 million. In
addition, State General Fund revenues of $12.6 million were carried forward from
Fiscal Year 1995-96, making a total of $5,500.1 million available for General
Fund expenditures in Fiscal Year 1996-97. The $228.2 million balance between
available revenues and projected expenditures is available for any lawful
purpose.
In addition to State General Fund revenues, the Revenue Estimating
Conference now includes Lottery Proceeds in its forecast of revenues available
for general purpose expenditures. On the basis of comparison, since projected
Lottery Proceeds equal $99.9 million, the Fiscal Year 1996-97 revenue
projections may be restated as $5,600 million and the expenditures at $5,371.8
million.
GENERAL FUND FISCAL YEAR 1996-97 CASH FLOW PROJECTIONS. The State's cash
flow position for Fiscal Year 1996-97 improved in comparison to the State's cash
flow position for Fiscal Year 1995-96. Month-end balances for Fiscal Year
1996-97 show less pronounced fluctuations than in the previous fiscal year.
The State has implemented procedures to deal with periods of actual or
projected temporary cash flow shortfalls. These procedures include: establishing
a cash management team, establishing a cash reserve to cover top priority cash
requirements (including debt service payments and payroll payments),
prioritizing other payments from the General Fund, and borrowing from available
balances in other legally authorized funds ("Interfund Borrowing"). Under
current law, Interfund Borrowing must be repaid within 45 days of the end of the
fiscal year.
FISCAL YEAR 1997-98 BUDGET PROJECTIONS. The Conference adopted, on January
29, 1997, its official forecast of revenues for Fiscal Year 1997-98 at $5,489.8
million of State General Fund monies plus $94.9 million in Lottery Proceeds, or
a total of $5,584.7 million as the basis for legislative enactment of the
operating budget during the 1997 Regular Session, which commences March 31,
1997.
The State Office of Planning and Budget has determined that the funding
level required to support continuation level budgets in accordance with La. R.S.
39:29 for Fiscal Year 1997-98 is $5,777.6 million; and, therefore, on a
continuation basis, forecasted revenues would be approximately $192.9 million
short of the amount needed to continue State operations in Fiscal Year 1997-98
at a level equivalent to Fiscal Year 1996-97. It may be possible to close this
gap by providing standstill dollar recommendations in a number of expenditure
categories.
SIGNIFICANT ITEM AFFECTING THE BUDGET--CASINO GAMING. The Louisiana
Economic Development and Gaming Corporation (the "Gaming Corporation") was
created by Act 384 of the 1992 Regular Session ("Act 384") for the purpose of
contracting with a casino operator to provide for or furnish an official gaming
establishment and to conduct casino gaming operations at the official gaming
establishment (casino). Act 384 directs that the casino be located on the site
of the Rivergate Convention Center in New Orleans. Under the enabling
legislation and the casino contract, when the permanent casino is in operation,
the operator must pay a minimum of 18 1/2% of gross revenues, or $100 million
annually, whichever is higher; and gaming operations conducted at the temporary
casino must pay 25% of gross
B-9
<PAGE>
revenues to Louisiana. Revenues generated from the land-based casino must be
transferred daily to the State Treasury for deposit in the Casino Gaming
Proceeds Fund. Such revenues will be first credited to the Bond Security and
Redemption Fund before being credited to the Casino Gaming Proceeds Fund. Monies
in the Casino Gaming Proceeds Fund may be allotted or expanded only pursuant to
legislative appropriation. The Corporation is required to deposit, on an annual
basis, into the Compulsive and Problem Gaming Fund, 1% of its operating account,
not to exceed $150,000.
Leases with the City of New Orleans, Louisiana, and Harrah's Jazz Company
were signed to allow Harrah's Jazz Company to renovate and operate a temporary
casino facility in the Municipal Auditorium and to allow demolition for
construction of the casino at the Rivergate Convention Center site. The
operating contract was awarded to Harrah's Jazz Company, a partnership comprised
of three principals: Harrah's New Orleans; New Orleans/Louisiana Development
Corporation (Jazzville); and Grand Palais Corporation. Temporary operations
began in May, 1995 in the New Orleans Municipal Auditorium. Construction of the
permanent casino began at the site of the old Rivergate in the spring of 1995.
Monies paid to the State totaled $125.3 million in Fiscal Year 1994-95, which
included a $125 million initial payment required in the operating contract, and
approximately $12 million in Fiscal Year 1995-96; revenue performance was
significantly lower than original estimates by Harrah's Jazz Company.
In November, 1995, Harrah's New Orleans filed voluntary bankruptcy under
Chapter 11 and the local investors, New Orleans/Louisiana Development
Corporation, filed for bankruptcy protection. The temporary casino closed on
November 22, 1995. Harrah's New Orleans' stated intentions are to seek
restructuring of Harrah's Jazz Company financing and renegotiate other
contractual terms. In the disclosure statement, it is anticipated that the final
reorganization plan will have two equity partners, Harrah's Entertainment and
the Bondholders. The Revenue Estimating Conference has not included any revenue
from land based casino gaming in the official forecast for Fiscal Year 1996-97
and Fiscal Year 1997-98. At this time, the situation has not been resolved, and
it is not possible to determine whether construction on the permanent casino
will be completed and the casino opened for operation.
THE LOUISIANA ECONOMY
The following data provides a synopsis of the current condition of the State
of Louisiana's economy.
OVERVIEW. The State's Department of Economic Development (the "Department")
has consistently worked to promote increased diversification of the State's
economy, enhancing economic opportunities from both new and existing businesses.
Louisiana continues to actively pursue and encourage both private and public
economic development research efforts. Louisiana State University (LSU), a
Carnegie-Mellon Research Institution, has constructed the Center for Advanced
Microstructures and Devices (CAMD) in Baton Rouge, and an adjacent research park
is envisioned. The Pennington Biomedical Research Center is a $26 million
facility dedicated to nutrition and preventative medicine, associated with LSU,
the LSU Agricultural Center and the LSU Medical Center.
According to the Department, Louisiana's economy in 1996 experienced steady
growth with employment increasing at approximately 1.4%. Employment in
Louisiana's manufacturing sector grew 0.2%. Although the manufacturing sector is
small, employing approximately 10.5% of the workforce, the capital intensive
chemical and energy industries are important components of the State's economy,
and in 1996 much of the payroll strength came via recovery in the petrochemical
industries. Strong product demand both domestically and internationally fueled
considerable gain. In 1997, the petrochemical industries will continue to supply
significant strength to the Louisiana economy. In addition, Avondale Shipyards
(a large Louisiana concern) has one of the largest backlogs in the company's
history, and a $20 million modernization and equipment program should secure
future orders. About 300 new jobs are expected to be created in the coming year
from construction of three Direct Reduction Iron facilities with around $700
million in total investment in Louisiana. Employment in the service industry is
expected to increase moderately in
B-10
<PAGE>
1997 with business services leading other sectors. Because of consolidation and
downsizing in hotels and casinos, employment fell 4% in these sectors.
Consolidation in the health services industry resulted in a one percent loss of
jobs. The outlook for the coming year is stabilization in the recreation and
health services. Hotel occupancy remained high in 1996, and these levels should
continue. Capacity of hotels in the New Orleans area increased 15% in 1996
creating concerns about overbuilding. Overall retail growth was slow during
1996. Automobile sales were comparatively weak. Retail sales in 1997 should
remain in line with the overall state income which should rise modestly.
TOURISM. The State's Image Advertising Campaign in Louisiana (the Image
Campaign) has contributed to the success Louisiana tourism is experiencing. The
results are more visitors to Louisiana and more tourism dollars spent in the
state. In 1995, the State broke its own record for achieving both the most out-
of-state visitors to Louisiana and highest out-of-state visitor spending, as
measured by the United States Travel Data Center. By the end of 1995, Louisiana
had hosted a record 23.1 million people, who made an impact of $6.6 billion on
Louisiana's economy and generated $450 million in State and local taxes.
Overall, travel expenditures increased a healthy 9% over 1994, according to a
study by the United States Travel Data Center. Louisiana has the second
fastest-growing tourism economy in the United States. Over 100,000 jobs in
Louisiana are attributed to visitor spending, accounting for almost 6% of total
employment in Louisiana. Tourism is the second largest industry in the State.
CHEMICAL INDUSTRY. Chemical industries have among the highest sales,
earnings, and job multiplier impacts of any sector in manufacturing. Because the
average chemical firm is so large, it tends to create many more spillover jobs
than typical plants in other sectors. The estimated overall job multiplier for
the industry is 6.7. The chemical industry, with 30,400 wage and salary
employees as of March, 1996, is the largest single employer in the Louisiana
manufacturing sector. Ninety-two percent of these workers are employed (1) in
the corridor between Baton Rouge and New Orleans and (2) in Lake Charles, but
chemical industries exist in 41 of the State's 64 parishes. At $1,022 per week
(approximately $53,144 a year), the chemical industry pays the second highest
wage rates in the manufacturing sector. Chemical industry wages are 66 percent
higher than the average wage in manufacturing.
In 1996, Louisiana's chemical industry employed 26.0% of the State's
manufacturing workers. Other industries in the State that rely on the chemical
industry for a significant portion of their inputs employed at least 202,020
workers. The State's chemical workers earned average wages and salaries of
$53,144, higher than manufacturing as a whole, 175% higher than the State's
overall average, second among all the states in 1996. In 1993, Louisiana's
chemical workers were among the most productive in the country; output per
worker in the State's chemical industry was 15% above the industry's national
average, and 194% higher than the overall state average. The value of the
State's chemical shipments totaled $21.2 billion in 1994, up 17.4% from the 1993
level of $18.1 billion. U.S. chemical exports from Louisiana totaled $7.0
billion in 1994.
LOUISIANA'S OIL AND GAS STATUS AND OUTLOOK. South and Offshore Louisiana
continue to experience activity gains in the oil and gas sector that began in
early 1994. Future activity gains appear assured based on future indicators.
Clerk of Court lease filings continue to increase. State lease bonus monies have
steadily increased since 1994. In 1994, Louisiana received $15 million, in 1995,
$32 million, and in 1996, $40 million. In 1997, Louisiana is expected to receive
$40 million. Day rates for rigs have risen 10-50 percent during the past two
years compared to the previous two years. Gulf Coast drilling costs have dropped
to approximately $4.20 per barrel of oil equivalent--the lowest level since
these industry surveys have been conducted, and are now less than the worldwide
average. Rowan Companies' survey of industry CEO ranks the Gulf of Mexico basin
as one of the three hottest prospect areas in the world for the next several
years behind Latin America and East Asia.
B-11
<PAGE>
Tax incentives for drilling granted by the State have had additional
positive impact in attracting capital and directly generating 1,600 new jobs at
an average weekly salary of $793--well above the statewide average wage rate.
The new royalty relief granted by the federal government for deep water
exploration will have an impact although it is not expected for two to three
years due to long-term planning requirements for this environment. Still, three
major deep water gas discoveries last year resulted in the U.S. Department of
Energy revisions to national gas reserves from a negative to a positive. Reserve
base in deep water could approach that of Prodhoe Bay, although most will be gas
not oil.
SHIPPING AND PORTS. Given Louisiana's strategic location at the mouth of
the Mississippi River and on the Gulf of Mexico, the port and maritime industry
is one of the State's most important economic generators. The Louisiana port
system serves as one of the major gateways not only to Louisiana but to the
entire mid-section of the United States. The ports not only serve as the means
by which cargo comes into and flows out of the country, but they also serve as
major economic catalysts for the economy of the state. The ports create a large
number of economic opportunities related to the servicing of the vessels that
call on the ports. They also act as a magnet for attracting warehousing and
manufacturing firms that use the ports to import raw materials into the area or
export finished products out of the area. The Louisiana port system, including
both deepwater ports and shallow draft ports, is one of the largest port systems
in the world, bring in millions of tons of cargo into and out of the country.
Ports in Louisiana are among the busiest in the world, moving more than a
billion tons of cargo annually to and from the United States and Central and
South America, Africa, the Pacific Rim, the Middle East, the Baltic States,
Europe and all points in between. The State's top five ports combined handle
more than 485 million tons of cargo annually--more than any single U.S. port.
The total economic impact of ports constitutes 21 percent of the total Louisiana
gross product and produced 4.7 percent of all personal income in the state. The
port industry and port users generated a total economic impact of more than
$21.9 billion in the State in 1994.
Ports and firms located in the State because of ports generated more than
$310 million in state and local taxes during 1994. Port-related activities
generated more than $209 million in tax revenue in the State in 1994. During the
same period ports and port users generated more than $101.1 million in tax
revenue for local governments. These are recurring revenues that will continue
and increase as port activities increase.
OPTIONS ON SECURITIES AND INDICES
OPTIONS--The Fixed Income Funds and the Equity Funds may trade put and call
options on permitted investments and related indices to a limited extent. Among
the strategies the Adviser may use for a Fund are: buying protective puts on
securities owned by the Fund, buying fiduciary calls on securities the Fund is
attempting to buy, and writing covered calls on securities the Fund owns.
A Fund may buy protective put options. The Fund may benefit from buying the
protective put if the price of the security already held by the Fund falls
during the option period, because the Fund may exercise the put and receive the
higher exercise price for its security. However, if the security rises in value,
the Fund will have paid a premium for the put which will expire unexercised.
A Fund may buy fiduciary call options on securities that the Fund is trying
to buy. The Fund may benefit from buying the fiduciary call if the price of the
underlying security rises during the option period, because the Fund may
exercise the call and buy the security for the lower exercise price. If,
however, the security falls in value, the Fund will have paid a premium for the
call which will expire worthless, but will be able to buy the security at a
lower price.
A Fund may write covered call options. The advantage to the Fund of writing
covered call options is that the Fund receives additional income in the form of
the premium. However, if the security rises in value, the Fund may not fully
participate in that market appreciation.
B-12
<PAGE>
During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing
transaction. A closing transaction cannot be effected with respect to an option
once the option writer has received an exercise notice for such option.
The market value of an option generally fluctuates with the market price of
an underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the pricing volatility of the underlying
security and the time remaining until the expiration date.
RISK FACTORS IN OPTIONS TRANSACTIONS--The successful use of a Fund's options
strategies depends on, among other things, the Adviser's ability to forecast
interest rate and market movements correctly.
When it purchases an option, a Fund runs the risk that it will lose its
entire investment in the option in a relatively short period of time unless the
Fund exercises the option or enters into a closing transaction with respect to
the option during the life of the option. If the price of the underlying
security does not rise (in the case of a call) or fall (in the case of a put) to
an extent sufficient to cover the option premium and transaction costs, a Fund
will lose part or all of its investment in the option. This risk differs from
the risk involved with an investment by a Fund in the underlying securities,
since the Fund may continue to hold its investment in those securities
notwithstanding the lack of a change in price of those securities.
The effective use of options also depends on a Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. Although
a Fund will take an option position only if the Adviser believes a liquid
secondary market exists for the option, there is no assurance that such a market
does or will continue to exist. If a secondary trading market in options were to
become unavailable, a Fund could no longer engage in closing transactions; even
when a liquid secondary market does generally exist, there can be no assurance
that a Fund will be able to effect a closing transaction on a given option at
any particular time or at an acceptable price. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A marketplace may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events, such as volume in excess of trading or clearing capability, were to
interrupt normal market operations. A marketplace may at times find it necessary
to impose restrictions on particular types of options transactions, which may
limit a Fund's ability to realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options purchased
or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, a Fund as purchaser or writer of an
option will be unable to close out its position until options trading resumes,
and it may be faced with losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing Corporation
(OCC) or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, a Fund as purchaser or writer of an option will be locked into
its position until one of the two restrictions has been lifted. If a prohibition
on exercise remains in effect until an option owned by a Fund has expired, the
Fund could lose the entire value of its option.
Special risks are presented by internationally-traded options. Because of
time differences between the United States and the various foreign countries,
and because different holidays are observed in different countries, foreign
options markets may be open for trading during hours or on days when U.S.
markets are closed. As a result, option premiums may not reflect the current
prices of the underlying interest in the United States.
B-13
<PAGE>
FUTURES CONTRACTS ON SECURITIES; OPTIONS ON FUTURES
SECURITIES FUTURES CONTRACTS--Each Fixed Income Fund and Equity Fund may
enter into futures contracts on securities, including securities indexes. A
futures contract sale creates an obligation by the seller to deliver the type of
instrument called for in the contract in a specified delivery month for a stated
price. A futures contract purchase creates an obligation by the purchaser to
take delivery of the type of instrument called for in the contract in a
specified delivery month at a stated price. Futures contracts are traded in the
United States only on commodities exchanges or boards of trade, known as
"contract markets," approved for such trading by the Commodity Futures Trading
Commission, and must be executed through a futures commission merchant, or
brokerage firm, that is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance of securities, the contracts usually are closed out before the
settlement date without the making or taking of delivery. A Fund may elect to
close some or all of its futures positions at any time prior to their
expiration. The purpose of making such a move would be to reduce or eliminate
the hedge position then currently held by the Fund. Closing out a futures
contract sale (purchase) is effected by purchasing (selling) a futures contract
for the same aggregate amount of the specific type of financial instrument with
the same delivery date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid the difference
and realizes a gain; if the offsetting purchase price exceeds the initial sale
price, the seller realizes a loss. If the offsetting sale price exceeds the
purchase price, the purchaser realizes a gain; if the purchase price exceeds the
offsetting sale price, the purchaser realizes a loss.
When a Fund purchases or sells a futures contract, it does not pay or
receive the purchase price; instead, the Fund is required to deposit an "initial
margin" in the form of cash and/or U.S. Government securities with its custodian
in a segregated account in the name of the futures broker. The nature of initial
margin in futures transactions is different from that of margin in security
transactions in that futures contract margin does not involve the borrowing of
funds by the Fund to finance the transactions. Rather, initial margin is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts also involve
brokerage costs, and closing transactions involve additional commission costs.
Subsequent payments, called "variation margin," to and from the broker are
made on a daily basis as the price of the underlying security fluctuates, making
the long and short positions in the futures contract more or less valuable, a
process known as "marking to market." Final determinations of variation margin
are made when a Fund enters into a closing transaction.
OPTIONS ON SECURITIES FUTURES CONTRACTS--Each Fixed Income Fund and Equity
Fund may enter into written options on securities futures contracts. A Fund may
purchase and write call and put options on the futures contracts it may buy or
sell, and may enter into closing transactions with respect to such options to
terminate existing positions. A Fund may use such options on futures contracts
in lieu of writing options directly on the underlying securities or purchasing
and selling the underlying futures contracts. Such options generally operate in
the same manner as options purchased or written directly on the underlying
investments. See the section titled "Options on Securities," above.
The Fund holding or writing an option on futures may terminate its position
by selling or purchasing an offsetting option. There can be no guarantee that
such closing transactions will be available.
A Fund will be required to deposit initial margin and maintenance margin
with respect to put and call options on futures contracts pursuant to brokers'
requirements similar to those described above.
COVER FOR OPTIONS AND FUTURES CONTRACT POSITIONS--Transactions using futures
contracts and options (other than options that a Fund has purchased) expose a
Fund to an obligation to another party. A Fund will not enter into any such
transactions unless it owns either (1) an offsetting
B-14
<PAGE>
("covered") position in securities or other options or futures contracts or (2)
cash, receivables and short-term debt securities with a value sufficient at all
times to cover its potential obligations not covered as provided in (1) above.
Each Fund will comply with Securities and Exchange Commission guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash, U.S. Government securities or other liquid, high-grade debt
securities in a segregated account with its Custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding futures contract or option is open, unless
they are replaced with similar assets. As a result, the commitment of a large
portion of a Fund's assets to cover or to segregated accounts could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
RISKS OF FUTURES CONTRACTS AND OPTIONS TRANSACTIONS--Successful use of
securities futures contracts by a Fund is subject to the Adviser's ability to
correctly predict movements in the direction of interest rates and other factors
affecting securities markets.
The purchase of options on futures contracts involves less risk to a Fund
than does the purchase or sale of futures contracts, because the maximum amount
at risk is the premium paid for the options (plus transaction costs). However,
there may be circumstances when the purchase of an option on a futures contract
would result in a loss to a Fund when the purchase or sale of the futures
contract would not, such as when there is no movement in the price of the hedged
investments. The writing of an option on a futures contract involves risks
similar to the risks, described above under "Options on Securities," involved in
the writing of options on securities.
There can be no assurance that higher-than-anticipated trading activity or
other unforeseen events will not, at times, render certain market clearing
facilities inadequate and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
Under certain circumstances, futures exchanges may establish daily limits on
the amount that the price of a future contract or option thereon can vary from
the previous day's settlement price; once that limit is reached, no trades may
be made that day at a price beyond the limit. Daily price limits do not limit
potential losses because prices could move to the daily limit for several
consecutive days with little or no trading, thereby preventing the liquidation
of unfavorable positions.
If a Fund were unable to liquidate a futures contract or option thereon due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would be required to make daily variation margin
payments and might be required to maintain the position being hedged by the
futures contract or option or to maintain cash or securities in a segregated
account.
To reduce or eliminate a hedge position it holds, a Fund may seek to close
out that position. The ability to establish and close out positions will be
subject to the development and maintenance of a liquid secondary market. There
can be no assurance that such a market does or will continue to exist for a
particular futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain contracts or options; (ii) restrictions
may be imposed by an exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of contracts or options, or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of contracts or options
(or a particular class or series of contracts or options), in which event the
secondary market on that exchange (or in the class or series of contracts or
options) would cease to exist, although
B-15
<PAGE>
outstanding contracts or options on the exchange that had been issued by a
clearing corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.
FOREIGN SECURITIES
The Equity Funds may invest in U.S. dollar denominated obligations or
securities of foreign issuers. Permissible investments may consist of
obligations of foreign branches of U.S. banks and of foreign banks, including
European certificates of deposit, European time deposits, Canadian time deposits
and Yankee certificates of deposit, and investments in Canadian commercial
paper, foreign securities and Europaper. The Strategic Income Bond Fund may
invest in obligations issued by the Canadian Government.
In addition, the Equity Funds may invest in the securities of foreign
issuers in the form of American Depositary Receipts ("ADRs"). ADRs are receipts,
typically issued by a U.S. bank or trust company, that evidence ownership of
underlying securities issued by a foreign corporation. ADRs may not necessarily
be denominated in the same currency as the securities into which they may be
converted. ADRs may be available for investment through sponsored or unsponsored
facilities. A sponsored facility is established jointly by the issuer of the ADR
and the issuer of the security underlying the ADR, whereas a depository may
establish an unsponsored facility without the participation of the issuer of the
underlying security. Depositaries establishing unsponsored facilities may not be
obliged to pass on to ADR holders either voting rights on the underlying
securities or shareholder communications received from the issuer of the
underlying securities, and holders of unsponsored ADRs generally bear all costs
of the unsponsored facility.
Foreign securities may subject a Fund to investment risks that differ in
some respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks.
WHEN-ISSUED SECURITIES
Each Fund, except for the Value Equity, Growth Equity, Institutional Money
Market, and Treasury Securities Money Market Funds and the International Equity
Portfolio, may purchase debt obligations on a when-issued basis, in which case
delivery and payment normally take place on a future date. The Funds will make
commitments to purchase obligations on a when-issued basis only with the
intention of actually acquiring the securities, but may sell them before the
settlement date. During the period prior to the settlement date, the securities
are subject to market fluctuation, and no interest accrues on the securities to
the purchaser. The payment obligation and the interest rate that will be
received on the securities at settlement are each fixed at the time the
purchaser enters into the commitment. Purchasing obligations on a when-issued
basis may be used as a form of leveraging because the purchaser may accept the
market risk prior to payment for the securities. The Funds, however, will not
use such purchases for leveraging; instead, as disclosed in the Prospectus, a
Fund will set aside assets to cover its commitments. If the value of these
assets declines, the Fund will place additional liquid assets aside on a daily
basis so that the value of the assets set aside is equal to the amount of the
commitment.
B-16
<PAGE>
SECURITIES LENDING
Each Fund, except the Treasury Securities Money Market Fund and
Institutional Money Market Fund, may lend securities pursuant to agreements
requiring that the loans be continuously secured by cash, U.S. Government
securities, or any combination of cash and such securities, as collateral equal
to 100% of the market value at all times of the securities lent. Such loans will
not be made if, as a result, the aggregate amount of all outstanding securities
loans for the Fund exceed one-third of the value of a Fund's total assets taken
at fair market value. A Fund will continue to receive interest on the securities
lent while simultaneously earning interest on the investment of the cash
collateral in U.S. Government securities. However, a Fund will normally pay
lending fees to such broker-dealers and related expenses from the interest
earned on invested collateral. Investments made with this collateral are
considered to be assets of the Fund and must comply with the Fund's investment
limitations. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans are made only to borrowers deemed by the Adviser to be of good standing
and when, in the judgment of the Adviser, the consideration which can be earned
currently from such securities loans justifies the attendant risk. Any loan may
be terminated by either party upon reasonable notice to the other party. The
Funds may use the Distributor or a broker-dealer affiliate of the Adviser as a
broker in these transactions.
INVESTMENT COMPANY SHARES
Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, a Fund, other than a Feeder Fund
(currently, the Small Cap Equity and International Equity Funds), is prohibited
from acquiring the securities of another investment company if, as a result of
such acquisition: (1) the Fund owns more than 3% of the total voting stock of
the other company; (2) securities issued by any one investment company represent
more than 5% of the Fund's total assets; or (3) securities (other than treasury
stock) issued by all investment companies represent more than 10% of the total
assets of the Fund. See also "Investment Limitations."
INVESTMENT LIMITATIONS
I. INVESTMENT LIMITATIONS OF THE FUNDS
Each Fund is subject to a number of fundamental investment restrictions that
may be changed only by a vote of a majority of the outstanding shares of that
Fund. A "majority of the outstanding shares" of the Trust or a particular Fund
means the affirmative vote, at a meeting of shareholders duly called, of the
lesser of (a) 67% or more of the votes of shareholders of the Trust or such Fund
present at a meeting at which the holders of more than 50% of the votes
attributable to shareholders of record of the Trust or such Fund are represented
in person or by proxy, or (b) the holders of more than 50% of the outstanding
votes of shareholders of the Trust or such Fund. The fundamental investment
limitations for each Portfolio are described separately.
Pursuant to these investment restrictions, no Fund will:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities, if, immediately after such
purchase, more than 5% of the value of its total assets would be invested in
any one issuer, or more than 10% of the outstanding voting securities of
such issuer; PROVIDED that (1) this restriction does not apply to the
Louisiana Fund, (2) for the Government Securities Fund and the Equity Funds,
this restriction applies to only 75% of such Fund's assets, and
B-17
<PAGE>
(3) the Money Market Funds may invest up to 25% of its total assets without
regard to this restriction only as permitted by applicable laws and
regulations. For purposes of this limitation, a security is considered to be
issued by the government entity (or entities) whose assets and revenues back
the security; with respect to a private activity bond that is backed only by
the assets and revenues of a non-governmental user, a security is considered
to be issued by such non-governmental user. For purposes of this limitation,
all debt securities are each considered as one class.
2. Invest in companies for the purpose of exercising control.
3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. Any borrowing
will be done from a bank and to the extent that such borrowing exceeds 5% of
the value of the Fund's assets, asset coverage of at least 300% is required.
In the event that such asset coverage shall at any time fall below 300%, the
Fund shall, within three days thereafter or such longer period as the
Securities and Exchange Commission may prescribe by rules and regulations,
reduce the amount of its borrowings to such an extent that the asset
coverage of such borrowings shall be at least 300%. This borrowing provision
is included solely to facilitate the orderly sale of portfolio securities to
accommodate heavy redemption requests if they should occur and is not for
investment purposes. All borrowings will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.
4. Pledge, mortgage or hypothecate assets except to secure temporary borrowings
permitted by (3) above in aggregate amounts not to exceed 10% of total
assets taken at current value at the time of the incurrence of such loan,
except as permitted with respect to securities lending.
5. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts (except that the Fixed Income and
Equity Funds may invest in futures contracts and options on futures
contracts as disclosed in the Prospectuses) and interests in a pool of
securities that are secured by interests in real estate (except that the
Fixed Income Funds may invest in mortgage-backed securities, including
collateralized mortgage obligations, as disclosed in the Prospectus).
However, subject to their permitted investments, any Fund may invest in
companies which invest in real estate commodities or commodities contracts.
6. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits as
necessary for the clearance of security transactions; this limitation shall
not prohibit short sales "against the box."
7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter under Federal securities laws in selling a Fund
security.
8. Purchase securities of other investment companies except as permitted by the
1940 Act, and the rules and regulations thereunder.
9. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the Securities and Exchange Commission.
10. Make loans except that the Fund may (i) purchase or hold debt instruments
in accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described
in the Prospectus and this Statement of Additional Information.
NON-FUNDAMENTAL POLICIES
No Fixed Income Fund or Equity Fund may invest in illiquid securities in an
amount exceeding, in the aggregate, 15% of that Fund's net assets, and the Money
Market Funds may not invest in illiquid securities in an amount exceeding, in
the aggregate, 10% of each Funds' net assets. An illiquid security is a security
which cannot be disposed of promptly (within seven days) and in the usual course
of business without a
B-18
<PAGE>
loss, and includes repurchase agreements maturing in excess of seven days, time
deposits with a withdrawal penalty, non-negotiable instruments and instruments
for which no market exists.
No Fund may invest in interests in oil, gas or other mineral exploration or
development programs or oil, gas or mineral leases.
With the exception of the limitations that apply to illiquid securities, the
foregoing percentages will apply at the time of the purchase of a security and
shall not be considered violated unless an excess occurs or exists immediately
after and as a result of a purchase of such security.
II. INVESTMENT LIMITATIONS OF THE SMALL CAP GROWTH PORTFOLIO
The investment limitations of Small Cap Growth Portfolio, the Portfolio in
which the Small Cap Equity Fund expects to invest up to 100% of its assets, are
separate from those of the Small Cap Equity Fund.
The Small Cap Growth Portfolio may not:
1. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate the Portfolio to purchase securities or
require the Portfolio to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5% of its assets, (i)
all borrowings will be repaid before making additional investments and any
interest paid on such borrowings will reduce income; and (ii) asset coverage
of at least 300% is required.
2. Make loans if, as a result, more than 33 1/3% of its total assets would be
loaned to other parties, except that the Portfolio may (i) purchase or hold
debt instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) lend its securities.
3. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the Portfolio may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
4. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the Securities and Exchange Commission (the
"SEC").
5. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
6. Invest in interests in oil, gas, or other mineral exploration or development
programs and oil, gas or mineral leases.
The foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess or deficiency
occurs immediately after or as a result of a purchase of such security. These
investment limitations and the investment limitations in each of the Portfolio's
Prospectus are fundamental policies of SIMT Trust and may not be changed without
shareholder approval.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of SIMT
and may be changed without shareholder approval.
The Small Cap Growth Portfolio may not:
1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Portfolio's fundamental limitation on borrowing.
B-19
<PAGE>
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that the
Portfolio may (i) obtain short-term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin payments
in connection with transactions involving futures contracts and options on
such contracts; and (iii) make short sales "against the box" or in
compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act or an order of exemption therefrom.
5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.
6. Purchase securities which are not readily marketable, if, in the aggregate,
more than 15% of its total assets would be invested in such securities.
Under rules and regulations, established by the SEC, the Portfolio is
prohibited from acquiring the securities of other investment companies if, as a
result of such acquisition, the Portfolio owns more than 3% of the total voting
stock of the company; securities issued by any one investment company represent
more than 5% of the total Portfolio's assets; or securities (other than treasury
stock) issued by all investment companies represent more than 10% of the total
assets of the Portfolio. The Portfolio's purchase of such investment company
securities results in the bearing of expenses such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.
Each of the foregoing percentage limitations (except with respect to the
limitation on investing in illiquid securities) apply at the time of purchase.
These limitations are non-fundamental and may be changed by the Trust's Board of
Trustees without a vote of shareholders.
III. INVESTMENT LIMITATIONS OF THE INTERNATIONAL EQUITY PORTFOLIO
The investment limitations of the International Equity Portfolio, the
Portfolio in which the International Equity Fund expects to invest up to 100% of
its assets, are separate from those of the International Equity Fund.
The International Equity Portfolio may not:
1. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that the Portfolio may (i) purchase or hold
debt instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) lend its securities.
2. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the Portfolio may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts, and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
3. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
4. Issue senior securities (as defined in the 1940 Act), except as permitted by
rule, regulation or order of the SEC.
B-20
<PAGE>
5. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.
The foregoing percentages will apply at the time of the purchase of a
security and shall not be violated unless an excess or deficiency occurs,
immediately after or as a result of a purchase of such security.
These investment limitations and the investment limitations in the
Prospectuses are fundamental policies of SIT and may not be changed without
shareholder approval.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of SIT and
may be changed without shareholder approval.
The International Equity Portfolio may not:
1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Portfolio's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that the
Portfolio may (i) obtain short-term credits as necessary for the clearance
of security transactions, (ii) provide initial and variation margin payments
in connection with transactions involving futures contracts and options on
such contracts, and (iii) make short sales "against the box" or in
compliance with the SEC's position regarding the asset segregation
requirements of Section 18 of the 1940 Act.
4. Purchase securities which are not readily marketable, if, in the aggregate,
more than 15% of its total assets would be invested in such securities.
5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its total
assets would be invested in illiquid securities.
6. Invest its assets in securities of any investment company, except as
otherwise permitted by the 1940 Act.
7. Purchase or retain securities of an issuer if, to the knowledge of SIT, an
officer, trustee, partner or director of SIT or any investment adviser of
SIT owns beneficially more than 1/2 of the 1% of the shares or securities of
such issuer and all such officers, trustees, partners and directors owning
more than 1/2 of 1% of such shares or securities together own more than 5%
of such shares or securities.
8. Purchase securities of any company which has (with predecessors) a record of
less than three years continuing operations if, as a result, more than 5% of
the total assets (taken at current value) would be invested in such
securities.
The foregoing percentages will apply at the time of the purchase of a
security and shall not be violated unless an excess or deficiency occurs,
immediately after or as a result of a purchase of such security. These
limitations are non-fundamental and may be changed by the Trust's Board of
Trustees without a vote of shareholders.
B-21
<PAGE>
THE ADVISERS AND SUB-ADVISER
The Trust and First National Bank of Commerce in New Orleans (the "Adviser")
have entered into separate advisory agreements (the "Advisory Agreements") dated
as of: November 12, 1996, with respect to the Strategic Income Bond Fund, Small
Cap Equity Fund and International Equity Fund; May 31, 1996, with respect to the
Tax Exempt Money Market Fund; and August 17, 1993, with respect to each of the
Trust's remaining Funds. Each Advisory Agreement provides that the Adviser shall
not be protected against any liability to the Trust or its shareholders by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder.
The continuance of an Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. An Advisory Agreement
will terminate automatically in the event of its assignment, and is terminable
at any time without penalty by the Trustees of the Trust or, with respect to the
Funds by a majority of the outstanding shares of the appropriate Funds, on not
less than 30 days' nor more than 60 days' written notice to the Adviser, or by
the Adviser on 90 days' written notice to the Trust.
For the fiscal years ended September 30, 1995, 1996 and 1997, the Funds paid
the following advisory fees:
<TABLE>
<CAPTION>
ADVISORY FEES PAID ADVISORY FEES WAIVED
---------------------------------- -------------------------------
FUND 1995 1996 1997 1995 1996 1997
- --------------------------------------------- ---------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Treasury Securities Money Market Fund........ $1,460,920 $2,591,388 $3,517,218 $478,529 $250,908 $ 11,476
Government Securities Fund................... $ 433,013 $ 724,413 $ 852,086 $148,818 $121,599 $ 57,880
Balanced Fund................................ $ 428,912 $ 678,210 $ 876,750 $143,749 $109,685 $ 40,982
Louisiana Tax-Free Income Fund............... $ 6,316 $ 47,758 $ 96,673 $ 27,116 $ 14,575 $ 3,271
Value Equity Fund............................ $ 284,586 $ 539,947 $ 872,210 $ 83,575 $ 36,348 $ 0
Growth Equity Fund........................... * $ 62,563 $ 186,012 * $ 9,488 $ 4,672
Institutional Money Market Fund.............. $ 0 $ 17,920 $ 21,967 $ 5,924(1) $ 25,605 $ 64,598
Tax Exempt Money Market Fund................. * $ 41,381 $ 339,994 * $ 31,001 $ 22,457
Strategic Income Bond Fund................... * * $ 27,992 * * $ 38,700
Small Cap Equity Fund........................ * * $ 2,751 * * $ 3,248
International Equity Fund.................... * * $ 2,102 * * $ 2,443
</TABLE>
- ------------------------
* Not in operation during the period.
(1) In addition to waiving the full advisory fee for 1995, the Adviser
contributed $7,691.
The Adviser has entered into a sub-advisory agreement (the "Sub-Advisory
Agreement") with Weiss, Peck & Greer, L.L.C. ("WPG") dated May 31, 1996 relating
to the Tax Exempt Money Market Fund.
The continuance of the Sub-Advisory Agreement, after the first year, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Sub-Advisory
Agreement may be terminated by the Adviser, the Trust's Board of Trustees or by
a vote of the majority of the outstanding voting securities of the Fund at any
time, without the payment or any penalty, on sixty (60) days' written notice to
WPG and may be terminated at any time by ninety (90) days' written notice to the
Adviser of the Fund. This
B-22
<PAGE>
Agreement will immediately terminate in the event of its assignment or upon
termination of the Sub-Advisory Agreement between the Adviser and the Trust with
regard to the Fund (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" have the
same meaning of such terms in the 1940 Act).
For the fiscal years ended September 30, 1996 and 1997, the Adviser paid the
following sub-advisory fees to WPG:
<TABLE>
<CAPTION>
SUB-ADVISORY SUB-ADVISORY
FEE PAID FEE WAIVED
-------------------- ----------------------------
FUND 1996 1997 1996 1997
- ---------------------------------------------------------------------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Tax Exempt Money Market Fund*......................................... $ 12,168 $ 57,780 $ 0 $ 0
</TABLE>
- ------------------------
* WPG has been the Fund's sub-adviser since May 31, 1996.
SIMC AND THE MONEY MANAGERS
SEI Investments Management Corporation ("SIMC") has received exemptive
relief from the SEC that permits SIMC, with the approval of the respective SIT
and SIMT Boards of Trustees, to retain Money Managers (sub-advisers) for a
Portfolio without submitting the sub-advisory agreement to a vote of the
Portfolio's shareholders. The relief permits the non-disclosure of amounts
payable by SIMC under such sub-advisory agreements.
SMALL CAP GROWTH PORTFOLIO
The SIMT advisory agreement and certain of the sub-advisory agreements
provide that SIMC and each Money Manager shall not be protected against any
liability to SIMT or its shareholders by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties, or from
reckless disregard of its obligations or duties thereunder. In addition, certain
of the sub-advisory agreements provide that the Money Manager shall not be
protected against any liability to SIMT or its shareholders by reason of willful
misfeasance, bad faith or negligence on its part in the performance of its
duties, or from reckless disregard of its obligations or duties thereunder.
SIMC acts as the investment adviser to the Small Cap Growth Portfolio and
operates as a "manager of managers." As investment adviser, SIMC oversees the
investment advisory services provided to the Small Cap Growth Portfolio and
manages the cash portion of the Portfolio's assets. Pursuant to separate sub-
advisory agreements with SIMC, and under the supervision of SIMC and SIMT's
Board of Trustees, the Money Managers are responsible for the day-to-day
investment management of all or a discrete portion of the assets of the Small
Cap Growth Portfolio. The Money Managers are selected based primarily upon the
research and recommendations of SIMC, which evaluates quantitatively and
qualitatively each of the sub-investment adviser's styles and strategies.
Subject to the SIMT's Board review, SIMC allocates and, when appropriate,
reallocates the Portfolio's assets among Money Managers, monitors and evaluates
Money Manager performance, and oversees Money Managers compliance with the
Portfolio's investment objective, policies and restrictions. SIMC HAS THE
ULTIMATE RESPONSIBILITY FOR THE INVESTMENT PERFORMANCE OF THE SMALL CAP GROWTH
PORTFOLIO DUE TO ITS RESPONSIBILITY TO OVERSEE MONEY MANAGERS AND RECOMMEND
THEIR HIRING, TERMINATION AND REPLACEMENT.
For the fiscal years ended September 30, 1995, 1996 and 1997, the Portfolio
paid the following advisory fees:
<TABLE>
<CAPTION>
ADVISORY ADVISORY
FEES PAID (000) FEES WAIVED (000)
---------------------- ------------------
1995 1996 1997 1995 1996 1997
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Portfolio.............. $1,493 $2,098 $2,675 $0 $0 $0
</TABLE>
B-23
<PAGE>
For the fiscal years ended September 30, 1995, 1996 and 1997, the Portfolio
paid the following sub-advisory fees:
<TABLE>
<CAPTION>
SUB-ADVISORY SUB-ADVISORY
FEES PAID (000) FEES WAIVED (000)
---------------------- ------------------
1995 1996 1997 1995 1996 1997
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Portfolio.............. $ 205 $1,574 $1,965 $0 $0 $0
</TABLE>
INTERNATIONAL EQUITY PORTFOLIO
The advisory agreement and each sub-advisory agreement with respect to the
International Equity Portfolio provides that SIMC and each Money Manager shall
not be protected against any liability to SIT or its shareholders by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder.
SIMC acts as the investment adviser to the International Equity Portfolio
and operates as a "manager of managers." As investment adviser, SIMC oversees
the investment advisory services provided to the International Equity Portfolio
and manages the cash portion of the Portfolio's assets. Pursuant to separate
sub-advisory agreements with SIMC, and under the supervision of SIMC and the
Board of Trustees, the Money Managers are responsible for the day-to-day
investment management of all or a discrete portion of the assets of the
International Equity Portfolio. The Money Managers are selected based primarily
upon the research and recommendations of SIMC, which evaluates quantitatively
and qualitatively each of the sub-investment adviser's styles and strategies.
Subject to the SIT Board's review, SIMC allocates and, when appropriate,
reallocates the Portfolio's assets among Money Managers, monitors and evaluates
Money Manager performance, and oversees Money Manager compliance with the
Portfolio's investment objective, policies and restrictions. SIMC HAS THE
ULTIMATE RESPONSIBILITY FOR THE INVESTMENT PERFORMANCE OF THE INTERNATIONAL
EQUITY PORTFOLIO DUE TO ITS RESPONSIBILITY TO OVERSEE MONEY MANAGERS AND
RECOMMEND THEIR HIRING, TERMINATION AND REPLACEMENT.
For the fiscal years ended February 28, 1995, February 29, 1996, and
February 28, 1997, the International Equity Portfolio paid the following
advisory fees:
<TABLE>
<CAPTION>
ADVISORY ADVISORY
FEES PAID (000) FEES WAIVED (000)
---------------------- ------------------
1995 1996 1997 1995 1996 1997
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
International Equity Portfolio.......... $1,516 $1,524(1) $2,336 $0 $0(1) $223
</TABLE>
For the fiscal years ended February 28, 1995, February 29, 1996, and
February 28, 1997, the International Equity Portfolio paid the following
sub-advisory fees:
<TABLE>
<CAPTION>
SUB-ADVISORY SUB-ADVISORY
FEES PAID (000) FEES WAIVED (000)
-------------------- ------------------
1995 1996 1997 1995 1996 1997
------ ---- ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
International Equity Portfolio.......... * $906 $1,389 * $0 $0
</TABLE>
- ------------------------
* Not applicable during such period.
(1) Includes amounts paid to the Portfolio's sub-advisers under the former
investment advisory agreements.
B-24
<PAGE>
THE ADMINISTRATOR
The Trust and SEI Fund Resources (the "Administrator") are parties to an
Administration Agreement dated May 13, 1996 (the "Administration Agreement").
The Administration Agreement provides that the Administrator shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.
For the fiscal years ended September 30, 1995, 1996 and 1997, the Funds paid
the following administrative fees:
<TABLE>
<CAPTION>
ADMINISTRATIVE FEES PAID ADMINISTRATIVE FEES WAIVED
---------------------------------------- -------------------------------
FUND 1995 1996 1997 1995 1996 1997
- ------------------------------------------- ------------ ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Treasury Securities Money Market Fund...... $ 1,293,016 $ 1,568,056 $ 1,764,347 N/A $ 53,138 $ 36,342
Government Securities Fund................. $ 211,577 $ 239,364 $ 232,563 N/A $ 22,714 $ 40,751
Balanced Fund.............................. $ 154,774 $ 165,548 $ 186,029 N/A $ 15,767 $ 32,540
Louisiana Tax-Free Income Fund............. $ 17,558 $ 26,920 $ 42,834 $ 1,546 $ 2,897 $ 7,371
Value Equity Fund.......................... $ 99,501 $ 129,657 $ 173,265 N/A $ 2,460 $ 5,144
Growth Equity Fund......................... * $ 12,573 $ 38,652 * $ 2,307 $ 6,776
Institutional Money Market Fund............ $ 3,949 $ 29,016 $ 57,709 N/A N/A $ 0
Tax Exempt Money Market Fund............... * $ 20,068 $ 115,464 * $ 4,057 $ 20,049
Strategic Income Bond Fund................. * * $ 13,519 * * $ 8,856
Small Cap Equity Fund...................... * * $ 0 * * $ 1,887(1)
International Equity Fund.................. * * $ 0 * * $ 1,705(2)
</TABLE>
- ------------------------
* Not in operation during the period.
(1)In addition to waiving administration fees, the Administrator reimbursed the
Small Cap Equity Fund $18,879 in 1997.
(2)In addition to waiving administration fees, the Administrator reimbursed the
International Equity Fund $17,914 in 1997.
The Administrator, a Delaware business trust, has its principal business
offices at Oaks, PA 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interests in the Administrator. SEI Investments and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors and
money managers. The Administrator and its affiliates also serve as administrator
or sub-administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CoreFunds, Inc., CrestFunds,
Inc., CUFUND, The Expedition Funds, First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., HighMark Funds, FMB
Funds, Inc., Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds,
Inc., PBHG Insurance Series Fund, The Pillar Funds, Rembrandt Funds-Registered
Trademark-, Santa Barbara Group of Mutual Funds, Inc., SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI International Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable Trust
and TIP Funds.
B-25
<PAGE>
THE DISTRIBUTOR
THE DISTRIBUTOR--SEI Investments Distribution Co. serves as distributor (the
"Distributor") to the Trust pursuant to a Distribution Agreement dated as of
August 17, 1993, as amended and restated as of August 8, 1994, (the
"Distribution Agreement"), which will continue for successive one-year periods.
Notwithstanding the foregoing, the Distribution Agreement shall be reviewed and
ratified at least annually (i) by the Trust's Trustees or by the vote of a
majority of the outstanding shares of the Trust, and (ii) by the vote of a
majority of the Trustees of the Trust who are not parties to the Distribution
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Distribution Agreement, cast in person at a meeting called for the purpose of
voting on such approval. The Distribution Agreement will automatically terminate
in the event of any assignment, as defined in the 1940 Act, and is terminable
with respect to a particular Fund on not less than sixty days' notice by the (i)
Trust's Trustees, (ii) vote of a majority of the outstanding shares of such Fund
or (iii) the Distributor.
DISTRIBUTION--As described in the Prospectuses, shares of the Trust's Funds
are sold on a continuous basis by the Distributor. Each of the Class A shares
and the Trust Class shares are offered without distribution fees, although the
Class A shares are sold with a front-end sales load. However, neither the Class
A shares nor the Trust Class shares are subject to ongoing distribution or
service fees, or are subject to a sales charge when they are redeemed.
The Trust has adopted a distribution plan dated August 17, 1993 for the
Class B shares of each Fixed Income and Equity Fund (the "Class B Plan"), a
distribution plan dated August 17, 1993 for the Retail Class shares of the
Treasury Securities Money Market Fund and a distribution plan dated as of
November 13, 1995 for the Retail Class shares of the Tax Exempt Money Market
Fund (the "Retail Class Plans"), a distribution plan dated as of August 8, 1994
for Cash Sweep Class shares of the Treasury Securities Money Market Fund and a
distribution plan dated as of November 1, 1996 for the Cash Sweep Class shares
of the Tax Exempt Money Market Fund (the "Cash Sweep Class Plans"), in each case
in accordance with the provisions of Rule 12b-1 under the 1940 Act, which
regulates circumstances under which an investment company may directly or
indirectly bear expenses relating to the distribution of its shares. Each of the
Class B, Retail Class and Cash Sweep Class Plans was approved by a majority of
the Trustees, including a majority of the Trustees who are not "interested
persons" of the Trust or the Distributor, as that term is defined in the 1940
Act ("Disinterested Trustees"). Continuance of each of the Class B, Retail Class
and Cash Sweep Class Plans must be approved annually by a majority of the
Trustees of the Trust and by a majority of the Disinterested Trustees. Each of
the Class B, Retail Class and Cash Sweep Class Plans requires that quarterly
written reports of amounts spent under that Plan and the purposes of such
expenditures be furnished to and reviewed by the Trustees. In accordance with
Rule 12b-1 under the 1940 Act, the Class B Plan, the Retail Class Plan or Cash
Sweep Class Plan, as applicable, may be terminated with respect to any Fund by a
vote of a majority of the Disinterested Trustees, or by a vote of a majority of
the outstanding shares of that Fund. Any of the Class B, Retail Class or Cash
Sweep Class Plans may be amended by vote of the Trust's Board of Trustees,
including a majority of the Disinterested Trustees, cast in person at a meeting
called for such purpose, except that any change that would effect a material
increase in any distribution fee with respect to a Fund requires the approval of
that Fund's shareholders.
None of the Class B, Retail Class or Cash Sweep Class shares incur a sales
charge when they are purchased, but Class B shares are subject to a sales charge
if they are redeemed within five years of purchase. Pursuant to the Distribution
Agreement and the Class B Plan, Class B shares are subject to an ongoing
distribution and service fee calculated on each Fixed Income and Equity Fund's
aggregate average daily net assets attributable to its Class B shares. Pursuant
to the Distribution Agreement and the Retail Class Plan and Cash Sweep Class
Plans, shares of each class are subject to ongoing distribution and service fees
calculated on the Tax Exempt and Treasury Securities Money Market Fund's
aggregate average daily net assets attributable to shares of each such class,
respectively.
B-26
<PAGE>
Class A shares are not subject to distribution or service fees and pay
correspondingly higher dividends per share. There can, of course, be no
guarantee that any Fund will have net income and pay dividends. However, because
initial sales charges are deducted at the time of purchase, investors in Class A
shares would not have all their funds invested initially and, therefore, would
initially own fewer shares. If you do not qualify for reduced initial sales
charges and you expect to maintain your investment for an extended period of
time, you should weigh the fact that accumulated distribution and service fees
on Class B shares may exceed the initial sales charge on Class A shares during
the life of your investment against the fact that, because of Class A's initial
sales charges, less of your initial purchase price is actually invested in the
Funds if you purchase Class A shares.
The distribution expenses incurred by the Distributor and other financial
intermediaries in connection with the sale of the shares will be paid, in the
case of Class A shares, from the proceeds of the initial sales charge and, in
the case of Class B shares, from the proceeds of the ongoing distribution and
service fees and the contingent deferred sales charge paid upon redemptions of
shares within five years of purchase.
For the fiscal year ended September 30, 1997, the Class B Government
Securities, Louisiana Tax-Free Income, Balanced, Value Equity, Growth Equity and
Strategic Income Bond, Small Cap Equity and International Equity Funds paid
$5,497, $6,262, $20,969, $45,641, $5,839, $1,028, $1,043 and $678, respectively,
in distribution fees. For the fiscal year ended September 30, 1997, the Retail
Class Treasury Securities Money Market Fund and the Tax Exempt Money Market Fund
paid $0. All of the distribution fees paid relate exclusively to sales expenses.
The following Funds imposed a front-end sales charge upon their Class A
shares in the amounts shown for the fiscal years ended September 30, 1995, 1996
and 1997:
<TABLE>
<CAPTION>
DOLLAR AMOUNT OF LOADS
DOLLAR AMOUNT OF LOADS (000) RETAINED BY THE DISTRIBUTOR (000)
------------------------------------- -------------------------------------
FUND 1995 1996 1997 1995 1996 1997
- ------------------------------------------ ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Government Securities Fund................ -- 37 -- -- 37 --
Louisiana Tax-Free Income Fund............ 3 40 20 3 40 20
Balanced Fund............................. 2 46 56 2 46 56
Value Equity Fund......................... 8 84 27 8 84 27
Growth Equity Fund........................ * 5 5 * 5 5
Strategic Income Bond Fund................ * * 15 * * 15
Small Cap Equity Fund..................... * * 10 * * 10
International Equity Fund................. * * -- * * --
</TABLE>
- ------------------------
* Had not commenced operations as of the end of the fiscal year.
The following Funds imposed a contingent deferred sales charge upon their
Class B shares in the amounts shown for the fiscal years ended September 30,
1995, 1996 and 1997:
<TABLE>
<CAPTION>
DOLLAR AMOUNT OF LOADS
DOLLAR AMOUNT OF LOADS (000) RETAINED BY THE DISTRIBUTOR (000)
------------------------------------- -------------------------------------
FUND 1995 1996 1997 1995 1996 1997
- ------------------------------------------ ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Government Securities Fund................ -- 1 1 -- 1 1
Louisiana Tax-Free Income Fund............ 4 1 2 4 1 2
Balanced Fund............................. -- 4 10 -- 4 10
Value Equity Fund......................... 5 9 15 5 9 15
Growth Equity Fund........................ * * 8 * * 8
Strategic Income Bond Fund................ * * -- * * --
Small Cap Equity Fund..................... * * -- * * --
International Equity Fund................. * * -- * * --
</TABLE>
- ------------------------
* Had not commenced operations as of the end of the fiscal year.
B-27
<PAGE>
THE PORTFOLIOS' ADMINISTRATOR AND SHAREHOLDER SERVICING AGENT
SIT and SIMT have each entered into a Management Agreement (each, a
"Management Agreement") with SEI Fund Management ("SFM") to provide
administrative services and act as shareholder servicing agent. Each Management
Agreement provides that SFM shall not be liable for any error of judgment or
mistake of law or for any loss suffered by SIT or SIMT, respectively, in
connection with the matters to which the such Management Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of SFM in the performance of its duties or from reckless disregard
of its duties and obligations thereunder.
The continuance of each Management Agreement must be specifically approved
at least annually (i) by the vote of a majority of the SIT or SIMT Trustees or
by the vote of a majority of the outstanding voting securities of the Portfolio,
and (ii) by the vote of a majority of the Trustees of SIT or SIMT who are not
parties to the Management Agreement or an "interested person" (as that term is
defined in the 1940 Act) of any party thereto, cast in person at a meeting
called for the purpose of voting on such approval. Each Management Agreement is
terminable at any time as to a Portfolio without penalty by the Trustees of SIT
or SIMT by a vote of a majority of the outstanding shares of a Portfolio or by
SFM on not less than 30 days' nor more than 60 days' written notice.
For the fiscal years ended September 30, 1995, 1996 and 1997, the Small Cap
Growth Portfolio paid the following fees to SFM:
<TABLE>
<CAPTION>
MANAGEMENT MANAGEMENT
FEES PAID (000) FEES WAIVED (000)
------------------------------- ----------------------
1995 1996 1997 1995 1996
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
Small Cap Growth Portfolio..................................... $ 1,267 $ 1,103 $ 1,440 $ 102 $ 27
<CAPTION>
1997
-----
<S> <C>
Small Cap Growth Portfolio..................................... $ 0
</TABLE>
For the fiscal years ended February 28, 1995, February 29, 1996, and
February 28, 1997, the International Equity Portfolio paid the following fees to
SFM:
<TABLE>
<CAPTION>
MANAGEMENT MANAGEMENT
FEES PAID (000) FEES WAIVED (000)
------------------------------- ----------------------
1995 1996 1997 1995 1996
--------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C>
International Equity Portfolio................................. $ 2,653 $ 1,312 $ 2,087 $ 77 $ 119
<CAPTION>
1997
-----
<S> <C>
International Equity Portfolio................................. $ 40
</TABLE>
TRUSTEES AND OFFICERS
THE TRUST
The Trustees and executive officers of the Marquis Funds-Registered
Trademark-, their respective dates of birth and their principal occupations for
the last five years are set forth below. Each may have held other positions with
the named companies during that period. Unless otherwise noted, the business
address of each Trustee and executive officer is SEI Investments, Oaks,
Pennsylvania 19456. Certain officers of the Trust also serve as officers of some
or all of the following: The Achievement Funds Trust, The Advisors' Inner
Circle, The Arbor Fund, ARK Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CoreFunds, Inc., CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, FMB Funds, Inc.,
Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG
Insurance Series Fund, The Pillar Funds, Santa Barbara Group of Mutual Funds,
Inc., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Institutional
Managed Trust, SEI International Trust, SEI Tax Exempt Trust, Stepstone Funds,
STI Classic Funds, STI Classic Variable Trust, SEI Liquid Asset Trust, SEI Index
Funds, SEI Institutional Investments Trust and TIP Funds, each of which is an
open-end management investment company managed by SEI Fund Resources or its
affiliates and, except for Rembrandt Funds-Registered Trademark- and Santa
Barbara Group of Mutual Funds, Inc., is distributed by SEI Investments
Distribution Co.
B-28
<PAGE>
ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees*--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Administrator and the
Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund, The Arbor
Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds, Insurance
Investment Products Trust, Marquis Funds-Registered Trademark-, Pillar Funds,
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.
JOHN T. COONEY (DOB 01/20/27)--Trustee**--Retired since 1992. Formerly Vice
Chairman of Ameritrust Texas N.A., 1989-1992, and MTrust Corp., 1985-1989.
Trustee of The Advisors' Inner Circle Fund, The Arbor Fund and The Expedition
Funds.
WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Administrator and Distributor, Director and Secretary of SEI
Investments. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The
Expedition Funds, Insurance Investment Products Trust, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI International Trust, SEI Liquid
Asset Trust and SEI Tax Exempt Trust.
FRANK E. MORRIS (DOB 12/30/23)--Trustee**--Retired since 1990. Peter Drucker
Professor of Management, Boston College, 1989-1990. President, Federal Reserve
Bank of Boston, 1968-1988. Trustee of The Advisors' Inner Circle Fund, The Arbor
Fund, The Expedition Funds, Insurance Investment Products Trust, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI International Trust, SEI
Liquid Asset Trust and SEI Tax Exempt Trust.
ROBERT A. PATTERSON (DOB 11/05/27)--Trustee**--Pennsylvania State
University, Senior Vice President, Treasurer (Emeritus). Financial and
Investment Consultant, Professor of Transportation (1984-present). Vice
President-Investments, Treasurer, Senior Vice President (Emeritus) (1982-1984).
Director, Pennsylvania Research Corp.; Member and Treasurer, Board of Trustees
of Grove City College. Trustee of The Advisors' Inner Circle Fund, The Arbor
Fund and The Expedition Funds.
EUGENE B. PETERS (DOB 06/03/29)--Trustee**--Private investor from 1987 to
present. Vice President and Chief Financial Officer, Western Company of North
America (petroleum service company) (1980-1986). President of Gene Peters and
Associates (import company) (1978-1980). President and Chief Executive Officer
of Jos. Schlitz Brewing Company before 1978. Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund and The Expedition Funds.
JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads,
from September 1987-December 1993; Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Insurance Investment Products Trust, SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.
BARRY MULROY (DOB 09/01/46)--Trustee*/**--First Commerce Corporation, 201
St. Charles Avenue, New Orleans, LA 70170. Marketing and Human Resources
Director of First Commerce Service Corporation from 1993 to present. Marketing
Director, First Commerce Service Corporation (1988-1992).
DAVID G. LEE (DOB 04/16/52)--President and Chief Executive Officer--Senior
Vice President of the Administrator and Distributor since 1993. Vice President
of the Administrator and Distributor, 1991-1993. President, GW Sierra Trust
Funds before 1991.
SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.
B-29
<PAGE>
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President, General Counsel and Assistant Secretary of SEI
Investments, Senior Vice President, General Counsel and Secretary of the
Administrator and Distributor since 1994. Vice President and Assistant Secretary
of SEI Investments, the Administrator and Distributor, 1992-1994. Associate,
Morgan, Lewis & Bockius LLP (law firm), 1988-1992.
RICHARD W. GRANT (DOB 10/25/45)--Secretary--2000 One Logan Square,
Philadelphia, PA 19103, Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Administrator and Distributor.
KATHRYN L. STANTON (DOB 11/19/58)--Vice President and Assistant
Secretary--Deputy General Counsel of SEI Investments, Vice President and
Assistant Secretary of the Administrator and Distributor since 1994. Associate,
Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
JAMES F. VOLK (DOB 8/28/62)--Controller and Chief Financial
Officer--Director of Investment Accounting Operations and Co-director of
International Fund Accounting Group of SEI Fund Resources since February 1996.
Assistant Chief Accountant, SEC's Division of Investment Management, December
1993-February 1996. Senior Manager, Coopers & Lybrand, 1984-1993.
TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, the
Administrator and the Distributor since 1995. Associate, Dewey Ballantine (law
firm) (1994-1995). Associate, Winston & Strawn (law firm) (1991-1994).
- ------------------------
* Messrs. Nesher, Mulroy and Doran are Trustees who may be deemed to be
"interested" persons of the Fund as that term is defined in the 1940 Act.
** Messrs. Cooney, Morris, Mulroy, Patterson, Peters and Storey serve as
members of the Audit Committee of the Fund.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT ESTIMATED FROM REGISTRANT
COMPENSATION FROM BENEFITS ANNUAL AND FUND COMPLEX*
REGISTRANT FOR THE ACCRUED AS BENEFITS PAID TO TRUSTEES
FISCAL YEAR ENDED PART OF FUND UPON FOR THE FISCAL YEAR ENDED
NAME OF PERSON, POSITION SEPTEMBER 30, 1997 EXPENSES RETIREMENT SEPTEMBER 30, 1997
- -------------------------------- ------------------ ------------ ---------- ------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney.................. $ 8,199.75 N/A N/A $8,199.75 for services on 1 board
Frank E. Morris................. $ 8,199.75 N/A N/A $8,199.75 for services on 1 board
Robert Patterson................ $ 8,199.75 N/A N/A $8,199.75 for services on 1 board
Eugene B. Peters................ $ 8,199.75 N/A N/A $8,199.75 for services on 1 board
James M. Storey, Esq............ $ 8,199.75 N/A N/A $8,199.75 for services on 1 board
Barry Mulroy.................... $ 0 N/A N/A $ 0 for services on 1 board
William M. Doran, Esq........... $ 0 N/A N/A $ 0 for services on 1 board
Robert A. Nesher................ $ 0 N/A N/A $ 0 for services on 1 board
</TABLE>
- ------------------------
* The Trust is the only investment company in the "Fund Complex."
SIMT AND SIT
Several of these same individuals currently serve as the Trustees and
Officers of SIMT and SIT.
With the exception of the Trustees and executive officers of the Marquis
Funds-Registered Trademark-, the Trustees and executive officers of SIMT and
SIT, their respective dates of birth and their principal occupations for the
last five years are set forth below. Each may have held other positions with the
named companies during that period. Unless otherwise noted, the principal
address of each Trustee and executive officer is SEI Investments, Oaks, PA
19456.
B-30
<PAGE>
For those Trustees and officers who are also Trustees or executive officers
of the Trust, only the name and office of the Trustee or officer is set forth
below.
ROBERT A. NESHER--Chairman of the Board of Trustees.*
GEORGE J. SULLIVAN, JR.--(DOB 11/13/42)--Trustee**--General Partner, Teton
Partners, L.P., since 1991; Chief Financial Officer, Noble Partners, L.P., since
1991; Treasurer and Clerk, Peak Asset Management, Inc., since 1991; Trustee,
Navigator Securities Lending Trust, since 1995. Trustee of SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, and SEI Tax Exempt Trust.
WILLIAM M. DORAN--Trustee.*
F. WENDELL GOOCH--(DOB 12/03/32)--Trustee(1)--P.O. Box 190, Paoli, IN 47454,
President, Orange County Publishing Co., Inc. since October 1981. Retired;
Publisher of the Paoli News and the Paoli Republican and Editor of the Paoli
Republican from January 1981 to 1997. President, H&W Distribution, Inc., since
July 1984. Executive Vice President, Trust Department, Harris Trust and Savings
Bank and Chairman of the Board of Directors of The Harris Trust Company of
Arizona before January 1981. Trustee of STI Classic Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, and SEI Tax Exempt Trust.
FRANK E. MORRIS--Trustee.
JAMES M. STOREY--Trustee.**
DAVID G. LEE--President, Chief Executive Officer.
MARK E. NAGLE--(DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Fund Resources since
1996. Vice President of Fund Accounting, BISYS Fund Services 1995-1996. Senior
Vice President and Site Manager, Fidelity Investments (1981-1995).
SANDRA K. ORLOW--Vice President, Assistant Secretary.
KATHRYN L. STANTON--Vice President, Assistant Secretary.
JOSEPH M. LYDON--Vice President, Assistant Secretary.
TODD CIPPERMAN--Vice President, Assistant Secretary.
KEVIN P. ROBINS--Vice President, Assistant Secretary.
RICHARD W. GRANT--Secretary.
- ------------------------
* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of SIT and SIMT as the term is defined in the 1940 Act.
** Messrs. Gooch, Storey, Morris and Sullivan serve as members of the Audit
Committee of the Trust.
B-31
<PAGE>
For the fiscal year ended September 30, 1997, SIMT paid approximately
$387,000 in fees to the Trustees who are not "interested persons" as defined in
the 1940 Act.
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT ESTIMATED FROM REGISTRANT
COMPENSATION FROM BENEFITS ANNUAL AND FUND COMPLEX
SIMT TRUST FOR ACCRUED AS BENEFITS PAID TO DIRECTORS
FISCAL YEAR END PART OF FUND UPON FOR FISCAL YEAR END
NAME OF PERSON AND POSITION SEPTEMBER 30, 1997 EXPENSES RETIREMENT SEPTEMBER 30, 1997
- ----------------------------------- ------------------ ------------ ---------- ------------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee.......... $ 0 $0 $0 $ 0 for services on 8 boards
George J. Sullivan, Jr., Trustee... $ 25,367 $0 $0 $96,750 for services on 8 boards
William M. Doran, Trustee.......... $ 0 $0 $0 $ 0 for services on 8 boards
F. Wendell Gooch, Trustee.......... $ 25,367 $0 $0 $96,750 for services on 8 boards
Frank E. Morris, Trustee........... $ 25,367 $0 $0 $96,750 for services on 8 boards
James M. Storey, Trustee........... $ 25,367 $0 $0 $96,750 for services on 8 boards
Mark E. Nagle, Controller.......... $ 0 $0 $0 $ 0 for services on 8 boards
David G. Lee,
Chief Executive Officer.......... $ 0 $0 $0 $ 0 for services on 8 boards
</TABLE>
For the fiscal year ended February 28, 1997, SIT paid approximately $369,500
in fees to the Trustees who are not "interested persons" as defined in the 1940
Act.
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT ESTIMATED FROM REGISTRANT
COMPENSATION FROM BENEFITS ANNUAL AND FUND COMPLEX
SIT TRUST FOR THE ACCRUES AS BENEFITS PAID TO DIRECTORS
FISCAL YEAR END PART OF FUND UPON FOR THE FISCAL YEAR END
NAME OF PERSON, POSITION FEBRUARY 28, 1997 EXPENSES RETIREMENT FEBRUARY 28, 1997
- ---------------------------------- ------------------ ------------ ---------- ------------------------------------
<S> <C> <C> <C> <C>
Richard Blanchard, Trustee........ $ 4,554 $0 $0 $22,500 for services on 8 boards
F. Wendell Gooch, Trustee......... $ 18,479 $0 $0 $92,250 for services on 8 boards
Frank Morris, Trustee............. $ 18,479 $0 $0 $92,250 for services on 8 boards
James Storey, Trustee............. $ 18,479 $0 $0 $92,500 for services on 8 boards
George J. Sullivan, Trustee....... $ 8,810 $0 $0 $69,750 for services on 8 boards
Robert A. Nesher, Trustee*........ $ 0 $0 $0 $ 0 for services on 8 boards
William M. Doran, Trustee*........ $ 0 $0 $0 $ 0 for services on 8 boards
</TABLE>
- ------------------------
* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" as the term is defined in the 1940 Act.
COMPUTATION OF YIELD
MONEY MARKET FUNDS--From time to time the Money Market Funds may advertise
"current yield" and "effective compound yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of a Fund refers to the income generated by an investment in a Fund over
a stated seven-day period. This income is then "annualized," that is, the amount
of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
The current yield of the Money Market Funds will be calculated daily based
upon the seven days ending on the date of calculation ("base period"). The yield
is computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing shareholder account having a balance of one
share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing such net change by
the value of the account at the beginning of the some period to obtain the base
period return and multiplying the result by (365/7). Realized and
B-32
<PAGE>
unrealized gains and losses are not included in the calculation of the yield.
The effective compound yield of the Funds is determined by computing the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return, according to the following formula:
Effective Yield = [(Base Period Return + 1)(365/7)] - 1. The current and the
effective yields reflect the reinvestment of net income earned daily on
portfolio assets.
The Tax Exempt Money Market Fund may also advertise a "tax-equivalent
yield," which is calculated by determining the rate of return that would have to
be achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a shareholder. The tax-
equivalent yield of the Fund will be calculated by adding (a) the portion of the
Fund's yield that is not tax-exempt and (b) the result obtained by dividing the
portion of the Fund's yield that is tax-exempt by the difference of one minus a
stated income tax rate.
For the 7-day period ended September 30, 1997, the Treasury Securities Money
Market Fund's 7-day and 7-day effective yields were 4.89% and 5.01%
respectively, for the Retail Class shares, 5.09% and 5.22%, respectively, for
the Trust Class shares, and 4.59% and 4.69%, respectively, for the Cash Sweep
Class shares.
For the 7-day period ended September 30, 1997, the Institutional Money
Market Fund's 7-day and 7-day effective yields were 5.23% and 5.36%,
respectively.
For the 7-day period ended September 30, 1997, the Tax Exempt Money Market
Fund's 7-day, 7-day effective and 7-day tax equivalent yields were 3.36%, 3.42%
and 5.25%, respectively, for the Retail Class shares. The tax-equivalent yield
was calculated using a federal income tax rate of 36%.
The yields of the Money Market Funds fluctuate, and the annualization of a
week's dividend is not a representation by the Trust as to what an investment in
each Fund will actually yield in the future. Actual yields will depend on such
variables as asset quality, average asset maturity, the type of instruments each
Fund invests in, changes in interest rates on money market instruments, changes
in the expenses of each Fund and other factors.
Yields are one basis upon which investors may compare the Money Market Funds
with other money market funds; however, yields of other money market funds and
other investment vehicles may not be comparable because of the factors set forth
above and differences in the methods used in valuing portfolio instruments.
FIXED INCOME AND EQUITY FUNDS--The Fixed Income Funds and the Equity Funds
may advertise a 30-day yield. These figures will be based on historical earnings
and are not intended to indicate future performance. The yield of these Funds
refers to the annualized income generated by an investment in the Funds over a
specified 30-day period. The yield is calculated by assuming that the income
generated by the investment during that 30-day period is generated over one year
and is shown as a percentage of the investment.
The Louisiana Fund may also advertise a "tax-equivalent yield," which is
calculated by determining the rate of return that would have to be achieved on a
fully taxable investment to produce the after-tax equivalent of the Fund's
yield, assuming certain tax brackets for a shareholder. The tax-equivalent yield
of the Fund will be calculated by adding (a) the portion of the Fund's yield
that is not tax-exempt and (b) the result obtained by dividing the portion of
the Fund's yield that is tax-exempt by the difference of one minus a stated
income tax rate. In particular, yield will be calculated according to the
following formula:
Yield = 2([(a-b)/(cd) + 1](6) - 1) where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of reimbursement); c
= the current daily number of shares
B-33
<PAGE>
outstanding during the period that were entitled to receive dividends; and d =
the maximum offering price per share on the last day of the period.
For the 30-day period ended September 30, 1997, the 30-day and 30-day
tax-equivalent yields on the Balanced Fund and the Fixed Income Funds were as
follows:
<TABLE>
<CAPTION>
30-DAY
30-DAY TAX EQUIVALENT
FUND YIELD YIELD
- ----------------------------------------------------------- ------------ -------------------
<S> <C> <C>
Government Securities Fund
Class A.................................................. 5.58% N/A
Class B.................................................. 5.04% N/A
Balanced Fund
Class A.................................................. 2.79% N/A
Class B.................................................. 2.16% N/A
Louisiana Tax-Free Income Fund
Class A.................................................. 3.92% 6.13%
Class B.................................................. 3.31% 5.17%
Strategic Income Bond Fund
Class A.................................................. 5.91% N/A
Class B.................................................. 5.39% N/A
</TABLE>
- ------------------------
* The 30-day tax-equivalent yield was calculated using a federal income tax rate
of 36%.
CALCULATION OF TOTAL RETURN
From time to time, the Fixed Income Funds and the Equity Funds may advertise
total return. The total return of the Fund refers to the average compounded rate
of return to a hypothetical investment for designated time periods (including
but not limited to, the period from which the Funds commenced operations through
the specified date), assuming that the entire investment is redeemed at the end
of each period. In particular, total return will be calculated according to the
following formula: P (1 + T)(n) = ERV, where P = a hypothetical initial payment
of $1,000; T = average annual total return: n= number of years; and ERV = ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
designated time period as of the end of such period.
The Small Cap Equity and International Equity Funds each are "feeder" funds
in a Corporate Master-Feeder-TM- structure. That is, the Small Cap Equity Fund
invests substantially all of its assets in Class A Shares of the Small Cap
Growth Portfolio, a separate series of SEI Institutional Managed Trust ("SIMT")
and the International Equity Fund invests substantially all of its assets in the
Class A Shares of the International Equity Portfolio, a separate series of SEI
International Trust ("SIT"). The Small Cap Growth Portfolio and the
International Equity Portfolio are referred herein as the "Portfolios."
As a result of the Funds' investments in the Portfolios, the Adviser
believes that it is relevant to show the historical performance of each Fund,
including the performance of its corresponding Portfolio. Nonetheless,
historical performance is not necessarily indicative of future performance.
The performance shown below is the aggregate performance of each Fund and
its corresponding Portfolio. The performance of the Portfolios, however, has
been adjusted to reflect applicable sales loads and operating expenses, other
than 12b-1 fees, of the Small Cap Equity and International Equity Funds.
Specifically, the data set forth below is adjusted to reflect operating expenses
of .20% and .27%, respectively, and (i) with respect to the Class A Shares, to
take into account a 3.50% sales load; and (ii) with respect to Class B Shares,
to take into account the applicable contingent deferred sales charge. Investment
performance reflects voluntary fee waivers and reimbursements currently in
effect and, with respect to Class B Shares, does not reflect each Fund's Rule
12b-1 fees. In the absence or reduction of
B-34
<PAGE>
current fee waivers or reimbursements or current Rule 12b-1 fees applicable to
Class B Shares were reflected, Total Return would be reduced.
Based on the foregoing, the aggregate average annual total returns for (i)
Marquis' Small Cap Equity Fund and SIMT's Small Cap Growth Portfolio and (ii)
Marquis' International Equity Fund and SIT's International Equity Portfolio from
inception of the respective Portfolios through September 30, 1997 and for the
one and five year periods ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
-----------------------------------------
SINCE
CLASS/WITH LOAD FIVE YEARS INCEPTION(2)
FUND WITHOUT LOAD ONE YEAR (ANNUALIZED) (ANNUALIZED)
- ------------------------------------------------ ------------------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
Small Cap Equity................................ Class A with Load(3) 16.35% 23.39% 22.71%
Class A without Load 20.60% 24.24% 23.50%
Class B with Load(3) 16.45% 23.29% 22.59%
Class B without Load 19.82% 23.33% 22.59%
International Equity............................ Class A with Load(3) 5.84% 8.99% 4.58%
Class A without Load 9.71% 9.76% 5.06%
Class B with Load(3) 5.52% 8.86% 4.25%
Class B without Load 9.02% 8.93% 4.25%
</TABLE>
- ------------------------
(1) Assumes a redemption at the end of each period.
(2) Marquis' Small Cap Equity Fund commenced operations on January 31, 1997 and
the SIMT's Small Cap Growth Portfolio commenced operations on April 20,
1992. Marquis' International Equity Fund commenced operations on January 31,
1997 and SIT's International Equity Portfolio commenced operations on
December 20, 1989.
(3) Returns "with loads" for Class A Shares assume the maximum front-end sales
load 3.50%; and for Class B Shares assume the applicable contingent deferred
sales charge for each period.
For the remaining Funds, the average annual total returns from inception
through September 30, 1997 and for the one and five year periods ended September
30, 1997 were as follows:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------
SINCE
CLASS/WITH LOAD FIVE YEARS INCEPTION
FUND WITHOUT LOAD ONE YEAR (ANNUALIZED) (ANNUALIZED)
- ------------------------------------------------ ------------------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
Louisiana Tax-Free Income....................... Class A with Load(1) 3.95% N/A 3.63%
Class A without Load 7.77% N/A 4.55%
Class B with Load(1) 3.49% N/A 3.94%
Class B without Load 6.99% N/A 4.23%
Balanced........................................ Class A with Load(2) 21.69% N/A 11.51%
Class A without Load 26.10% N/A 12.50%
Class B with Load(2) 21.69% N/A 11.53%
Class B without Load 25.19% N/A 11.76%
Growth Equity................................... Class A with Load(3) 26.64% N/A 23.61%
Class A without Load 31.25% N/A 26.43%
Class B with Load(3) 26.91% N/A 25.34%
Class B without Load 30.41% N/A 27.04%
Strategic Income Bond........................... Class A with Load(4) 2.77% N/A 2.77%
Class A without Load 8.26% N/A 8.26%
Class B with Load(4) 2.33% N/A 2.33%
Class B without Load 7.57% N/A 7.57%
</TABLE>
B-35
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------
SINCE
CLASS/WITH LOAD FIVE YEARS INCEPTION
FUND WITHOUT LOAD ONE YEAR (ANNUALIZED) (ANNUALIZED)
- ------------------------------------------------ ------------------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
Government Securities........................... Class A with Load(5) 4.46% N/A 4.35%
Class A without Load 8.22% N/A 5.28%
Class B with Load(2) 3.90% N/A 4.19%
Class B without Load 7.40% N/A 4.47%
Value Equity.................................... Class A with Load(5) 40.17% N/A 18.39%
Class A without Load 45.27% N/A 19.34%
Class B with Load(2) 40.81% N/A 18.76%
Class B without Load 44.31% N/A 18.95%
Small Cap Equity................................ Class A with Load(4) 16.35% 23.39% 22.71%
Class A without Load 20.60% 24.24% 23.50%
Class B with Load(4) 16.45% 23.29% 22.59%
Class B without Load 19.82% 23.33% 22.59%
International Equity............................ Class A with Load(4) 5.84% 8.99% 4.58%
Class A without Load 9.71% 9.76% 5.06%
Class B with Load(4) 5.52% 8.86% 4.25%
Class B without Load 9.01% 8.93% 4.25%
</TABLE>
- ------------------------
(1) Commenced operations on November 22, 1993.
(2) Commenced operations on October 22, 1993.
(3) Commenced operations on March 1, 1996.
(4) Commenced operations on January 31, 1997.
(5) Commenced operations on October 1, 1993.
PURCHASE AND REDEMPTION OF SHARES
Each Fund intends to pay cash for all shares redeemed, but under abnormal
conditions which make payment in cash unwise, payment may be made wholly or
partly in portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting such
securities to cash.
It is currently the policy of each of the Trust, SIMT and SIT (collectively,
the "Trusts") to pay for all redemptions in cash. Each Trust retains the right,
however, to alter this policy to provide for redemptions in whole or in part by
a distribution in-kind of securities held by its Funds or Portfolios in lieu of
cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions. However, a shareholder will at
all times be entitled to aggregate cash redemptions from all Funds or Portfolios
of the appropriate Trust during any 90-day period of up to the lesser of
$250,000 or 1% of such Trust's net assets.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the Securities and Exchange Commission by rule or
regulation) as a result of disposal or valuation of the Fund's securities is not
reasonably practicable, or for such other periods as the Securities and Exchange
Commission has by order permitted. The Trust also reserves the right to suspend
sales of shares of the Fund for any period during which the New York Stock
Exchange, the Adviser, the Administrator and/or the Custodian are not open for
business. The New York Stock Exchange will not open in observance of the
following holidays: New Year's Day; Martin Luther King, Jr., Day; Presidents'
Day; Good Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving; and
Christmas. In addition, as it relates to the Money Market Funds, the Federal
Reserve observes the following holidays: Columbus Day and Veterans' Day.
B-36
<PAGE>
CONVERSION FEATURE
As described in the Prospectuses, Class B shares of the Fixed Income and
Equity Funds will automatically convert to Class A shares and will no longer be
subject to the distribution and service fees or the contingent deferred sales
charge after five years after the beginning of the month in which the shares
were issued. Such conversion will be on the basis of the relative net asset
values of the two classes, without the imposition of a sales load, fee or other
charge. Because the per share net asset value of the Class A shares may be
higher than that of the Class B shares at the time of conversion, a shareholder
may receive fewer Class A shares than the number of Class B shares converted,
although the dollar value will be the same.
LETTER OF INTENT
Reduced sales charges are applicable to the aggregate amount of purchases
made by any such purchaser previously enumerated within a 13-month period
pursuant to a written Letter of Intent (the "Letter") provided by the
Distributor, which is not legally binding on the signer or a Fund and which
provides for the holding in escrow by the Administrator of 5% of the total
amount intended to be purchased until such purchase is completed within the
13-month period. A Letter may be dated to include shares purchased up to 90 days
prior to the date the Letter is signed. The 13-month period begins on the date
of the earliest purchase. If the intended investment is not completed, the
purchaser will be asked to pay an amount equal to the difference between the
sales charge on the shares purchased at the reduced rate and the sales charge
otherwise applicable to the total shares purchased. If such payment is not made
within 20 days following the expiration of the 13-month period, the
Administrator will surrender an appropriate number of the escrowed shares for
redemption in order to realize the difference. Such purchasers may include the
value (at offering price at the level designated in their Letter) of all their
shares of the Fund and of the Fixed Income Funds and the Equity Funds previously
purchased and still held as of the date of their Letter toward the completion of
such Letter.
DETERMINATION OF NET ASSET VALUE
MONEY MARKET FUNDS--The net asset value per share of the Money Market Funds
is calculated by adding the value of securities and other assets, subtracting
liabilities and dividing by the number of outstanding shares. Securities will be
valued by the amortized cost method which involves valuing a security at its
cost on the date of purchase and thereafter (absent unusual circumstances)
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuations in general market rates of interest on
the value of the instrument. While this method provides certainty in valuation,
it may result in periods during which a security's value, as determined by this
method, is higher or lower than the price each Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield of each
Fund may tend to be higher than a like computation made by a company with
identical investments utilizing a method of valuation based upon market prices
and estimates of market prices for all of its portfolio securities. Thus, if the
use of amortized cost by each Fund resulted in a lower aggregate portfolio value
on a particular day, a prospective investor in each Fund would be able to obtain
a somewhat higher yield than would result from investment in a company utilizing
solely market values, and existing investors in each Fund would experience a
lower yield. The converse would apply in a period of rising interest rates.
The Money Market Funds' use of amortized cost and the maintenance of each
Funds net asset value at $1.00 are permitted by regulations promulgated by Rule
2a-7 under the 1940 Act, provided that certain conditions are met. The
regulations also require the Trustees to establish procedures which are
reasonably designed to stabilize the net asset value per share at $1.00 for each
Fund. Such procedures include the determination of the extent of deviation, if
any, of each Fund's current net asset value per share calculated using available
market quotations from each Fund's amortized cost price per share at such
intervals as the Trustees deem appropriate and reasonable in light of market
conditions and periodic reviews of the
B-37
<PAGE>
amount of the deviation and the methods used to calculate such deviation. In the
event that such deviation exceeds 1/2 of 1%, the Trustees are required to
consider promptly what action, if any, should be initiated, and, if the Trustees
believe that the extent of any deviation may result in material dilution or
other unfair results to shareholders, the Trustees are required to take such
corrective action as they deem appropriate to eliminate or reduce such dilution
or unfair results to the extent reasonably practicable. Such actions may
include: the sale of portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; or establishing a net asset value per share by using
available market quotations. In addition, if each Fund incurs a significant loss
or liability, the Trustees have the authority to reduce pro rata the number of
shares of each Fund in each shareholder's account and to offset each
shareholder's pro rata portion of such loss or liability from the shareholder's
accrued but unpaid dividends or from future dividends while each other Fund must
annually distribute at least 90% of its investment company taxable income.
FIXED INCOME AND EQUITY FUNDS--The securities of the Fixed Income Funds and
the Equity Funds are valued by the Administrator pursuant to valuations provided
by an independent pricing service. The pricing service relies primarily on
prices of actual market transactions as well as trader quotations. However, the
service may also use a matrix system to determine valuations of fixed income
securities, which system considers such factors as security prices, yields,
maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.
The Small Cap Growth Portfolio's securities are valued by SIMC pursuant to
valuations provided by an independent pricing service (generally the last quoted
sale price). Portfolio securities listed on a securities exchange for which
market quotations are available are valued at the last quoted sale price on each
Business Day (defined as days on which the New York Stock Exchange is open for
business ("Business Day")) or, if there is no such reported sale, at the most
recently quoted bid price. Unlisted securities for which market quotations are
readily available are valued at the most recently quoted bid price. The pricing
service may also use a matrix system to determine valuations. This system
considers such factors as security prices, yields, maturities, call features,
ratings and developments relating to specific securities in arriving at
valuations. The procedures of the pricing service and its valuations are
reviewed by the officers of SIMT under the general supervision of the SIMT
Trustees.
The market value of each portfolio security of the International Equity
Portfolio is obtained by SIMC from an independent pricing service. Securities
having maturities of 60 days or less at the time of purchase will be valued
using the amortized cost method, which approximates the securities' market
value. The pricing service may use a matrix system to determine valuations of
equity and fixed income securities. This system considers such factors as
security prices, yields, maturities, call features, ratings and developments
relating to specific securities in arriving at valuations. The pricing service
may also provide market quotations. The procedures used by the pricing service
and its valuations are reviewed by the officers of SIT under the general
supervision of the SIT Trustees. Portfolio securities for which market
quotations are available are valued at the last quoted sale price on each
Business Day or, if there is no such reported sale, at the most recently quoted
bid price.
TAXES
The following is only a summary of certain tax considerations generally
affecting a Fund and its shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisers with
specific reference to their own tax situations, including their state and local
tax liabilities.
ALL FUNDS--The following discussion of certain Federal income tax
consequences is based on the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations issued thereunder as in effect on the date of this
Statement of Additional Information. New legislation, certain administrative
B-38
<PAGE>
changes, or court decisions may significantly change the conclusions expressed
herein, and may have a retroactive effect with respect to the transactions
contemplated herein.
Please note that for purposes of satisfying certain of the requirements for
taxation as a regulated investment company described below, the Small Cap Equity
Fund and International Equity Fund treat themselves as owning a proportionate
share of the assets and gross income of the Small Cap Growth Portfolio and
International Equity Portfolio, respectively, in which the Funds invest up to
100% of their assets. Although the Funds possess neither an opinion of counsel
nor a private letter ruling to this effect, they believe that this treatment is
appropriate, as numerous private rulings (applicable to other taxpayers)
conclude.
It is the policy of each of the Trust's Funds to qualify for the favorable
tax treatment accorded regulated investment companies under Subchapter M of the
Code. By following such policy, each of the Trust's Funds expects to be relieved
of the Federal income taxes on net investment company taxable income and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) distributed to shareholders.
In order to qualify as a regulated investment company each Fund must, among
other things, (1) derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies; and (2)
diversify its holdings so that at the end of each quarter of each taxable year
(i) at least 50% of the market value of the Fund's total assets is represented
by cash or cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities limited, in respect of any one
issuer, to a value not greater than 5% of the value of the Fund's total assets
and 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities of any one
issuer (other than U.S. Government securities or securities of any other
regulated investment company) or of two or more issuers that the Fund controls
and that are engaged in the same, similar, or related trades or businesses.
These requirements may restrict the degree to which the Funds may engage in
short-term trading and in certain hedging transactions and may limit the range
of the Fund's investments. If a Fund qualifies as a regulated investment
company, it will not be subject to Federal income tax on the part of its net
investment income and net realized capital gains, if any, which it distributes
each year to shareholders, provided the Fund distributes at least (a) 90% of its
"investment company taxable income" (generally, net investment income plus the
excess, if any, of net short-term capital gain over net long-term capital
losses) and (b) 90% of its net exempt interest income (the excess of (i) its
tax-exempt interest income over (ii) certain deductions attributable to that
income).
If for any taxable year, a Fund does not qualify as a regulated investment
company under Subchapter M of the Code, all of its taxable income will be
subject to tax at regular corporate tax rates without any deduction for
distributions to shareholders and all such distributions will be taxable to
shareholders as ordinary dividends to the extent of the Fund's current or
accumulated earnings and profits. Such distributions will generally qualify for
the corporated dividends received deduction for corporate shareholders.
If a Fund fails to distribute in a calendar year at least 98% of its
ordinary income for the year and 98% of its capital gain net income (the excess
of short and long term capital gain over short and long term capital losses) for
the one-year period ending October 31 of the year (and any retained amount from
the prior calendar year), the Fund will be subject to a nondeductible 4% Federal
excise tax on the undistributed amounts. The Fund intends to make sufficient
distributions to avoid imposition of this tax.
Distributions declared in October, November, or December to shareholders of
record during those months and paid during the following January are treated as
if they were received by each shareholder on December 31 of the prior year for
tax purposes.
B-39
<PAGE>
Any gain or loss recognized on a sale, exchange or redemption of shares of a
Portfolio by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than eighteen months, mid-term capital gain if
the shares have been held for more than twelve months but not more than eighteen
months, and otherwise will be treated as short-term capital gain or loss.
However, if shares on which a shareholder has received a net capital gain
distribution are subsequently sold, exchanged or redeemed and such shares have
been held for six months or less, any loss recognized will be treated as a
long-term capital loss to the extent of the net capital gain distribution.
Long-term capital gains are currently taxed at a maximum rate of 20%, mid-term
capital gains are currently taxed at a maximum rate of 28%, and short-term
capital gains are currently taxed at ordinary income tax rates.
In certain cases, a Fund will be required to withhold and remit to the U.S.
Treasury 31% of any taxable dividends, capital gain distributions and redemption
proceeds (other than from redemption of shares of the Money Market Funds) paid
to a shareholder (1) who has failed to provide a correct taxpayer identification
number, (2) who is subject to backup withholding by the Internal Revenue
Service, or (3) who has not certified to the Fund that such shareholder is not
subject to backup withholding. This backup withholding is not an additional tax,
and any amounts withheld may be credited against the shareholder's ultimate U.S.
tax liability.
A Fund's transactions in certain futures contracts, options, forward
contracts, foreign currencies, foreign debt securities, and certain other
investment and hedging activities will be subject to special tax rules. In a
given case, these rules may accelerate income to the Fund, defer losses to the
Fund, cause adjustments in the holding periods of the Fund's assets, convert
short-term capital losses into long-term capital losses, or otherwise affect the
character of the Fund's income. These rules could therefore affect the amount,
timing, and character of distributions to shareholders. Each Fund will endeavor
to make any available elections pertaining to such transactions in a manner
believed to be in the best interest of the Fund.
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made during the year. However, information set
forth in the Prospectuses and this Statement of Additional Information which
relates to taxation is only a summary of some of the important tax
considerations generally affecting purchasers of shares of the Trust's Funds.
Further tax information regarding the Funds is included in the immediately
following sections of this Statement of Additional Information. No attempt has
been made to present a detailed explanation of the income tax treatment of a
Fund or its shareholders, and this discussion is not intended as a substitute
for careful tax planning. Accordingly, potential purchasers of shares of a Fund
are urged to consult their tax advisers with specific reference to their own tax
situation.
The following tax information relates specifically to certain of the Trust's
Funds.
ADDITIONAL TAX INFORMATION CONCERNING THE LOUISIANA FUND AND TAX EXEMPT
MONEY MARKET FUND--As indicated in the Prospectuses of the Louisiana Fund and
Tax Exempt Money Market Fund, the Louisiana Fund and the Tax Exempt Money Market
Fund (the "Tax Exempt Funds") are designed to provide shareholders with current
tax-exempt interest income and are not intended to constitute a balanced
investment program. Certain recipients of Social Security and railroad
retirement benefits may be required to take into account income from the Tax
Exempt Funds in determining the taxability of their benefits. In addition, the
Tax Exempt Funds may not be an appropriate investment for shareholders that are
"substantial users" or persons related to such users of facilities financed by
private activity bonds or industrial revenue bonds. A "substantial user" is
defined generally to include certain persons who regularly use a facility in
their trade or business. Shareholders should consult their tax advisers to
determine the potential effect, if any, on their tax liability of investing in
the Tax Exempt Funds.
If, at the close of each quarter of its taxable year, at least 50% of the
value of a Tax Exempt Fund's total assets consists of securities the interest on
which is excludable from gross income, such Fund may pay
B-40
<PAGE>
"exempt-interest dividends" to its shareholders. The policy of the Tax Exempt
Funds is to pay each year as dividends substantially all of its interest income,
net of certain deductions. An exempt-interest dividend is any dividend or part
thereof (other than a capital gain dividend) paid by a Tax Exempt Fund, and
designated by the Fund as an exempt-interest dividend in a written notice mailed
to shareholders within 60 days after the close of such Fund's taxable year.
However, aggregate exempt-interest dividends for the taxable year may not exceed
the net interest from Municipal Securities and other securities exempt from the
regular Federal income tax received by the Tax Exempt Fund during the taxable
year. The percentage of the total dividends paid for any taxable year which
qualifies as Federal exempt-interest dividends will be the same for all
shareholders receiving dividends from the Tax Exempt Fund during such year,
regardless of the period for which the shares were held.
Exempt-interest dividends may nevertheless be subject to the alternative
minimum tax (the "Alternative Minimum Tax") imposed by section 55 of the Code or
the environmental tax (the "Environmental Tax") imposed by Section 59A of the
Code. The Environmental Tax is imposed at the rate of 0.12% and applies only to
corporate taxpayers. The Alternative Minimum Tax and the Environmental Tax may
be imposed in two circumstances. First, exempt-interest dividends derived from
certain "private activity bonds" issued after August 7, 1986, will generally be
an item of tax preference (and therefore potentially subject to the Alternative
Minimum Tax and the Environmental Tax) for both corporate and non-corporate
taxpayers. Second, in the case of exempt-interest dividends received by
corporate shareholders, all exempt-interest dividends, regardless of when the
bonds from which they are derived were issued or whether they were derived from
private activity bonds, will be included in the corporation's "adjusted current
earnings," as defined in section 56(g) of the Code, in calculating the
corporation's alternative minimum taxable income for purposes of determining the
Alternative Minimum Tax and the Environmental Tax.
The deduction otherwise allowable to property and casualty insurance
companies for "losses incurred" will be reduced by an amount equal to a portion
of exempt-interest dividends received or accrued during the taxable year.
Foreign corporations engaged in a trade or business in the United States will be
subject to a "branch profits tax" on their "dividend equivalent amount" for the
taxable year, which will include exempt-interest dividends. Certain Subchapter S
corporations may also be subject to taxes on their "passive investment income,"
which could include exempt-interest dividends.
Issuers of bonds purchased by the Tax Exempt Funds (or the beneficiary of
such bonds) may have made certain representations or covenants in connection
with the issuance of such bonds to satisfy certain requirements of the Code that
must be satisfied subsequent to the issuance of such bonds. Investors should be
aware that exempt-interest dividends derived from such bonds may become subject
to Federal income taxation retroactively to the date thereof if such
representations are determined to have been inaccurate or if the issuer of such
bonds (or the beneficiary of such bonds) fails to comply with the covenants.
Under the Code, if a shareholder receives an exempt-interest dividend with
respect to any share and such share is held for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend.
Although the Tax Exempt Funds do not expect to earn any investment company
taxable income (as defined by the Code), any income earned on taxable
investments will be distributed and will be taxable to shareholders as ordinary
income. In general, "investment company taxable income" comprises taxable net
investment income plus the excess, if any, of net short-term capital gain over
net long-term capital losses. The Tax Exempt Funds would be taxed on any
undistributed investment company taxable income. Since any such income will be
distributed, it is anticipated that no such tax will be paid by the Tax Exempt
Funds.
As indicated in the Prospectuses of the Tax Exempt Funds, the Tax Exempt
Funds may acquire puts with respect to Municipal Securities held in its
portfolio. See "Additional Description Of Permitted Investments--Puts on
Municipal Securities" in this Statement of Additional Information. The policy of
the Tax Exempt Funds is to limit acquisitions of puts to those under which an
acquiring Tax Exempt Fund will be treated for Federal income tax purposes as the
owner of the Municipal Securities acquired subject to
B-41
<PAGE>
the put and the interest on the Municipal Securities will be tax-exempt to such
Fund. Although the Internal Revenue Service has issued a published ruling that
provides some guidance regarding the tax consequences of the purchase of puts,
there is currently no guidance available from the Internal Revenue Service that
definitively establishes the tax consequences of many of the types of puts that
the Tax Exempt Funds could acquire under the 1940 Act. Therefore, although the
Louisiana Fund will only acquire a put after concluding that it will have the
tax consequences described above, the Internal Revenue Service could reach a
different conclusion. If the Tax Exempt Funds were not treated as the owner of
the Municipal Securities, income from such securities would probably not be
tax-exempt.
Although each Tax Exempt Fund expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located, or in which it is otherwise deemed to be conducting business, the Tax
Exempt Funds may be subject to the tax laws of such states or localities. In
addition, in those states and localities which have income tax laws, the
treatment of the Tax Exempt Funds and their shareholders under such laws may
differ from their treatment under Federal income tax laws. Shareholders are
advised to consult their tax advisers concerning the application of state and
local taxes.
If for any taxable year a Tax Exempt Fund does not qualify for the special
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to Federal tax at regular corporate rates (without any deduction
for distributions to its shareholders). Moreover, upon distribution to
shareholders, the Tax Exempt Fund's income, including Municipal Securities
interest income, will be taxable to shareholders to the extent of such Fund's
current and/or accumulated earnings and profits.
STATE TAXES--A Fund is not liable for any income or franchise tax in
Massachusetts if it qualifies as a regulated investment company for Federal
income tax purposes. Distributions by the Funds to shareholders and the
ownership of shares may be subject to state and local taxes. Therefore,
shareholders are urged to consult with their tax advisors concerning the
application of state and local taxes to investments in the Funds, which may
differ from the Federal income tax consequences. For example, under certain
specified circumstances, state income tax laws MAY exempt from taxation
distributions of a regulated investment company to the extent that such
distributions are derived from interest on Federal obligations. SHAREHOLDERS ARE
URGED TO CONSULT WITH THEIR TAX ADVISORS REGARDING WHETHER, AND UNDER WHAT
CONDITIONS, SUCH EXEMPTION IS AVAILABLE.
FUND TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser is responsible for placing the orders
to execute transactions for the Funds. In placing orders, it is the policy of
the Trust to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads or
commissions, the Trust will not necessarily be paying the lowest spread or
commission available.
The money market securities in which the Funds invest are traded primarily
in the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.
B-42
<PAGE>
TRADING PRACTICES AND BROKERAGE
THE TRUST
The Adviser selects brokers or dealers to execute transactions for the
purchase or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is to
have brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Trust's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is a
spread (the difference between the buy and sell price) which is the equivalent
of a commission.
The Trust may allocate out of all commission business generated by all of
the funds and accounts under management by the Adviser, brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include (i) advice, either directly or through publications or
writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; (ii) furnishing of analyses and reports
concerning issuers, securities or industries; (iii) providing information on
economic factors and trends, assisting in determining portfolio strategy,
providing computer software used in security analyses, and providing portfolio
performance evaluation and technical market analyses. Such services are used by
the Adviser in connection with its investment decision-making process with
respect to one or more funds and accounts managed by it, and may not be used
exclusively with respect to the fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934, as amended, higher
commissions may be paid to broker-dealers who provide brokerage and research
services than to broker-dealers who do not provide such services if such higher
commissions are deemed reasonable in relation to the value of the brokerage and
research services provided. Although transactions are directed to broker-dealers
who provide such brokerage and research services, the Trust believes that the
commissions paid to such broker-dealers are not, in general, higher than
commissions that would be paid to broker-dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In addition, portfolio transactions which
generate commissions or their equivalent are directed to broker-dealers who
provide daily portfolio pricing services to the Trust. Subject to best price and
execution, commissions used for pricing may or may not be generated by the funds
receiving the pricing service.
B-43
<PAGE>
For the fiscal year ended September 30, 1997, the following commissions were
paid on brokerage transactions, pursuant to an agreement or understanding, to
brokers because of research services provided by the brokers:
<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT
OF
TRANSACTIONS
INVOLVING
DIRECTED BROKERAGE
TOTAL DOLLAR AMOUNT OF COMMISSIONS FOR
BROKERAGE COMMISSIONS FOR RESEARCH
FUND RESEARCH SERVICES(000) SERVICES(000)
- ---------------------------------------------------------------- ------------------------- ---------------------
<S> <C> <C>
Treasury Securities Money Market Fund........................... 0 0
Tax Exempt Money Market Fund.................................... 0 0
Institutional Money Market Fund................................. 0 0
Government Securities Fund...................................... 0 0
Louisiana Tax-Free Income Fund.................................. 0 0
Balanced Fund................................................... 148 80,956
Value Equity Fund............................................... 361 183,830
Growth Equity Fund.............................................. 49 28,043
Strategic Income Bond Fund...................................... 0 0
Small Cap Equity Fund........................................... 0 0
International Equity Fund....................................... 0 0
</TABLE>
The Adviser may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. It is believed that the ability
of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or trust may obtain, it is the opinion
of the Adviser and the Trust's Board of Trustees that the advantages of combined
orders outweigh the possible disadvantages of separate transactions.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Fund may
place orders with broker-dealers which have agreed to defray certain Trust
expenses such as custodian fees, and may, at the request of the Distributor,
give consideration to sales of shares of the Trust as a factor in the selection
of brokers and dealers to execute Trust portfolio transactions.
It is expected that the Trust may execute brokerage or other agency
transactions through the Distributor or an affiliate of the Adviser, both of
which are registered broker-dealers, for a commission in conformity with the
1940 Act, the Securities Exchange Act of 1934 and rules promulgated by the
Securities and Exchange Commission (the "SEC"). Under these provisions, the
Distributor or an affiliate of the Adviser is permitted to receive and retain
compensation for effecting portfolio transactions for the Trust on an exchange
if a written contract is in effect between the Distributor and the Trust
expressly permitting the Distributor or an affiliate of the Adviser to receive
and retain such compensation. These rules further require that commissions paid
to the Distributor or affiliate of the Adviser by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other renumeration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the Trust
may direct commission business to one or more designated broker-dealers in
connection with such broker-dealer's provision of services to the Trust or
payment of certain Trust expenses (E.G., custody, pricing and professional
fees). The Trustees, including those who are not "interested persons" of the
Trust, have adopted procedures for evaluating the reasonableness of commissions
paid to the Distributor and will review these procedures periodically.
B-44
<PAGE>
For the fiscal years ended September 30, 1995, 1996 and 1997, the Funds paid
the following brokerage commissions:
<TABLE>
<CAPTION>
AMOUNT PAID TO SEI
TOTAL BROKERAGE COMMISSIONS INVESTMENTS(1)
------------------------------- -------------------------------
FUND 1995 1996 1997 1995 1996 1997
- ------------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Treasury Securities Money Market Fund............ -- -- N/A N/A N/A 0
Tax Exempt Money Market Fund..................... * * * * * 0
Institutional Money Market Fund.................. -- -- N/A N/A N/A 0
Government Securities Fund....................... -- -- N/A N/A N/A 0
Louisiana Tax-Free Income Fund................... -- -- N/A N/A N/A 0
Balanced Fund.................................... 127,294 148,272 162,158 0 0 0
Value Equity Fund................................ 161,492 363,554 347,766 0 0 0
Growth Equity Fund............................... * 48,628 42,444 * 0 0
Strategic Income Bond Fund....................... * * 0 * * 0
Small Cap Equity Fund............................ * * 0 * * 0
International Equity Fund........................ * * 0 * * N/A
</TABLE>
- ------------------------
* Had not commenced operations as of the end of the fiscal year.
(1) The amounts paid to SEI Investments reflect fees paid in connection with
repurchase agreement transactions.
For the fiscal years indicated, the Funds paid the following brokerage
commissions:
<TABLE>
<CAPTION>
% OF TOTAL
% OF TOTAL BROKERAGE TOTAL $
BROKERAGE TRANSACTIONS AMOUNT OF
TOTAL $ AMOUNT OF COMMISSIONS EFFECTED BROKERAGE
TOTAL $ AMOUNT OF BROKERAGE COMMISSIONS PAID TO THE THROUGH COMMISSIONS
BROKERAGE COMMISSIONS PAID TO AFFILIATED AFFILIATED AFFILIATED PAID FOR
PAID BROKERS BROKERS BROKERS RESEARCH
------------------------- ------------------------- ----------- ------------ -----------
FUND 1995 1996 1997 1995 1996 1997 1997 1997 1997
- ----------------------------------- ------- ------- ------- ------- ------- ------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Treasury Securities Money Market
Fund............................. -- -- N/A N/A N/A 0 0 0 0
Tax Exempt Money Market Fund....... * * * * * 0 0 0 0
Institutional Money Market Fund.... -- -- N/A N/A N/A 0 0 0 0
Government Securities
Fund............................. -- -- N/A N/A N/A 0 0 0 0
Louisiana Tax-Free Income Fund..... -- -- N/A N/A N/A 0 0 0 0
Balanced Fund...................... 127,294 148,272 162,158 14,688 147,931 0 0 0 88,963
Value Equity Fund.................. 161,492 363,554 347,766 24,648 314,153 0 0 0 218,132
Growth Equity Fund................. * 48,628 42,444 * 34,368 0 0 0 29,177
Strategic Income Bond Fund......... * * 0 * * 0 0 0 0
Small Cap Equity Fund.............. * * 0 * * 0 0 0 0
International Equity Fund.......... * * 0 * * 0 0 0 0
</TABLE>
- ------------------------
* Had not commenced operations as of the end of the fiscal year.
B-45
<PAGE>
The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the Investment Company Act) which the Trust
has acquired during its most recent fiscal year. "Regular brokers or dealers" of
the Trust are the ten brokers or dealers that, during the most recent fiscal
year, (i) received the greatest dollar amounts of brokerage commissions from the
Trust's portfolio transactions, (ii) engaged as principal in the largest dollar
amounts of brokerage commissions from the Trust's portfolio transactions, or
(iii) sold the largest dollar amounts of the Trust's shares. As of September 30,
1997, the Government Securities Fund Portfolio held the following debt security:
$502,000 issued by Lehman Brothers; and the Strategic Income Bond Fund Portfolio
held the following debt securities; $579,000 issued by Merrill Lynch Government
Securities Inc., $328,000 issued by Lehman Brothers and $490,000 held by General
Electric Capital Corp.
THE PORTFOLIOS
SIMT--SIMT has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the advisers are responsible for placing orders to
execute Portfolio transactions. In placing orders, it is SIMT's policy to seek
to obtain the best net results taking into account such factors as price
(including the applicable dealer spread), size, type and difficulty of the
transaction involved, the firm's general execution and operational facilities,
and the firm's risk in positioning the securities involved. While the Money
Managers generally seek reasonably competitive spreads or commissions, SIMT will
not necessarily be paying the lowest spread or commission available. SIMT will
not purchase portfolio securities from any affiliated person acting as principal
except in conformity with the regulations of the SEC.
It is expected that the Small Cap Growth Portfolio may execute brokerage or
other agency transactions through the Distributor, a registered broker-dealer,
for a commission in conformity with the 1940 Act, the Securities Exchange Act of
1934, as amended, and rules and regulations of the SEC. Under these provisions,
the Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for a Portfolio on an exchange if a written contract is
in effect between the Distributor and the Trust expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by SIMT for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the
Portfolio may direct commission business to one or more designated
broker-dealers, including the Distributor, in connection with such
broker-dealer's payment of certain of the Portfolios' expenses. The Trustees,
including those who are not "interested persons" of SIMT, have adopted
procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically. In addition, SIMC has
adopted a policy respecting the receipt of research and related products and
services in connection with transactions effected for Portfolios operating
within the "Manager of Managers" structure. Under this policy, SIMC and the
various firms that serve as Money Managers to certain Portfolios of SIMT, in the
exercise of joint investment discretion over the assets of the Portfolio, will
direct a substantial portion of a Portfolio's brokerage to the Distributor in
consideration of the Distributor's provision of research and related products to
SIMC for use in performing its advisory responsibilities. All such transactions
directed to the Distributor must be accomplished in a manner that is consistent
with the SIMT's policy to achieve best net results, and must comply with SIMT's
procedures regarding the execution of transactions through affiliated brokers.
B-46
<PAGE>
<TABLE>
<CAPTION>
% OF TOTAL
% OF TOTAL BROKERAGE TOTAL $
BROKERAGE TRANSACTIONS AMOUNT OF
TOTAL $ AMOUNT OF COMMISSIONS EFFECTED BROKERAGE
TOTAL $ AMOUNT OF BROKERAGE COMMISSIONS PAID TO THE THROUGH COMMISSIONS
BROKERAGE COMMISSIONS PAID TO AFFILIATED AFFILIATED AFFILIATED PAID FOR
PAID BROKERS BROKERS BROKERS RESEARCH
-------------------------- ------------------------ ----------- ------------ -----------
FUND 1995 1996 1997 1995 1996 1997 1997 1997 1997
- ---------------------------- ----- -------- -------- ----- ------- ------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap Growth
Portfolio.................. * $551,149 $803,002 * $15,867 $77,385 9.64% 7.26% $0
</TABLE>
- ------------------------
*Had not commenced operations as of the end of the fiscal year.
SIMT is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the Investment Company Act) which SIMT has
acquired during its most recent fiscal year. As of September 30, 1997, the Small
Cap Growth Portfolio held the following debt security: $19,147,000 issued by
J.P. Morgan.
SIT--SIT has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, SIMC is responsible for placing orders to execute
Portfolio transactions. In placing orders, it is SIT's policy to seek to obtain
the best net results taking into account such factors as price (including the
applicable dealer spread), size, type and difficulty of the transaction
involved, the firm's general execution and operational facilities, and the
firm's risk in positioning the securities involved. While SIMC generally seeks
reasonably competitive spreads or commissions, the Trust will not necessarily be
paying the lowest spread or commission available. SIT will not purchase
portfolio securities from any affiliated person acting as principal except in
conformity with the regulations of the SEC.
SIT does not expect to use one particular dealer, but, subject to SIT's
policy of seeking the best net results, dealers who provide supplemental
investment research to SIMC or the Money Managers may receive orders for
transactions by SIT. Information so received will be in addition to and not in
lieu of the services required to be performed by SIMC or the Money Managers
under the Portfolio's advisory agreement and sub-advisory agreement, and the
expenses of the SIMC and the Money Managers will not necessarily be reduced as a
result of the receipt of such supplemental information. These research services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends, assisting in
determining portfolio performance evaluation and technical market analyses. Such
services are used by the SIMC or the Money Managers in connection with their
investment decision-making process with respect to one or more funds and
accounts managed by them, and may not be used exclusively with respect to the
fund or account generating the brokerage.
The money market securities in which the International Equity Portfolio
invests are traded primarily in the over-the-counter market. Bonds and
debentures are usually traded over-the-counter, but may be traded on an
exchange. Where possible, each Money Manager will deal directly with the dealers
who make a market in the securities involved except in those circumstances where
better prices and execution are available elsewhere. Such dealers usually are
acting as principal for their own account. On occasion, securities may be
purchased directly from the issuer. Money market securities are generally traded
on a net basis and do not normally involve either brokerage commissions or
transfer taxes. The cost of executing portfolio securities transactions of the
Portfolio will primarily consist of dealer spreads and underwriting commissions.
It is expected that the Portfolio may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission, in conformity with the 1940 Act, the Securities
B-47
<PAGE>
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
Under these provisions, the Distributor is permitted to receive and retain
compensation for effecting portfolio transactions for the Portfolio on an
exchange if a written contract is in effect between the Distributor and SIT
expressly permitting the Distributor to receive and retain such compensation.
These provisions further require that commissions paid to the Distributor by SIT
for exchange transactions not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commission, fee or other
renumeration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." The Trustees,
including those who are not "interested persons" of SIT, have adopted procedures
for evaluating the reasonableness of commissions paid to the Distributor and
will review these procedures periodically.
In addition, SIMC has adopted a policy respecting the receipt of research
and related products and services in connection with transactions effected for
Portfolios operating within the "Manager of Managers" structure. Under this
policy, SIMC and the various firms that serve as Money Managers to the
Portfolio, in the exercise of joint investment discretion over the assets of the
Portfolio, will direct a substantial portion of the Portfolio's brokerage to the
Distributor in consideration of the Distributor's provision of research and
related products to SIMC for use in performing its advisory responsibilities.
All such transactions directed to the Distributor must be accomplished in a
manner that is consistent with SIT's policy to achieve best net results, and
must comply with SIT's procedures regarding the execution of transactions
through affiliated brokers.
<TABLE>
<CAPTION>
% OF TOTAL
% OF TOTAL BROKERAGE TOTAL $
BROKERAGE TRANSACTIONS AMOUNT OF
TOTAL $ AMOUNT OF COMMISSIONS EFFECTED BROKERAGE
TOTAL $ AMOUNT OF BROKERAGE COMMISSIONS PAID TO THE THROUGH COMMISSIONS
BROKERAGE COMMISSIONS PAID TO AFFILIATED AFFILIATED AFFILIATED PAID FOR
PAID BROKERS BROKERS BROKERS RESEARCH
------------------------- ------------------------- ----------- ------------ -----------
FUND 1995 1996 1997 1995 1996 1997 1997 1997 1997
- ----------------------------------- ------- ------- ------- ------- ------- ------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Equity Portfolio..... 1,482 1,604 2,320 171 577 383 16.51 34.17 479,553
</TABLE>
SIT is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the Investment Company Act) which SIT has
acquired during its most recent fiscal year. As of February 28, 1997, the
International Equity Portfolio held no debt securities.
Since SIT does not market its shares through intermediary brokers or
dealers, it is not the SIT's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the SIMC may place Portfolio orders with qualified
broker-dealers who recommend the SIT to clients, and may, when a number of
brokers and dealers can provide best price and execution on a particular
transaction, consider such recommendations by a broker or dealer in selecting
among broker-dealers.
B-48
<PAGE>
PORTFOLIO TURNOVER
For the fiscal years ended September 30, 1996 and 1997, the portfolio
turnover rate for each of the Funds was as follows:
<TABLE>
<CAPTION>
TURNOVER RATE
--------------------
FUND 1996 1997
- --------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Government Securities Fund....................................................... 22.80% 11.88%
Balanced Fund.................................................................... 57.22% 40.97%
Value Equity Fund................................................................ 95.93% 97.91%
Louisiana Tax-Free Income Fund................................................... 8.26% 0.77%
Growth Equity Fund............................................................... 91.09%(1) 65.12%
Strategic Income Bond Fund....................................................... * 1.34%
Small Cap Equity Fund............................................................ * 29.56%
International Equity Fund........................................................ * 4.69%
</TABLE>
- ------------------------
* Had not commenced operations as of the end of the fiscal year.
(1) The portfolio turnover rate reflects the rate since the Portfolio commenced
operations on March 1, 1996.
The portfolio turnover rate for the Small Cap Growth Portfolio for the
fiscal years ending September 30, 1996 and 1997 was 167% and 107%, respectively.
The portfolio turnover rate for the International Equity Portfolio for the
fiscal years ended February 29, 1996 and February 28, 1997 was 102% and 117%,
respectively.
DESCRIPTION OF SHARES
The Trust is a Massachusetts business trust and was organized pursuant to a
Declaration of Trust. The Declaration of Trust authorizes the Board of Trustees
to issue an unlimited number of shares, which are units of beneficial interest.
The Trust presently has series of shares which represent interests in the
following Funds: the Government Securities Fund, the Louisiana Fund, the
Strategic Income Bond Fund, the Balanced Fund, the Value Equity Fund, the Growth
Equity Fund, the Small Cap Equity Fund, the International Equity Fund, the
Treasury Securities Money Market Fund, the Institutional Money Market Fund and
the Tax Exempt Money Market Fund, respectively. The Trust's Declaration of Trust
authorizes the Board of Trustees to divide or redivide any unissued shares of
the Trust into one or more additional series.
Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board of Trustees may grant in its discretion. When
issued for payment as described in the Prospectuses and this Statement of
Additional Information, the Trust's shares will be fully paid and
non-assessable, subject only to the possibility of shareholder liability
described in the following section. All consideration received by the Trust for
shares of any additional series and all assets in which such consideration is
invested would belong to that series and would be subject to the liabilities
related thereto. In the event of a liquidation or dissolution of the Trust,
shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general assets
not belonging to any particular Fund which are available for distribution. Share
certificates representing shares will not be issued.
B-49
<PAGE>
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust could,
under certain circumstances, be held personally liable as partners for the
obligations of the trust. Even if the Trust were held to be a partnership,
however, the possibility of the shareholders' incurring financial loss for that
reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any shareholder held personally liable for the
obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for
his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his willful misfeasance, bad faith, gross negligence or reckless disregard
of his duties.
5% SHAREHOLDERS
The names and addresses of the holders of 5% or more of the outstanding
shares of any Fund as of January 21, 1998 and the percentage of outstanding
shares of such Fund held by such shareholders as of such date are, to Trust
management's knowledge, as follows(1):
<TABLE>
<CAPTION>
NAME AND ADDRESS OF RECORD OR BENEFICIAL HOLDER NUMBER OF SHARES % OF OWNERSHIP
- -------------------------------------------------- ---------------- ----------------
<S> <C> <C>
TREASURY SECURITIES MONEY MARKET FUND--TRUST CLASS
ENBECEE Company................................... 521,877,017 99.98%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
TREASURY SECURITIES MONEY MARKET FUND--RETAIL
CLASS
National Financial Services Corp.
for the Exclusive Benefit of Our Customers...... 337,233,793 58.54%
PO Box 3752
Church Street Station
New York, NY 10008-3752
ENBECEE Company................................... 238,570,250 41.41%
Attn: Cash Sweep
PO Box 61837
New Orleans, LA 70161-1837
</TABLE>
B-50
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF RECORD OR BENEFICIAL HOLDER NUMBER OF SHARES % OF OWNERSHIP
- -------------------------------------------------- ---------------- ----------------
<S> <C> <C>
TAX EXEMPT MONEY MARKET FUND
National Financial Services Corp.
for the Exclusive Benefit of Our Customers...... 66,275,067 46.92%
PO Box 3752
Church Street Station
New York, NY 10008-3752
ENBECEE Company................................... 59,728,073 42.29%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 15,232,979 10.78%
Attn: Cash Sweep
PO Box 61837
New Orleans, LA 70161-1837
INSTITUTIONAL MONEY MARKET FUND
ENBECEE Company................................... 49,855,768 100%
Attn: Trust Services
Cash Sweep
PO Box 61837
New Orleans, LA 70161-1837
GOVERNMENT SECURITIES FUND
ENBECEE Company................................... 8,012,749 53.63%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 6,532,919 43.73%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
LOUISIANA TAX-FREE INCOME FUND
ENBECEE Company................................... 1,436,392 34.63%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
</TABLE>
B-51
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF RECORD OR BENEFICIAL HOLDER NUMBER OF SHARES % OF OWNERSHIP
- -------------------------------------------------- ---------------- ----------------
<S> <C> <C>
BALANCED FUND
ENBECEE Company................................... 9,949,859 88.27%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 681,947 6.05%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
VALUE EQUITY FUND
ENBECEE Company................................... 4,166,181 44.47%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 9,369,442 38.44%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
STRATEGIC INCOME BOND FUND
ENBECEE Company................................... 746,547 47.22%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 660,676 41.79%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
</TABLE>
B-52
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF RECORD OR BENEFICIAL HOLDER NUMBER OF SHARES % OF OWNERSHIP
- -------------------------------------------------- ---------------- ----------------
<S> <C> <C>
SMALL CAP EQUITY FUND
ENBECEE Company................................... 174,900 40.81%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 71,800 16.75%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
INTERNATIONAL EQUITY FUND
ENBECEE Company................................... 197,679 71.72%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 19,898 7.22%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
GROWTH EQUITY FUND
ENBECEE Company................................... 1,575,814 62.38%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
ENBECEE Company................................... 666,552 26.39%
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
</TABLE>
- ------------------------
(1) The Trust believes that most of the shares referred to above were held by
the above persons in accounts for their fiduciary, agency or custodial
customers.
B-53
<PAGE>
FINANCIAL STATEMENTS
THE TRUST
The financial statements of the Trust are incorporated by reference into
this Statement of Additional Information. The financial statements have been
audited by Arthur Andersen LLP, independent public accountants to the Trust, as
indicated in their report with respect thereto, and are incorporated herein by
reference in reliance upon the authority of said firm as experts in accounting
and auditing in giving said report. A copy of the 1997 Annual Report to
Shareholders must accompany the delivery of this Statement of Additional of
Information.
SIMT AND SIT
SIMT's financial statements (as of, and for the fiscal year ended, September
30, 1997) with respect to the Small Cap Growth Portfolio only and SIT's
financial statements (as of, and for the fiscal year ended, February 28, 1997)
with respect to the International Equity Portfolio only, are incorporated by
reference into this Statement of Additional Information. Such financial
statements have been audited by Price Waterhouse LLP, independent accountants to
SIMT and SIT, as indicated in SIMT's and SIT's respective annual reports and are
incorporated herein by reference in reliance on the reports of Price Waterhouse
LLP, independent accountants, given on authority of said firm as experts in
accounting and auditing. Also, SIT's semi-annual unaudited financial statements
(as of, and for the six month period ended August 31, 1997) with respect to the
International Equity Portfolio only, are incorporated by reference into this
Statement of Additional Information. A copy of each of the SIMT and SIT 1997
Annual Reports to Shareholders and the SIT 1997 Semi-Annual Report to
Shareholders must accompany the delivery of this Statement of Additional
Information.
B-54
<PAGE>
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published
by Standard & Poor's Corporation ("S&P"), Moody's Investors Services, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff & Phelps, Inc.
("Duff") and IBCA Limited and IBCA, Inc. (together "IBCA").
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1, 1+ and 2, to indicate the relative degree of safety. Issues rated
A-1+ are those with an "overwhelming degree" of credit protection. Those rated
A-1 reflect a "very strong" degree of safety regarding timely payment. Those
rated A-2 reflect a degree of safety regarding timely payment but not as high a
degree as A-1.
Commercial paper rated Prime-1 or Prime-2 by Moody's are judged by Moody's
to be of the "highest" and "higher" quality, respectively, on the basis of
relative repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial paper rating
assigned by Fitch. Commercial paper rated Fitch-1 is regarded as having the
strongest degree of assurance for timely payment. The rating Fitch-2 (Very Good
Grade) is the second highest commercial paper rating assigned by Fitch which
reflects an assurance of timely payment only slightly less in degree than the
strongest issues.
Commercial paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by good
fundamental protection factors. Risk factors are minor. Ratings of Duff-1 are
further refined by the gradations of "1+" and "1-". Issues rated Duff-1+ have
the highest certainty of timely payment, outstanding short term liquidity, and
safety just below risk-free U.S. Treasury short-term obligations. Issues rated
Duff-1 have high certainty of timely payment, strong liquidity factors supported
by good fundamental protection factors, and small risk factors. Commercial paper
rated Duff-2 is regarded as having good certainty of timely payment, good access
to capital markets and sound liquidity factors and company fundamentals. Risk
factors are small.
DESCRIPTION OF CORPORATE BOND RATINGS
The following descriptions of corporate bond ratings have been published by
S&P, Moody's, Fitch, Duff and IBCA.
Bonds rated AAA have the highest rating that S&P assigns to a debt
obligation. Such a rating indicates an extremely strong capacity to pay
principal and interest. Bonds rated AA by S&P also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and in the
majority of instances bonds rated AA differ from AAA issues only to a small
degree. Debt rated A by S&P has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
Bonds which are rated BBB by S&P are considered medium-grade obligations
(I.E., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged" bonds. Interest payments are protected by a large, or an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes are unlikely to impair
the fundamentally strong position of such issues. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality. Together with bonds rated Aaa, they
comprise what are generally known as high-grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in Aaa
securities, fluctuation of protective
A-1
<PAGE>
elements may be of greater amplitude, or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A by Moody's possess many favorable investment
attributes and are considered upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Debt rated Baa by Moody's is regarded as having an adequate capacity to pay
principal and interest and repay principal. Whereas debt in this category
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
principal and interest and repay principal for debt in this category than in
higher rated categories.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions, and liable to but only slight market fluctuation other than market
fluctuation caused by changes in the money rate. The prime feature of an AAA
bond is a showing of earnings several times or many times interest requirements,
with such stability of applicable earnings that safety is beyond reasonable
question whatever changes occur in conditions. Bonds rated AA by Fitch are
judged by Fitch to be of safety virtually beyond question and are readily
salable. The merits of bonds in this category are not unlike those of the AAA
class, but whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to rating by
the lesser financial power of the enterprise and more local type market. Bonds
rated A by Fitch are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings. Bonds rated BBB by
Fitch are considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic condition and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
Bonds rated AAA by Duff are judged by Duff to be of the highest credit
quality, with negligible risk factors being only slightly more than for
risk-free U.S. Treasury debt. Bonds rated AA by Duff are judged by Duff to be of
high credit quality with strong protection factors and risk that is modest but
that may vary slightly from time to time because of economic conditions. Bonds
rated A by Duff are judged by Duff to have average but adequate protection
factors. However, risk factors are more variable and greater in periods of
economic stress. bonds rated BBB by Duff are judged by Duff as having below
average protection factors but still considerable variability in risk during
economic cycles.
Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations for which there
is a very low expectation of investment risk are rated AA by IBCA. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic or financial conditions may increase investment risk albeit
not very significantly. Obligations for which there is a low expectation of
investment risk are rated A by IBCA. Capacity for timely repayment of principal
and interest is strong, although adverse changes in business, economic or
financial conditions may lead to increased investment risk. Obligations for
which there is currently a low expectation of investment risk are rated BBB by
IBCA. Capacity for timely repayment of principal and interest is adequate,
although adverse changes in business, economic or financial conditions are more
likely to lead to increased investment risk than for obligations in higher
categories.
A-2
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE ONE GROUP(R)
The One Group U.S. Treasury Securities Money Market Fund
(the "U.S. Treasury Securities Money Market Fund")
The One Group Prime Money Market Fund (the "Prime Money Market Fund")
The One Group Municipal Money Market Fund (the "Municipal Money Market Fund")
The One Group Ohio Municipal Money Market Fund (the "Ohio Municipal Money Market
Fund")
The One Group Income Equity Fund (the "Income Equity Fund")
The One Group Disciplined Value Fund (the "Disciplined Value Fund")
The One Group Growth Opportunities Fund (the "Growth Opportunities Fund")
The One Group International Equity Index Fund (the "International Equity Index
Fund")
The One Group Equity Index Fund (the "Equity Index Fund")
The One Group Large Company Value Fund (the "Large Company Value Fund")
The One Group Large Company Growth Fund (the "Large Company Growth Fund")
The One Group Asset Allocation Fund (the "Asset Allocation Fund")
The One Group Income Bond Fund (the "Income Bond Fund")
The One Group Limited Volatility Bond Fund (the "Limited Volatility Bond Fund")
The One Group Intermediate Bond Fund (the "Intermediate Bond Fund")
The One Group Government Bond Fund (the "Government Bond Fund")
The One Group Ultra Short-Term Income Fund (the "Ultra Short-Term Income Fund")
The One Group Municipal Income Fund (the "Municipal Income Fund")
The One Group Intermediate Tax-Free Bond Fund (the "Intermediate Tax-Free Bond
Fund")
The One Group Ohio Municipal Bond Fund (the "Ohio Municipal Bond Fund")
The One Group Texas Tax-Free Bond Fund (the "Texas Tax-Free Bond Fund")
The One Group West Virginia Municipal Bond Fund (the "West Virginia Municipal
Bond Fund")
The One Group Kentucky Municipal Bond Fund (the "Kentucky Municipal Bond Fund")
The One Group Arizona Municipal Bond Fund (the "Arizona Municipal Bond Fund")
The One Group Treasury Money Market Fund (the "Treasury Money Market Fund")
The One Group Treasury Only Money Market Fund (the "Treasury Only Money Market
Fund")
The One Group Government Money Market Fund (the "Government Money Market Fund")
The One Group Tax Exempt Money Market Fund (the "Tax Exempt Money Market Fund")
The One Group Institutional Prime Money Market Fund (the "Institutional Prime
Money Market Fund")
The One Group Louisiana Municipal Bond Fund (the "Louisiana Municipal Bond
Fund")
The One Group Value Growth Fund (the "Value Growth Fund")
The One Group Small Capitalization Fund (the "Small Capitalization Fund")
The One Group Income Fund (the "Income Fund")
The One Group Investor Growth Fund (the "Investor Growth Fund)
The One Group Investor Growth & Income Fund (the "Investor Growth & Income Fund)
The One Group Investor Aggressive Growth Fund (the "Investor Aggressive Growth")
The One Group Investor Fixed Income Fund (the "Investor Fixed Income Fund")
The One Group Investor Conservative Growth Fund (the "Investor Conservative
Growth Fund")
The One Group Investor Balanced Fund (the "Investor Balanced Fund")
The One Group Treasury & Agency Fund (the "Treasury & Agency Fund")
(each a "Fund," and collectively the "Funds")
November 1, 1997
This Statement of Additional Information is not a Prospectus, but supplements
and should be read in conjunction with the Prospectuses dated November 1, 1997.
This Statement of Additional Information is incorporated in its entirety into
each Fund's Prospectus. A copy of each Prospectus is available without charge by
writing to The One Group Services Company, 435 Stelzer Road, Columbus, Ohio
43219, or by telephoning toll free (800)-480-4111.
<PAGE>
TABLE OF CONTENTS
PAGE
THE TRUST......................................................................1
INVESTMENT OBJECTIVES AND POLICIES.............................................2
Additional Information on Fund Instruments.........................2
High Quality Investments With Regard to the Money Market and
Institutional Money Market Funds.......................2
Bank Obligations...................................................3
Commercial Paper...................................................3
Repurchase Agreements..............................................3
Reverse Repurchase Agreements......................................4
Government Securities..............................................4
Loan Participations and Assignments................................4
Futures and Options Trading........................................5
Futures Contracts..................................................5
Restrictions on the Use of Futures Contracts.......................6
Risk Factors in Futures Transactions...............................7
Options Contracts..................................................7
Covered Calls......................................................8
Purchasing Call Options............................................9
Purchasing Put Options............................................10
Secured Puts......................................................10
Risk Factors in Options Transactions..............................10
Mortgage-Related Securities.......................................10
Real Estate Investment Trusts ("REITs")...........................14
Foreign Investments...............................................15
PERCS ......................................................16
When-Issued Securities and Forward Commitments....................16
Securities Lending................................................16
Index Investing by the Equity Index and International
Equity Index Funds....................................17
Foreign Currency Transactions.....................................18
Forward Foreign Currency Exchange Contracts.......................19
Foreign Currency Futures Contracts................................20
Variable and Floating Rate Instruments............................22
Municipal Securities..............................................23
Demand Features...................................................26
Swaps, Caps and Floors............................................26
Structured Instruments............................................27
New Financial Products............................................28
Restricted Securities.............................................28
High Yield Securities.............................................29
U.S. Treasury Obligations.........................................30
Treasury Receipts.................................................30
Common Stock......................................................30
Preferred Stock...................................................30
Investment Company Securities.....................................30
Convertible Securities............................................30
Warrants ......................................................30
Asset-Backed Securities...........................................31
Ohio Municipal Securities.........................................31
West Virginia Municipal Securities................................32
Kentucky Municipal Securities.....................................32
Texas Municipal Securities........................................32
Arizona Municipal Securities......................................33
Louisiana Municipal Securities....................................34
Investment Restrictions...........................................37
Portfolio Turnover................................................41
Additional Tax Information Concerning All Funds...................42
(ii)
<PAGE>
Additional Tax Information Concerning the Tax-Advantaged Funds....44
Additional Tax Information Concerning the International
Equity Index Fund.....................................45
Foreign Tax Credit................................................45
VALUATION ..................................................................46
Valuation of the Money Market and Institutional Money
Market Funds..........................................46
Valuation of the Equity Funds, the Bond Funds and the
Municipal Bond Funds..................................46
ADDITIONAL INFORMATION REGARDING THE
CALCULATION OF PER SHARE NET ASSET VALUE..........................47
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................47
MANAGEMENT OF THE TRUST.......................................................50
Trustees & Officers...............................................50
Investment Advisor................................................53
Glass-Steagall Act................................................55
Portfolio Transactions............................................56
Administrator.....................................................57
Distributor ......................................................62
Distribution Plan.................................................62
Custodian and Transfer Agent......................................65
Experts ......................................................65
ADDITIONAL INFORMATION........................................................66
Description of Shares.............................................66
Shareholder and Trustee Liability.................................66
Performance.......................................................67
Calculation of Performance Data...................................67
Miscellaneous.....................................................75
(iii)
<PAGE>
THE TRUST
The One Group (the "Trust") is an open-end management investment
company. The Trust consists of forty series of units of beneficial interest
("Shares") each representing interests in one of forty separate investment
portfolios ("Funds"), i.e., the U.S. Treasury Securities Money Market Fund
(formerly the U.S. Treasury Money Market Portfolio), the Prime Money Market
Fund, the Municipal Money Market Fund (formerly the Tax-Free Obligations
Portfolio) and the Ohio Municipal Money Market Fund (these four Funds being
collectively referred to as the "Money Market Funds"), the Income Equity Fund,
the Disciplined Value Fund, the Growth Opportunities Fund (formerly the Small
Company Growth Fund and the Growth Equity Portfolio), the Equity Index Fund, the
International Equity Index Fund, the Large Company Value Fund (formerly, the
Quantitative Equity Portfolio), the Large Company Growth Fund, the Asset
Allocation Fund (formerly, the Flexible Balanced Portfolio), the Value Growth
Fund and the Small Capitalization Fund (formerly the Gulf South Growth
Fund)(these ten Funds being collectively referred to as the "Equity Funds"), the
Income Bond Fund (formerly the Income Portfolio), the Limited Volatility Bond
Fund, the Intermediate Bond Fund, the Treasury & Agency Fund, the Government
Bond Fund, the Income Fund and the Ultra Short-Term Income Fund (formerly the
Government ARM Fund) (these seven Funds being collectively referred to as the
"Bond Funds"), the Intermediate Tax-Free Bond Fund, the Municipal Income Fund
(formerly the Tax-Free Bond Fund), the Ohio Municipal Bond Fund, the Texas
Tax-Free Bond Fund, the West Virginia Municipal Bond Fund, the Kentucky
Municipal Bond Fund, the Arizona Municipal Bond Fund, and the Louisiana
Municipal Bond Fund (these eight Funds being collectively referred to as the
"Municipal Bond Funds"), the Treasury Money Market Fund, the Treasury Only Money
Market Fund, the Government Money Market Fund, the Tax Exempt Money Market Fund,
and the Institutional Prime Money Market Fund (these five Funds being
collectively referred to as the "Institutional Money Market Funds"), the
Investor Growth Fund, the Investor Growth & Income Fund, the Investor Aggressive
Growth Fund, the Investor Fixed Income Fund, the Investor Conservative Growth
Fund, and the Investor Balanced Fund (these six Funds being collectively
referred to as the "Funds of Funds"). The Municipal Money Market Fund, the Ohio
Municipal Money Market Fund, the Municipal Bond Funds, and the Tax Exempt Money
Market Fund are also referred to as the "Tax-Advantaged Funds."
All of the Trust's Funds are diversified, as defined under the
Investment Company Act of 1940, as amended (the "1940 Act"), with the exception
of the Ohio Municipal Bond Fund, the Kentucky Municipal Bond Fund, the West
Virginia Municipal Bond Fund, the Texas Tax-Free Bond Fund, the Arizona
Municipal Bond Fund, the Ohio Municipal Money Market Fund, and the Louisiana
Municipal Bond Fund, which are non-diversified. Shares in the Funds of the Trust
(other than the Institutional Money Market Funds, and the Money Market Funds)
are offered in four separate classes: Fiduciary Class Shares, Class A Shares,
Class B Shares and Class C Shares. The U.S. Treasury Securities Money Market
Fund and the Prime Money Market Fund offer Class A Shares, Class B Shares, Class
C Shares, Fiduciary Class Shares and Service Class Shares. The Ohio Municipal
Money Market Fund and the Municipal Money Market Fund offer Class A, Class C and
Fiduciary Class Shares. Much of the information contained herein expands upon
subjects discussed in the Prospectuses for the respective Funds. No investment
in a particular class of Shares of a Fund should be made without first reading
that Fund's Prospectus.
1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement each Fund's investment objective and
policies as set forth in the respective Prospectus for that Fund.
ADDITIONAL INFORMATION ON FUND INSTRUMENTS
HIGH QUALITY INVESTMENTS WITH REGARD TO THE MONEY MARKET AND INSTITUTIONAL MONEY
MARKET FUNDS
The Money Market and Institutional Money Market Funds, may invest only
in obligations determined by the Fund's investment Advisor, Banc One Investment
Advisors Corporation ("Banc One Advisors") to present minimal credit risks under
guidelines adopted by the Trust's Board of Trustees.
The Treasury Money Market Fund and the Treasury Only Money Market Fund
may only invest in U.S. Treasury bills, notes and other U.S. Treasury
obligations issued or guaranteed by the U.S. government. Some of the securities
held by the Treasury Money Market Fund may be subject to repurchase agreements.
The Government Money Market Fund invests exclusively in securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, some of which may be subject to repurchase agreements.
The Tax Exempt Money Market Fund may invest only in obligations which,
at the time of purchase, (i) possess the highest short-term ratings from a
nationally recognized statistical rating organization (an "NRSRO") in the case
of single-rated securities; or (ii) possess, in the case of multiple-rated
securities, the highest short-term ratings by at least two NRSROs; or (iii) do
not possess a rating (i.e., are unrated) but are determined by Banc One Advisors
to be of comparable quality to the rated instruments eligible for purchase by
the Fund under guidelines adopted by the Board of Trustees (collectively, "First
Tier Securities"). Some of the securities of the Tax Exempt Money Market Fund
may be subject to repurchase agreements.
With regard to the Money Market Funds and the Institutional Money
Market Funds other than the Tax Exempt Money Market Fund, investments will be
limited to those obligations which, at the time of purchase, (i) possess one of
the two highest short-term ratings from an NRSRO in the case of single-rated
securities; or (ii) possess, in the case of multiple-rated securities, one of
the two highest short-term ratings by at least two NRSROs or (iii) do not
possess a rating (i.e., are unrated) but are determined by Banc One Advisors to
be of comparable quality to the rated instruments eligible for purchase by the
Trust under guidelines adopted by the Board of Trustees (collectively, "Eligible
Securities"). A security that has not received a rating will be deemed to
possess the rating assigned to an outstanding class of the issuer's short-term
debt obligations if determined by Banc One Advisors to be comparable in priority
and security to the obligation selected for purchase by the Trust.
A security subject to a tender or demand feature will be considered an
Eligible Security only if both the demand feature and the underlying security
possess a high quality rating or, if such do not possess a rating, are
determined by Banc One Advisers to be of comparable quality; provided, however,
that where the demand feature would be readily exercisable in the event of a
default in payment of principal or interest on the underlying security, the
obligation may be acquired based on the rating possessed by the demand feature
or, if the demand feature does not possess a rating, a determination of
comparable quality by Banc One Advisors. A security which at the time of
issuance had a maturity exceeding 397 days but, at the time of purchase, has a
remaining maturity of 397 days or less, is not considered an Eligible Security
if it does not possess a high quality rating and the long-term rating, if any,
is not within the two highest rating categories.
Eligible Securities include First-Tier Securities and Second-Tier
Securities. First-Tier Securities include those that possess a rating in the
highest category, in the case of a single-rated security, or at least two
ratings in the highest rating category, in the case of multiple-rated
securities, or, if the securities do not possess a rating, are determined to be
of comparable quality by Banc One Advisors pursuant to the guidelines adopted by
the Board of Trustees. Second-Tier Securities are all other Eligible Securities.
Each Money Market and Institutional Money Market Fund other than the
Ohio Municipal Money Market, the Municipal Money Market and the Tax Exempt Money
Market Funds will not invest more than 5% of its total assets in the First Tier
Securities of any one issuer. In addition, each Fund other than the Municipal
Money Market Fund, the Ohio Municipal Money Market Fund, and the Tax Exempt
Money Market Fund may not invest more than 5% of its total assets in Second Tier
Securities, with investment in the Second Tier Securities of any one issuer
further limited to the greater of 1% of the Fund's total assets or $1.0 million.
If a percentage limitation is satisfied at the time of purchase, a later
increase in such percentage resulting from a change in the Fund's net asset
value or a subsequent change in a security's qualification as a First Tier or
Second Tier Security will not constitute a violation of the limitation. In
addition, there is no limit on the percentage of a Fund's assets that may be
invested in obligations issued or guaranteed by the U.S. government, its
agencies,
2
<PAGE>
or instrumentalities and, with respect to each Money Market Fund and each
Institutional Money Market Fund other than the Treasury Only Money Market Fund,
repurchase agreements fully collateralized by such obligations.
Under the guidelines adopted by the Trust's Board of Trustees and in
accordance with Rule 2a-7 under the 1940 Act, Banc One Advisors may be required
to promptly dispose of an obligation held in a Fund's portfolio in the event of
certain developments that indicate a diminishment of the instrument's credit
quality, such as where an NRSRO downgrades an obligation below the second
highest rating category, or in the event of a default relating to the financial
condition of the issuer.
A rating by an NRSRO may be utilized only where the NRSRO is neither
controlling, controlled by, or under common control with the issuer of, or any
issuer, guarantor, or provider of credit support for, the instrument.
BANK OBLIGATIONS
Bank obligations consist of bankers' acceptances, certificates of
deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange
typically drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks and savings and loan associations having, at the time
of investment, total assets in excess of $1 billion (as of the date of their
most recently published financial statements).
Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of deposit
will be those of domestic and foreign branches of U.S. commercial banks which
are members of the Federal Reserve System or the deposits of which are insured
by the Federal Deposit Insurance Corporation, and in certificates of deposit of
domestic savings and loan associations the deposits of which are insured by the
Federal Deposit Insurance Corporation if, at the time of purchase, such
institutions have total assets in excess of $1 billion (as of the date of their
most recently published financial statements). Certificates of deposit may also
include those issued by foreign banks outside the United States with total
assets at the time of purchase in excess of the equivalent of $1 billion. The
Funds may also invest in Eurodollar certificates of deposit, which are U.S.
dollar-denominated certificates of deposit issued by branches of foreign and
domestic banks located outside the United States, and Yankee certificates of
deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States. The
International Equity Index Fund may also invest in obligations (including
banker's acceptances and certificates of deposit) denominated in foreign
currencies (see "Foreign Investments" herein).
Time deposits are interest-bearing non-negotiable deposits at a bank or
a savings and loan association that have a specific maturity date. A time
deposit earns a specific rate of interest over a definite period of time. Time
deposits cannot be traded on the secondary market and those exceeding seven days
and with a withdrawal penalty are considered to be illiquid. Demand deposits are
funds deposited in a commercial bank or a savings and loan association which,
without prior notice to the bank, may be withdrawn generally by negotiable
draft. Time and demand deposits will be maintained only at banks or savings and
loan associations from which a Fund could purchase certificates of deposit.
COMMERCIAL PAPER
Commercial paper consists of secured and unsecured promissory notes
issued by corporations. Except as noted below with respect to variable amount
master demand notes, issues of commercial paper normally have maturities of less
than nine months and fixed rates of return.
The Limited Volatility Bond Fund may purchase commercial paper
consisting of issues rated at the time of purchase in the highest rating
category by at least one NRSRO (such as A-1 by Standard & Poor's Corporation
("S&P"), P-1 by Moody's Investors Service, Inc. ("Moody's") or F-1 by Fitch
Investors Service, L.P. ("Fitch")) or if unrated, determined by Banc One
Advisors to be of comparable quality. The Money Market Funds (other than the
U.S. Treasury Securities Money Market Fund), the Asset Allocation Fund, the
Equity Funds other than the International Equity Index Fund, the Municipal Bond
Funds, the Income Bond Fund, the Intermediate Bond Fund, and the Ultra
Short-Term Income Fund may purchase commercial paper consisting of issues rated
at the time of purchase in the highest or second highest rating category by at
least one NRSRO (such as A-2 or better by S&P, P-2 or better by Moody's or F-2
or better by Fitch) or if unrated, determined by Banc One Advisors to be of
comparable quality. The Income Fund may purchase commercial paper consisting of
issues rated at the time of purchase in all rating categories by at least one
NRSRO, or, if unrated, determined by Banc One Advisors to be of comparable
quality.
3
<PAGE>
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, a Fund would acquire
securities from member banks of the Federal Deposit Insurance Corporation (or in
the case of the International Equity Index Fund, such banks or foreign banks)
with total assets in excess of $1 billion (or in the case of the International
Equity Index Fund, the equivalent of $1 billion) and registered broker-dealers
(or in the case of the International Equity Index Fund, broker-dealers which may
or may not be registered) which Banc One Advisors deems creditworthy under
guidelines approved by the Board of Trustees, subject to the seller's agreement
to repurchase such securities at a mutually agreed-upon date and price. The
repurchase price would generally equal the price paid by the Fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. The seller under a
repurchase agreement will be required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). If the seller were to default on its repurchase obligation or
become insolvent, the Fund holding such obligation would suffer a loss to the
extent that the proceeds from a sale of the underlying portfolio securities were
less than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Fund were delayed pending court action.
Additionally, there is no controlling legal precedent under U.S. law and there
may be no controlling legal precedents under the laws of certain foreign
jurisdictions confirming that a Fund would be entitled, as against a claim by
such seller or its receiver or trustee in bankruptcy, to retain the underlying
securities, although (with respect to repurchase agreements subject to U.S. law)
the Board of Trustees of the Trust believes that, under the regular procedures
normally in effect for custody of a Fund's securities subject to repurchase
agreements and under federal laws, a court of competent jurisdiction would rule
in favor of the Trust if presented with the question. Securities subject to
repurchase agreements will be held by the Trust's custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system. Although there
is no current intention to do so, the International Equity Index Fund reserves
the right in the future to enter into repurchase agreements. Repurchase
agreements are considered by the Securities and Exchange Commission to be loans
by a Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS
Funds may borrow money for temporary purposes by entering into reverse
repurchase agreements. Pursuant to such agreements, a Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed-upon date and price. A Fund would enter
into reverse repurchase agreements only to avoid otherwise selling securities
during unfavorable market conditions to meet redemptions. At the time a Fund
entered into a reverse repurchase agreement, it would place in a segregated
custodial account assets, such as cash or liquid securities consistent with the
Fund's investment restrictions and having a value equal to the repurchase price
(including accrued interest), and would subsequently monitor the account to
ensure that such equivalent value was maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which the Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered by the Securities and
Exchange Commission to be borrowings by a Fund under the 1940 Act.
GOVERNMENT SECURITIES
Obligations of certain agencies and instrumentalities of the U.S.
government, such as the Government National Mortgage Association (Ginnie Mae")
and the Export-Import Bank, are supported by the full faith and credit of the
U.S. Treasury; others, such as the Federal National Mortgage Association
("Fannie Mae"), are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations; and still others, such as the
Federal Farm Credit Banks and the Federal Home Loan Mortgage Corporation
("Freddie Mac") are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial support
to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. A Fund will invest in the obligations of such
agencies or instrumentalities only when Banc One Advisors or the Investment
Sub-Advisor ("Sub-Advisor") believes that the credit risk with respect thereto
is minimal. For information on mortgage-related securities issued by certain
agencies or instrumentalities of the U.S. government, see "Investment Objectives
and Policies--Mortgage-Related Securities" in this Statement of Additional
Information.
LOAN PARTICIPATIONS AND ASSIGNMENTS
Some of the Funds may invest in fixed and floating rate loans ("Loans")
arranged through private negotiations between an issuer of Sovereign Debt
Obligations and one or more financial institutions ("Lenders"). Investments in
loans are expected in most instances to be in the form of participations in
Loans ("Participations") and assignments of all or a portion of Loans
("Assignments") from third parties. Because loan participants and assignments
may be illiquid, a Fund will invest no more than 15% (10% for the Money Market
Funds) of its net assets in loan participations and other illiquid assets. The
government that is the borrower on the Loan will be considered by the Fund to be
the issuer of a Participations or Assignment for purposes of the fund's
fundamental investment policy that it will not invest 25% or more of its total
assets in securities of issuers conducting their principal business activities
in the same industry (i.e., foreign government). The
4
<PAGE>
Funds investment in Participations typically will result in the Fund having a
contractual relationship only with the Lender and not with the borrower.
When a Fund purchases Assignments from Lenders it will acquire direct
rights against the borrower on the Loan. Because Assignments are arranged
through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by a Fund as the
purchaser of an Assignment may differ from, and be more limited than, those held
by the assigning Lender. The assignability of certain Sovereign Debt Obligations
is restricted by the governing documentation as to the nature of the assignee
such that the only way in which a Fund may acquire an interest in a Loan is
through a Participations and not an Assignment. A Fund may have difficulty
disposing of Assignments and Participations because to do so it will have to
assign such securities to a third party. Because there is no liquid market for
such securities, the Funds anticipate that such securities could be sold only to
a limited number of institutional investors. The lack of a liquid secondary
market may have an adverse impact on the value of such securities and a Fund's
ability to dispose of particular Assignments or Participations when necessary to
meet a Fund's liquidity needs in response to a specific economic event such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for a Fund to assign a value to those securities for purposes of
valuing a Fund's portfolio and calculating its net asset value.
FUTURES AND OPTIONS TRADING
Some of the Funds may enter into futures contracts, options, options on
futures contracts and stock index futures contracts and options thereon for the
purposes of remaining fully invested, reducing transaction costs, or managing
interest rate risk.
FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase
by another party of a specified amount of a specific security, class of
securities, or an index at a specified future time and at a specified price. A
stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contracts and the price at which the futures contract is
originally struck. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. government agency.
Although most futures contracts by their terms call for actual delivery
and acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery.
Closing out an open futures position is done by taking an opposite position
("buying" a contract which has previously been "sold," or "selling" a contract
previously purchased) in an identical contract to terminate the position. The
acquisition of put and call options on futures contracts will, respectively,
give a Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period. Brokerage commissions are incurred when a
futures contract is bought or sold.
When making future trades, the Funds are required to make a good faith
margin deposit in cash or government securities with a broker or custodian to
initiate and maintain open positions in futures contracts. A margin deposit is
intended to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified delivery
date. Minimal initial margin requirements are established by the futures
exchange and may be changed. Brokers may establish deposit requirements which
are higher than the exchange minimums. Initial margin deposits on futures
contracts are customarily set at levels much lower than the prices at which the
underlying securities are purchased and sold, typically ranging upward from less
than 5% of the value of the contract being traded.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Funds
expect to earn interest income on their margin deposits.
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Funds intend to enter into futures
contracts, options on futures contracts, index futures and options thereon that
are traded on an exchange regulated by the CFTC if, to the extent that such
futures and options are not for "bona fide hedging purposes" (as defined by the
CFTC), the aggregate initial margin and premiums on such positions (excluding
the amount by which
5
<PAGE>
options are in the money) do not exceed 5% of the Fund's total assets at current
value. A Fund, however, may invest more than such amount for bona fide hedging
purposes, and also may invest more than such amount if it obtains authority to
do so from the CFTC without rendering the fund a commodity pool operator or
adversely affecting its status as an investment company for federal securities
laws or income tax purposes.
A Fund may buy and sell futures contracts and related options to manage
its exposure to changing interest rates and security prices. When interest rates
are expected to rise or market values of portfolio securities are expected to
fall, a Fund can seek through the sale of futures contracts to offset a decline
in the value of its portfolio securities. When interest rates are expected to
fall or market values are expected to rise, a Fund, through the purchase of such
contracts, can attempt to secure better rates or prices for the Fund than might
later be available in the market when it effects anticipated purchases.
Although techniques other than the sale and purchase of futures
contracts could be used to control the Funds' exposure to market fluctuations,
the use of futures contracts may be a more effective means of managing this
exposure. While the Funds will incur commission expenses in both opening and
closing out futures positions, these costs may be lower than transaction costs
that would be incurred in the purchase and sale of the underlying securities.
A Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying reference
security or index. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market, resulting in an inability to
close a futures position prior to its maturity date. Third, the purchase of a
futures contract involves the risk that a Fund could lose more than the original
margin deposit required to initiate a futures transaction.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
None of the Funds will enter into futures contract transactions for
purposes other than bona fide hedging purposes to the extent that, immediately
thereafter, the sum of its initial margin deposits and premiums on open
contracts exceeds 5% of the market value of the respective Fund's total assets.
The Funds of Funds will not enter into futures contract transactions, however,
the One Group mutual funds in which they invest may do so as described herein.
In addition, none of the Equity Funds will enter into futures contracts to the
extent that the value of the futures contracts held would exceed 25% of the
respective Fund's total assets. Futures transactions will be limited to the
extent necessary to maintain each Fund's qualification as a regulated investment
company.
The Funds have undertaken to restrict their futures contract trading as
follows: first, the Funds will not engage in transactions in futures contracts
for speculative purposes; second, the Funds will not market themselves to the
public as commodity pools or otherwise as vehicles for trading in the
commodities futures or commodity options markets; third, the Funds will disclose
to all prospective Shareholders the purpose of and limitations on their
commodity futures trading; fourth, the Funds will submit to the CFTC special
calls for information. Accordingly, registration as a commodities pool operator
with the CFTC is not required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the Securities and Exchange Commission. Under those requirements,
where a Fund has a long position in a futures contract, it may be required to
establish a segregated account (not with a futures commission merchant or
broker) containing cash or certain liquid assets equal to the purchase price of
the contract (less any margin on deposit). For a short position in futures or
forward contracts held by a Fund, those requirements may mandate the
establishment of a segregated account (not with a futures commission merchant or
broker) with cash or certain liquid assets that, when added to the amounts
deposited as margin, equal the market value of the instruments underlying the
futures contracts (but are not less than the price at which the short positions
were established). However, segregation of assets is not required if a Fund
"covers" a long position. For example, instead of segregating assets, a Fund,
when holding a long position in a futures contract, could purchase a put option
on the same futures contract with a strike price as high or higher than the
price of the contract held by the Fund. In addition, where a Fund takes short
positions, or engages in sales of call options, it need not segregate assets if
it "covers" these positions. For example, where a Fund holds a short position in
a futures contract, it may cover by owning the instruments underlying the
contract. The Funds may also cover such a position by holding a call option
permitting it to purchase the same futures contract at a price no higher than
the price at which the short position was established. Where a Fund sells a call
option on a futures contract, it may cover either by entering into a long
position in the same contract at a price no higher than the strike price of the
call option or by owning the instruments underlying the futures contract. A Fund
could also cover this position by holding a separate call option permitting it
to purchase the same futures contract at a price no higher than the strike price
of the call option sold by the Fund.
The Funds also may engage in straddles and spreads. In a straddle
transaction, the Fund either buys a call and a put or sells a call and a put on
the same security. In a spread, the Fund purchases and sells a call or a put.
The Fund will sell a straddle when Banc One Advisors believes the price of a
security will be stable. The Fund will receive a premium on the sale
6
<PAGE>
of the put and the call. A spread permits the Fund to make a hedged investment
that the price of a security will increase or decline.
In addition, the extent to which a Fund may enter into transactions
involving futures contracts may be limited by the Internal Revenue Code's
requirements for qualification as a registered investment company and the
Trust's intention to qualify as such. In certain circumstances, entry into a
futures contract that substantially eliminates risk of loss and the opportunity
for gain in an "appreciated financial position" will also accelerate gain to the
Funds.
RISK FACTORS IN FUTURES TRANSACTIONS
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Thus, it may not be possible to close a futures
position. In the event of adverse price movements, a Fund would continue to be
required to make daily cash payments to maintain the required margin. In such
situations, if a Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, a Fund may be required to make delivery
of the instruments underlying futures contracts it holds. The inability to close
options and futures positions also could have an adverse impact on the ability
to effectively hedge such positions. The Funds will minimize the risk that they
will be unable to close out a futures contract by only entering into futures
contracts which are traded on national futures exchanges and for which there
appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased Participations by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Funds are only for risk management
purposes, Banc One Advisors and the Sub-Advisor do not believe that the Funds
are subject to the risks of loss frequently associated with futures
transactions. Each Fund would presumably have sustained comparable losses if,
instead of the futures contract, it had invested in the underlying financial
instrument and sold it after the decline.
Utilization of futures transactions by a Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the portfolio securities being hedged. It is also
possible that a Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore does
not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Some futures strategies, including selling futures, buying puts and
writing covered calls, may reduce the Fund's exposure to price fluctuations.
Other strategies, including buying futures, and buying calls, tend to increase
market exposure. Futures and options may be combined with each other in order to
adjust the risk and return characteristics of the overall portfolio. The Fund
expects to enter into these transactions to manage a return or spread on a
particular investment or portion of its assets, to protect against any increase
in the price of securities the Fund anticipates purchasing at a later date, or
for other risk management strategies.
OPTIONS CONTRACTS
Some of the Funds may use trading of options on securities or futures
contracts as a hedging device. An option on a futures contract gives the
purchaser of the option the right (but not the obligation) to take a position at
a specified price (the "striking," "strike" or "exercise" price) in the
underlying futures contract or security. A "call" option gives the purchaser the
7
<PAGE>
right to take a long (buy) position in the underlying futures contract or
security, and the purchaser of a "put" option acquires the right to take a short
(sell) position in the underlying futures contract or security. The purchase
price of an option is referred to as its "premium." The seller (or "writer") of
an option is obligated to take a futures or securities position at a specified
price if the option is exercised. In the case of a call option, the seller must
stand ready to take a short position (i.e., sell the futures contract or
security) in the underlying futures contract or security at the strike price if
the option is exercised. A seller of a put option, on the other hand, stands
ready to take a long position (i.e., buy the contract or security) in the
underlying futures contract or security at the strike price if the option is
exercised.
A "naked" option refers to an option written by a party which does not
possess the underlying futures contract or security. A "covered" option refers
to an option written by a party which does possess the underlying position. The
initial purchase (sale) of an option is an "opening transaction." In order to
close out an option position, the Fund may enter into a "closing transaction".
This involves the sale (purchase) of an option contract on the same security
with the same exercise price and expiration date as the option contract
originally opened.
A call option on a futures contract or security is said to be
"in-the-money" if the strike price is below current market levels. Similarly, a
put option on a futures contract or security is said to be "out-of-the-money" if
the strike price is below current market levels. On the other hand, a put option
is "in-the-money" if the strike price is above current market levels, and
"out-of-the-money" if the strike price is below current market levels.
Options have limited life spans, usually tied to the delivery or
settlement date of the underlying futures contract or security. Some options,
however, expire significantly in advance of such dates. An option that is
"out-of-the-money" and not offset by the time it expires becomes worthless. On
certain exchanges "in-the-money" options are automatically exercised on their
expiration date, but on others unexercised options simply become worthless after
their expiration date. Options usually trade at a premium (referred to as the
"time value" of the option) above their intrinsic value (the difference between
the market price for the underlying futures contract or equity security and the
strike price). As an option nears its expiration date, the market value and the
intrinsic value move into parity as the time value diminishes.
Some Funds may enter into over-the-counter option transactions. There
will be an active over-the-counter market for such options which will establish
their pricing and liquidity. Broker/Dealers with whom the Trust will enter into
such option transactions shall have a minimum net worth of $20,000,000. Each
Fund will limit the writing of put and call options to 25% of its net assets.
Increased market volatility generally increases the value of options by
increasing the probability of favorable market swings, putting outstanding
options "in-the-money." Although purchasing options is a limited risk trading
approach, significant losses can be incurred by doing so.
COVERED CALLS
Some of the Funds may write (sell) "covered" call options and purchase
options to close out options previously written by the Fund. The Funds' purpose
in writing covered call options is to generate additional premium income. This
premium income will serve to enhance a Fund's total return and will reduce the
effect of any price decline of the security involved in the option. Although the
International Equity Index Fund has no current intention to write such options,
it reserves the right to do so from time to time when such activity will further
its investment objective. Covered call options will generally be written on
securities which, in the opinion of Banc One Advisors or the Sub-Advisor, are
not expected to make any major price moves in the near future but which, over
the long term, are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a certain
date (the expiration date). So long as the obligation of the writer of a call
option continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring the writer to deliver
the underlying security against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by repurchasing an option
identical to that previously sold. To secure the writer's obligation to deliver
the underlying security in the case of a call option, subject to the rules of
the Options Clearing Corporation, a writer is required to deposit in escrow the
underlying security or other assets in accordance with such rules. The Funds
will write only covered call options. This means that a Fund will only write a
call option on a security which a Fund already owns.
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each Fund's
investment objectives. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked options, which a Fund will not do), but capable of
enhancing the Fund's total return. When writing a covered call option, a Fund,
in return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, but conversely
retains the risk of loss should the price of the security decline. Unlike one
who owns securities not subject to an
8
<PAGE>
option, a Fund has no control over when it may be required to sell the
underlying securities, since it may be assigned an exercise notice at any time
prior to the expiration of its obligation as a writer. Thus, the security could
be "called away" at a price substantially below the fair market value of the
security. If a call option which a Fund has written expires, a Fund will realize
a gain in the amount of the premium; however, such gain may be offset by a
decline in the market value of the underlying security during the option period.
If the call option is exercised, a Fund will realize a gain or loss from the
sale of the underlying security. The security covering the call will be
maintained in a segregated account of the Fund's custodian. The Funds do not
consider a security covered by a call to be "pledged" as that term is used in
each Fund's policy which limits the pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium each
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, the Fund's Advisor or Sub-Advisor, in
determining whether a particular call option should be written on a particular
security, will consider the reasonableness of the anticipated premium and the
likelihood that a liquid secondary market will exist for those options. The
premium received by a Fund for writing covered call options will be recorded as
a liability in the Trust's statement of assets and liabilities. This liability
will be adjusted daily to the option's current market value, which will be the
latest sale price at the time at which the net asset value per Share of the Fund
is computed (close of the New York Stock Exchange), or, in the absence of such
sale, the latest asked price. The liability will be extinguished upon expiration
of the option, the purchase of an identical option in the closing transaction,
or delivery of the underlying security upon the exercise of the option.
Generally, a Fund, in order to avoid the exercise of an option sold by
it, will be able to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless selling (in the case of a
call option) or purchasing (in the case of a put option) the underlying
securities is determined to be in a Fund's best interest. A closing purchase
transaction consists of a Fund purchasing an option having the same terms as the
option sold by a Fund, and has the effect of cancelling a Fund's position as a
seller. The premium which a Fund will pay in executing a closing purchase
transaction may be higher (or lower) than the premium received when the option
was sold, depending in large part upon the relative price of the underlying
security at the time of each transaction. To the extent options sold by a Fund
are exercised and a Fund delivers securities to the holder of a call option, a
Fund's turnover rate will increase, which would cause a Fund to incur additional
brokerage expenses.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit a Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both. If a Fund desires to sell a particular security from its portfolio on
which it has written a call option it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that a Fund will be able to effect such closing transactions at a
favorable price. If a Fund cannot enter into such a transaction, it may be
required to hold a security that it might otherwise have sold, in which case it
would continue to be at market risk on the security. This could result in higher
transaction costs. A Fund will pay transaction costs in connection with the
writing of options to close out previously written options. Such transaction
costs are normally higher than those applicable to purchases and sales of
portfolio securities.
Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities at the time the options are written. From time to time, a Fund may
purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such security
from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
PURCHASING CALL OPTIONS
Certain Funds may purchase call options to hedge against an increase in
the price of securities that the Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Fund, as
holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs. These costs will reduce any profit the Fund might
have realized had it bought the underlying security at the time it purchased the
call option. In the event that paying premiums for a call
9
<PAGE>
option, together with a price movement in the underlying security, is such that
exercise of the option would not be profitable to the Fund, loss of the premium
may be offset by a decrease in the acquisition cost of securities by the Fund.
PURCHASING PUT OPTIONS
Certain Funds may also purchase put options to protect their portfolio
holdings in an underlying security against a decline in market value. Such hedge
protection is provided during the life of the put option since the Fund, as
holder of the put option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying security's market
price. For a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, the Fund will reduce
any profit it might otherwise have realized from appreciation of the underlying
security by the premium paid for the put option and by transaction cost.
However, any loss of premium may be offset by an increase in the value of the
Fund's securities.
SECURED PUTS
Certain Funds may write secured puts. For the secured put writer,
substantial depreciation in the value of the underlying security would result in
the security being "put to" the writer at the strike price of the option which
may be substantially in excess of the fair market value of the security. If a
secured put option expires unexercised, the writer realizes a gain in the amount
of the premium.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the options strategies depends on the ability of
Banc One Advisors or, in the case of the International Equity Index Fund, the
Sub-Advisor, to assess interest rate and market movements correctly and to
accurately calculate the fair price of the option. In addition, there may be
imperfect or no correlation between the changes in market value of the
securities held by the Funds and the prices of the options.
When it purchases an option, a Fund runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction with respect
to the option during the life of the option. If the price of the underlying
security does not rise (in the case of a call) or fall (in the case of a put) to
an extent sufficient to cover the option premium and transaction costs, a Fund
will lose part or all of its investment in the option. This contrasts with an
investment by a Fund in the underlying securities, since the Fund may continue
to hold its investment in those securities notwithstanding the lack of a change
in price of those securities.
The effective use of options also depends on a Fund's ability to
terminate option positions at times when Banc One Advisors or, in the case of
the International Equity Index Fund, the Sub-Advisor, deems it desirable to do
so. A Fund will take an option position only if Banc One Advisors or, in the
case of the International Equity Index Fund, the Sub-Advisor, believes there is
a liquid secondary market for the option, however, there is no assurance that a
Fund will be able to effect closing transactions at any particular time or at an
acceptable price.
If a secondary trading market in options were to become unavailable, a
Fund could no longer engage in closing transactions. Lack of investor interest
might adversely affect the liquidity of the market for particular options or
series of options. A marketplace may discontinue trading of a particular option
or options generally. In addition, a market could become temporarily unavailable
if unusual events, such as volume in excess of trading or clearing capability,
were to interrupt normal market operations. A marketplace may at times find it
necessary to impose restrictions on particular types of options transactions,
which may limit a Fund's ability to realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options
purchased or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, a Fund as purchaser or writer of an
option will be unable to close out its positions until option trading resumes,
and it may be faced with losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing Corporation
("OCC") or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, a Fund as purchaser or writer of an option will be locked into
its position until one of the two restrictions has been lifted. If a prohibition
on exercise remains in effect until an option owned by a Fund has expired, the
Fund could lose the entire value of its option.
Special risks are presented by internationally-traded options. Because
of time differences between the United States and the various foreign countries,
and because different holidays are observed in different countries, foreign
option markets may be open for trading during hours or on days when U.S. markets
are closed. As a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
10
<PAGE>
MORTGAGE-RELATED SECURITIES
Certain of the Funds may, consistent with their investment objectives
and policies, invest in mortgage-backed securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities.
Mortgage-backed securities, for purposes of the Trust's Prospectuses
and this Statement of Additional Information, represent pools of mortgage loans
assembled for sale to investors by various governmental agencies such as the
Government National Mortgage Association ("Ginnie Mae") and government-related
organizations such as the Federal National Mortgage Association ("Fannie Mae")
and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), as well as by
nongovernmental issuers such as commercial banks, savings and loan institutions,
mortgage bankers, and private mortgage insurance companies. Such
non-governmental mortgage securities cannot be treated as U.S. government
securities for purposes of investment policies. The Government Bond Fund, the
Government Money Market Fund and the Treasury & Agency Fund may only invest in
mortgage-backed securities issued or guaranteed by the U.S. government, or its
agencies or instrumentalities. The other Funds listed above also may invest in
mortgage-backed securities issued by non-government entities, which consist of
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS") and REAL ESTATE MORTGAGE INVESTMENT
CONDUITS ("REMICS") that are rated in one of the four highest rating categories
by at least one NRSRO at the time of investment or, if unrated, determined by
Banc One Advisors to be of comparable quality. The Funds, including the
Government Bond Fund and Government Money Market Fund, also may invest in
multiple class securities issued by U.S. government agencies and
instrumentalities such as Fannie Mae, Freddie Mac and Ginnie Mae. The Funds,
except the Government Bond Fund, the Government Money Market Fund and the
Treasury & Agency Fund may invest in multiple class securities issued by private
issuers including guaranteed CMOs and REMIC pass-through or Participations
certificates, when consistent with a Fund's investment objective, policies and
limitations. A REMIC is a CMO that qualifies for special tax treatment under the
Code and invests in certain mortgages principally secured by interests in real
property and other permitted investments.
CMOs and guaranteed REMIC pass-through certificates ("REMIC
Certificates") issued by Fannie Mae, Freddie Mac, Ginnie Mae and private issuers
are types of multiple class pass-through securities. Investors may purchase
beneficial interests in REMICs, which are known as "regular" interests or
"residual" interests. The Funds do not currently intend to purchase residual
interests in REMICs. The REMIC Certificates represent beneficial ownership
interests in a REMIC Trust, generally consisting of mortgage loans or Fannie
Mae, Freddie Mac or Ginnie Mae guaranteed mortgage pass-through certificates
(the "Mortgage Assets"). The obligations of Fannie Mae, Freddie Mac or Ginnie
Mae under their respective guaranty of the REMIC Certificates are obligations
solely of Fannie Mae, Freddie Mac or Ginnie Mae, respectively.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient funds are otherwise available.
For Freddie Mac REMIC Certificates, Freddie Mac guarantees the timely
payment of interest, and also guarantees the payment of principal as payments
are required to be made on the underlying mortgage participation certificates
("PCS"). PCS represent undivided interests in specified residential mortgages or
participation therein purchased by Freddie Mac and placed in a PC pool. With
respect to principal payments on PCS, Freddie Mac generally guarantees ultimate
collection of all principal of the related mortgage loans without offset or
deduction. Freddie Mac also guarantees timely payment of principal on certain
PCS referred to as "Gold PCS."
Ginnie Mae REMIC Certificates guarantee the full and timely payment of
interest and principal on each class of securities (in accordance with the terms
of those classes as specified in the related offering circular supplement). The
Ginnie Mae guarantee is backed by the full faith and credit of the United States
of America.
REMIC Certificates issued by Fannie Mae, Freddie Mac and Ginnie Mae are
treated as U.S. government securities for purposes of investment policies. CMOs
and REMIC Certificates provide for the redistribution of cash flow to multiple
classes. Each class of CMOs or REMIC Certificates, often referred to as a
"tranche," is issued at a specific adjustable or fixed interest rate and must be
fully retired no later than its final distribution date. This reallocation of
interest and principal results in the redistribution of prepayment risk across
to different classes. This allows for the creation of bonds with more or less
risk than the underlying collateral exhibits. Principal prepayments on the
mortgage loans or the Mortgage Assets underlying the CMOs or REMIC Certificates
may cause some or all of the classes of CMOs or REMIC Certificates to be retired
substantially earlier than their final distribution dates. Generally, interest
is paid or accrues on all classes of CMOs or REMIC Certificates on a monthly
basis.
The principal of and interest on the Mortgage Assets may be allocated
among the several classes of CMOs or REMIC Certificates in various ways. In
certain structures (known as "sequential pay" CMOs or REMIC Certificates),
payments of principal, including any principal prepayments, on the Mortgage
Assets generally are applied to the classes of CMOs or REMIC Certificates in the
order of their respective final distribution dates. Thus, no payment of
principal will be made on
11
<PAGE>
any class of sequential pay CMOs or REMIC Certificates until all other classes
having an earlier final distribution date have been paid in full.
Additional structures of CMOs and REMIC Certificates include, among
others, "parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC
Certificates are those which are structured to apply principal payments and
prepayments of the Mortgage Assets to two or more classes concurrently on a
proportionate or disproportionate basis. These simultaneous payments are taken
into account in calculating the final distribution date of each class.
A wide variety of REMIC Certificates may be issued in the parallel pay
or sequential pay structures. These securities include accrual certificates
(also know as "Z-Bonds"), which only accrue interest at a specified rate until
all other certificates having an earlier final distribution date have been
retired and are converted thereafter to an interest-paying security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
Certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC Certificates (the
"PAC Certificates"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount of principal payable on the next payment date. The
PAC Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying Mortgage Assets. These tranches tend to have market prices and
yields that are much more volatile than the PAC classes.
The Z-Bonds in which the Funds may invest may bear the same non-credit-
related risks as do other types of Z-Bonds. Z-Bonds in which the Fund may invest
will not include residual interest.
There can be no assurance that the U.S. government would provide
financial support to Fannie Mae, Freddie Mac or Ginnie Mae if necessary in the
future.
Although certain mortgage-related securities are guaranteed by a third
party or otherwise similarly secured, the market value of the security, which
may fluctuate, is not so secured. If a Fund of the Trust purchases a
mortgage-related security at a premium, that portion may be lost if there is a
decline in the market value of the security whether resulting from changes in
interest rates or prepayments in the underlying mortgage collateral. As with
other interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. For this and other reasons, a
mortgage-related security's stated maturity may be shortened by unscheduled
prepayments on the underlying mortgages and, therefore, it is not possible to
predict accurately the security's return to the Trust's Funds. In addition,
regular payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return the Funds of
the Trust will receive when these amounts are reinvested.
The market value of the Fund's adjustable rate Mortgage-Backed
Securities may be adversely affected if interest rates increase faster than the
rates of interest payable on such securities or by the adjustable rate mortgage
loans underlying such securities. Furthermore, adjustable rate Mortgage-Backed
Securities or the mortgage loans underlying such securities may contain
provisions limiting the amount by which rates may be adjusted upward and
downward and may limit the amount by which monthly payments may be increased or
decreased to accommodate upward and downward adjustments in interest rates.
Certain adjustable rate mortgage loans may provide for periodic
adjustments of scheduled payments in order to amortize fully the mortgage loan
by its stated maturity. Other adjustable rate mortgage loans may permit their
stated maturity to be extended or shortened in accordance with the portion of
each payment that is applied to interest as affected by the periodic interest
rate adjustments.
Although having less risk of decline during periods of rising interest
rates, adjustable rate Mortgage-Backed Securities have less potential for
capital appreciation than fixed rate Mortgage-Backed Securities because their
coupon rates will decline in response to market interest rate declines. The
market value of fixed rate Mortgage-Backed Securities may be adversely affected
as a result of increases in interest rates and, because of the risk of
unscheduled principal prepayments, may benefit less than other fixed rate
securities of similar maturity from declining interest rates. Finally, to the
extent Mortgage-Backed Securities are purchased at a premium, mortgage
foreclosures and unscheduled principal prepayments may result in some loss of
the Fund's principal investment to the extent of the premium paid. On the other
hand, if such securities are purchased at a discount, both a scheduled payment
of principal and an unscheduled prepayment of principal will increase current
and total returns and will accelerate the recognition of income.
The Bond Funds and the Asset Allocation Fund may invest in
mortgage-related securities which are collateralized mortgage obligations
structured on pools of mortgage pass-through certificates or mortgage loans.
Collateralized mortgage
12
<PAGE>
obligations will be purchased only if rated in the four highest rating
categories by a nationally recognized rating organization such as Moody's or
S&P.
There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
Ginnie Mae include Ginnie Mae Mortgage Pass-Through Certificates which are
guaranteed as to the timely payment of principal and interest by Ginnie Mae and
such guarantee is backed by the full faith and credit of the United States.
Ginnie Mae is a wholly-owned U.S. government corporation within the Department
of Housing and Urban Development. Ginnie Mae certificates also are supported by
the authority of Ginnie Mae to borrow funds from the U.S. Treasury to make
payments under its guarantee. Mortgage-related securities issued by Fannie Mae
include Fannie Mae Guaranteed Mortgage Pass-Through Certificates which are
solely the obligations of Fannie Mae and are not backed by or entitled to the
full faith and credit of the United States. Fannie Mae is a government-sponsored
organization owned entirely by private stock-holders. Fannie Mae Certificates
are guaranteed as to timely payment of the principal and interest by Fannie Mae.
Mortgage-related securities issued by Freddie Mac include Freddie Mac Mortgage
Participation Certificates. Freddie Mac is a corporate instrumentality of the
United States, created pursuant to an Act of Congress, which is owned entirely
by Federal Home Loan Banks. Freddie Mac Certificates are not guaranteed by the
United States or by any Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. Freddie Mac
Certificates entitle the holder to timely payment of interest, which is
guaranteed by Freddie Mac. Freddie Mac guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans. When
Freddie Mac does not guarantee timely payment of principal, Freddie Mac may
remit the amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage, but in no event
later than one year after it becomes payable.
The Funds may enter into MORTGAGE DOLLAR ROLLS in which the Funds sell
securities for delivery in the current month and simultaneously contract with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date. When a Fund enters into
mortgage dollar rolls, the Fund will hold and maintain a segregated account
until the settlement date, cash or liquid, high grade debt securities in an
amount equal to the forward purchase price. The Funds benefit to the extent of
any difference between the price received for the securities sold and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income plus the interest earned on the cash proceeds of the securities sold
until the settlement date of the forward purchase. Unless such benefits exceed
the income, capital appreciation and gain or loss due to mortgage prepayments
that would have been realized on the securities sold as part of the mortgage
dollar roll, the use of this technique will diminish the investment performance
of the Funds compared with what such performance would have been without the use
of mortgage dollar rolls. The benefits derived from the use of mortgage dollar
rolls may depend upon Banc One Advisors' ability to predict correctly mortgage
prepayments and interest rates. There is no assurance that mortgage dollar rolls
can be successfully employed. The Funds currently intend to enter into mortgage
dollar rolls that are accounted for as a financing transaction. For purposes of
diversification and investment limitations, mortgage dollar rolls are considered
to be mortgage-backed securities.
The Bond Funds, (other than the Limited Volatility Bond Fund and the
Treasury & Agency Fund), and the Asset Allocation Fund may invest in certain
STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS") that are extremely sensitive to
changes in prepayments and interest rates. Even though such securities have been
guaranteed by an agency or instrumentality of the U.S. government, under certain
interest rate or prepayment rate scenarios, the Funds may fail to fully recover
their investment in such securities. The Funds may invest in SMBS to enhance
revenues or hedge against interest rate risk. SMBS are derivative multi-class
mortgage securities. The Funds may only invest in SMBS issued or guaranteed by
the U.S. government, its agencies or instrumentalities. SMBS are usually
structured with two classes that receive different proportions of the interest
and principal distributions from a pool of mortgage assets. A common type of
SMBS will have one class receiving all of the interest from the mortgage assets
(" IOs"), while the other class will receive all of the principal ("POs").
Mortgage IOs receive monthly interest payments based upon a notional amount that
declines over time as a result of the normal monthly amortization and
unscheduled prepayments of principal on the associated mortgage POs. Changes in
prepayment rates can cause the return on investment in IOs to be highly
volatile, and under extremely high prepayment conditions IOs can incur
significant losses. POs are bought at a discount to the ultimate principal
repayment value. The rate of return on a PO will vary with prepayments, rising
as prepayment increase and falling as prepayments decrease. Although the market
for such securities is increasingly liquid, certain SMBS may not be readily
marketable and will be considered illiquid for purposes of the Funds'
limitations on investments in illiquid securities. The market value of the class
consisting entirely of principal payments generally is unusually volatile in
response to changes in interest rates. The yields on a class of SMBS that
receives all or most of the interest from mortgage assets are generally higher
than prevailing market yields on other mortgage-backed securities because their
cash flow patterns are more volatile and there is a greater risk that any
premium paid will not be fully recouped. Banc One Advisors will seek to manage
these risks (and potential benefits) by investing in a variety of such
securities and by using certain analytical and hedging techniques.
The yield characteristics of Mortgage-Backed Securities differ from
those of traditional fixed income securities. The major differences typically
include more frequent interest and principal payments, usually monthly, and the
possibility that prepayments of principal may be made at any time. Prepayment
rates are influenced by changes in current interest rates and
13
<PAGE>
a variety of economic, geographic, social and other factors and cannot be
predicted with certainty. As with fixed rate mortgage loans, adjustable rate
mortgage loans may be subject to a greater prepayment rate in a declining
interest rate environment. The yields to maturity of the Mortgage-Backed
Securities in which the Trust invests will be affected by the actual rate of
payment (including prepayments) of principal of the underlying mortgage loans.
The mortgage loans underlying such securities generally may be prepaid at any
time without penalty. In a fluctuating interest rate environment, a predominant
factor affecting the prepayment rate on a pool of mortgage loans is the
difference between the interest rates on the mortgage loans and prevailing
mortgage loan interest rates (giving consideration to the cost of any
refinancing). In general, if mortgage loan interest rates fall sufficiently
below the interest rates on fixed rate mortgage loans underlying mortgage
pass-through securities, the rate of prepayment would be expected to increase.
Conversely, if mortgage loan interest rates rise above the interest rates on the
fixed rate mortgage loans underlying the mortgage pass-through securities, the
rate of prepayment may be expected to decrease.
The Bond Funds and the Asset Allocation Fund, may invest in ADJUSTABLE
RATE MORTGAGE LOANS ("ARMS"). The Treasury & Agency Fund will buy only
government ARMs. ARMs eligible for inclusion in a mortgage pool will generally
provide for a fixed initial mortgage interest rate for a specified period of
time. Thereafter, the interest rates (the "Mortgage Interest Rates") may be
subject to periodic adjustment based on changes in the applicable index rate
(the "Index Rate"). The adjusted rate would be equal to the Index Rate plus a
gross margin, which is a fixed percentage spread over the Index Rate established
for each ARM at the time of its origination.
Adjustable interest rates can cause payment increases that some
borrowers may find difficult to make. However, certain ARMs may provide that the
Mortgage Interest Rate may not be adjusted to a rate above an applicable
lifetime maximum rate or below an applicable lifetime minimum rate for such ARM.
Certain ARMs may also be subject to limitations on the maximum amount by which
the Mortgage Interest Rate may adjust for any single adjustment period (the
"Maximum Adjustment"). Other ARMs ("Negatively Amortizing ARMs") may provide
instead or as well for limitations on changes in the monthly payment on such
ARMs. Limitations on monthly payments can result in monthly payments which are
greater or less than the amount necessary to amortize a Negatively Amortizing
ARM by its maturity at the Mortgage Interest Rate in effect in any particular
month. In the event that a monthly payment is not sufficient to pay the interest
accruing on a Negatively Amortizing ARM, any such excess interest is added to
the principal balance of the loan, causing negative amortization and will be
repaid through future monthly payments. It may take borrowers under Negatively
Amortizing ARMs longer periods of time to achieve equity and may increase the
likelihood of default by such borrowers. In the event that a monthly payment
exceeds the sum of the interest accrued at the applicable Mortgage Interest Rate
and the principal payment which would have been necessary to amortize the
outstanding principal balance over the remaining term of the loan, the excess
(or "accelerated amortization") further reduces the principal balance of the
ARM. Negatively Amortizing ARMs do not provide for the extension of their
original maturity to accommodate changes in their Mortgage Interest Rate. As a
result, unless there is a periodic recalculation of the payment amount (which
there generally is), the final payment may be substantially larger than the
other payments. These limitations on periodic increases in interest rates and on
changes in monthly payment protect borrowers from unlimited interest rate and
payment increases.
There are two main categories of indices which provide the basis for
rate adjustments on ARMs: those based on U.S. Treasury securities and those
derived from a calculated measure such as a cost of funds index or a moving
average of mortgage rates. Commonly utilized indices include the one-year,
three-year and five-year constant maturity Treasury bill rates, the three-month
Treasury bill rate, the 180-day Treasury bill rate, rates on longer-term
Treasury securities, the 11th District Federal Home Loan Bank Cost of Funds, the
National Median Cost of Funds, the one-month, three-month, six-month or one-year
London Interbank Offered Rate ("LIBOR"), the prime rate of a specific bank, or
commercial paper rates. Some indices, such as the one-year constant maturity
Treasury rate, closely mirror changes in market interest rate levels. Others,
such as the 11th District Federal Home Loan Bank Cost of Funds index, tend to
lag behind changes in market rate levels and tend to be somewhat less volatile.
The degree of volatility in the market value of the Fund's portfolio and
therefore in the net asset value of the Fund's shares will be a function of the
length of the interest rate reset periods and the degree of volatility in the
applicable indices.
In general, changes in both prepayment rates and interest rates will
change the yield on Mortgage-Backed Securities. The rate of principal
prepayments with respect to ARMs has fluctuated in recent years. As is the case
with fixed mortgage loans, ARMs may be subject to a greater rate of principal
prepayments in a declining interest rate environment. For example, if prevailing
interest rates fall significantly, ARMs could be subject to higher prepayment
rates than if prevailing interest rates remain constant because the availability
of fixed rate mortgage loans at competitive interest rates may encourage
mortgagors to refinance their ARMs to "lock-in" a lower fixed interest rate.
Conversely, if prevailing interest rates rise significantly, ARMs may prepay at
lower rates than if prevailing rates remain at or below those in effect at the
time such ARMs were originated. As with fixed rate mortgages, there can be no
certainty as to the rate of prepayments on the ARMs in either stable or changing
interest rate environments. In addition, there can be no certainty as to whether
increases in the principal balances of the ARMs due to the addition of deferred
interest may result in a default rate higher than that on ARMs that do not
provide for negative amortization. Other factors affecting prepayment of ARMs
include changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgage properties and servicing decisions.
14
<PAGE>
REAL ESTATE INVESTMENT TRUSTS ("REITS")
Certain of the Funds may invest without limitation in shares of REITs.
REITs are pooled investment vehicles which invest primarily in income producing
real estate or real estate related loans or interest. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling property that have appreciated
in value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. Similar to
investment companies, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Internal Revenue Code of
1986, as amended (the "Code"). A Fund will indirectly bear its proportionate
share of expenses incurred by REITs in which a Fund invests in addition to the
expenses incurred directly by a Fund.
Investing in REITS involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITS may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax free pass-through of income under the Code and failing to
maintain their exemption from registration under the Act.
REITs (especially mortgage REITs) are also subject to interest rate
risks. When interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investment in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks included in the S&P
Index of 500 Common Stocks.
FOREIGN INVESTMENTS
Some of the Funds may invest in certain obligations or securities of
foreign issuers. Possible investments include equity securities of foreign
entities, obligations of foreign branches of U.S. banks and of foreign banks,
including, without limitation, European Certificates of Deposit, European Time
Deposits, European Banker's Acceptances, Canadian Time Deposits and Yankee
Certificates of Deposits, and investments in Canadian Commercial Paper, foreign
securities and Europaper (as those terms are defined in the relevant
Prospectuses of the Trust). Securities of foreign issuers may include sponsored
and unsponsored American Depository Receipts ("ADRs"). Sponsored ADRs are listed
on the New York Stock Exchange; unsponsored ADRs are not. Therefore, there may
be less information available about the issuers of unsponsored ADRs than the
issuers of sponsored ADRs. Unsponsored ADRs are restricted securities. These
instruments may subject a Fund to investment risks that differ in some respects
from those related to investments in obligations of U.S. domestic issuers. Such
risks include future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible seizure,
nationalization or expropriation of foreign deposits, the possible establishment
of exchange controls or taxation at the source, greater fluctuations in value
due to changes in exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Such investments may also entail higher custodial fees and
sales commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks are not
regulated by U.S. banking authorities and may be subject to less stringent
reserve requirements than those applicable to domestic branches of U.S. banks.
In addition, foreign banks generally are not bound by the accounting, auditing,
and financial reporting standards comparable to those applicable to U.S. banks.
Investments in all types of foreign obligations or securities will not exceed
25% of the net assets of the Asset Allocation Fund, the Equity Funds (with the
exception of the International Equity Index Fund) and the Income Bond and
Limited Volatility Bond Funds.
By investing in foreign securities, the International Equity Index Fund
attempts to take advantage of differences between both economic trends and the
performance of securities markets in the various countries, regions and
geographic areas as prescribed by the Fund's investment objective and policies.
During certain periods the investment return on securities in some or all
countries may exceed the return on similar investments in the United States,
while at other times the investment return may be less than that on similar U.S.
securities. Shares of the International Equity Index Fund, when included in
appropriate amounts in a portfolio otherwise consisting of domestic securities,
will provide a source of increased diversification. The International Equity
Index Fund itself seeks increased diversification by combining securities from
various countries and geographic areas that offer different investment
opportunities and are affected by different economic
15
<PAGE>
trends. The international investments of the International Equity Index Fund may
reduce the effect that events in any one country or geographic area will have on
its investment holdings. Of course, negative movement by one of a Fund's
investments in one foreign market represented in its portfolio may offset
potential gains from the Fund's investments in another country's markets.
PERCS*
The Equity Funds may invest in Preferred Equity Redemption Cumulative
Stock ("PERCS") which is a form of convertible preferred stock that actually has
more of an equity component than it does fixed income characteristics. These
instruments permit companies to raise capital via a surrogate for common equity.
PERCS are preferred stock which convert to common stock after a specified period
of time, usually three years, and are considered the equivalent of equity by the
ratings agencies. Issuers pay holders a substantially higher dividend yield than
that on the underlying common, and in exchange, the holder's appreciation is
capped, usually at about 30 percent. PERCS are callable at any time. The PERC is
mandatorily convertible into common stock, but is callable at any time at an
initial call price that reflects a substantial premium to the stock's issue
price. PERCS offer a higher dividend than that available on the common stock,
but in exchange the investors agree to the company placing a cap on the
potential price appreciation. The call price declines daily in an amount that
reflects the incremental dividend that holders enjoy. PERCS are listed on an
exchange where the common stock is listed.
*PERCS is a registered trademark of Morgan Stanley, which does not
sponsor and is in no way affiliated with The One Group.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
Some funds may purchase securities on a "when-issued" and forward
commitment basis. When a Fund agrees to purchase securities, the Fund's
custodian will set aside cash or liquid portfolio securities equal to the amount
of the commitment in a separate account. The Funds may purchase securities on a
when-issued basis when deemed by Banc One Advisors to present attractive
investment opportunities. When-issued securities are purchased for delivery
beyond the normal settlement date at a stated price and yield, thereby involving
the risk that the yield obtained will be less than that available in the market
at delivery. The Funds generally will not pay for such securities or earn
interest on them until received. Although the purchase of securities on a
when-issued basis is not considered to be leveraging, it has the effect of
leveraging. When Banc One Advisors purchases a when-issued security, the
Custodian will set aside cash or liquid securities to satisfy the purchase
commitment. In such a case, a Fund may be required subsequently to place
additional assets in the separate account in order to assure that the value of
the account remains equal to the amount of the Fund's commitment. It may be
expected that a Fund's net assets will fluctuate to a greater degree when it
sets aside portfolio securities to cover such purchase commitments than when it
sets aside cash. No Fund intends to purchase "when-issued" securities for
speculative purposes but only for the purpose of acquiring portfolio securities.
Because a Fund will set aside cash or liquid portfolio securities to satisfy its
purchase commitments in the manner described, the Fund's liquidity and the
ability of Banc One Advisors and the Sub-Advisor to manage the Fund might, as
described in the Prospectuses, be affected in the event its commitments to
purchase when-issued securities ever exceeded 40% of the value of its assets.
Commitments to purchase when-issued securities will not, under normal market
conditions, exceed 25% of a Fund's total assets, and a commitment will not
exceed 90 days. A Fund may dispose of a when-issued security or forward
commitment prior to settlement if Banc One Advisors deems it appropriate to do
so. When a Fund engages in "when-issued" transactions, it relies on the seller
to consummate the trade. Failure of the seller to do so may result in the Fund's
incurring a loss or missing the opportunity to obtain a price considered to be
advantageous.
In a forward commitment transaction, the Funds contract to purchase
securities for a fixed price at a future date beyond customary settlement time.
The Funds are required to hold and maintain in a segregated account until the
settlement date, cash, U.S. government securities or liquid high-grade debt
obligations in an amount sufficient to meet the purchase price. Alternatively,
the Funds may enter into offsetting contracts for the forward sale of other
securities that they own. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date.
SECURITIES LENDING
In order to generate additional income, each of the Funds, except the
Funds of Funds, may lend up to 33% of the securities in which they are invested
pursuant to agreements requiring that the loan be continuously secured by cash,
securities of the U.S. government or its agencies, shares of an investment trust
or mutual fund or any combination of cash and such securities as collateral
equal at all times to at least 100% of the market value plus accrued interest on
the securities lent. The Funds will continue to receive interest on the
securities lent while simultaneously seeking to earn interest on the investment
of cash collateral in U.S. government securities, shares of an investment trust
or mutual fund, or other short-term, highly liquid investments. Collateral is
marked to market daily to provide a level of collateral at least equal to the
market value of the securities lent. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral
16
<PAGE>
should the borrower of the securities fail financially. However, loans will only
be made to borrowers deemed by Banc One Advisors to be of good standing under
guidelines established by the Trust's Board of Trustees and when, in the
judgment of Banc One Advisors, the consideration which can be earned currently
from such securities loans justifies the attendant risk. Loans are subject to
termination by the Funds or the borrower at any time, and are therefore, not
considered to be illiquid investments.
INDEX INVESTING BY THE EQUITY INDEX AND INTERNATIONAL EQUITY INDEX FUNDS
It is anticipated that the indexing approach that will be employed by
the Equity Index Fund will be an effective method of substantially tracking
percentage changes in the S&P 500 Index (the "Index"). It is a reasonable
expectation that there will be a close correlation between the Fund's
performance and that of the Index in both rising and falling markets. The Fund
will attempt to achieve a correlation between the performance of its portfolio
and that of the Index of at least 0.95, without taking into account expenses. A
correlation of 1.00 would indicate perfect correlation, which would be achieved
when the Fund's net asset value, including the value of its dividend and capital
gains distributions, increases or decreases in exact proportion to changes in
the Index. The Fund's ability to correlate its performance with the Index,
however, may be affected by, among other things, changes in securities markets,
the manner in which the Index is calculated by Standard & Poor's Corporation
("S&P") and the timing of purchases and redemptions. In the future, the Trustees
of the Trust, subject to the approval of Shareholders, may select another index
if such a standard of comparison is deemed to be more representative of the
performance of common stocks.
S&P chooses the stocks to be included in the Index largely on a
statistical basis. Inclusion of a stock in the Index in no way implies an
opinion by S&P as to its attractiveness as an investment. The Index is
determined, composed and calculated by S&P without regard to the Equity Index
Fund. S&P is neither a sponsor of, nor in any way affiliated with the Equity
Index Fund, and S&P makes no representation or warranty, expressed or implied on
the advisability of investing in the Equity Index Fund or as to the ability of
the Index to track general stock market performance, and S&P disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the Index or any data included therein. "Standard and Poor's 500" is
a service mark of S&P.
The weightings of stocks in the Index are based on each stock's
relative total market value, i.e., market price per share times the number of
Shares outstanding. Because of this weighting, approximately 50% of the Index is
currently composed of the 50 largest companies in the Index, and the Index
currently represents over 65% of the market value of all U.S. common stocks
listed on the New York Stock Exchange. Typically, companies included in the
Index are the largest and most dominant firms in their respective industries.
Banc One Advisors generally selects stocks for the Equity Index Fund in
the order of their weightings in the Index beginning with the heaviest weighted
stocks. The percentage of the Equity Index Fund's assets to be invested in each
stock is approximately the same as the percentage it represents in the Index. No
attempt is made to manage the Equity Index Fund in the traditional sense using
economic, financial and market analysis. The Equity Index Fund is managed using
a computer program to determine which stocks are to be purchased and sold to
replicate the Index to the extent feasible. From time to time, administrative
adjustments may be made in the Fund because of changes in the composition of the
Index, but such changes should be infrequent.
It is anticipated that the indexing approach that will be employed by
the International Equity Index Fund will be an effective method of substantially
tracking percentage changes in the GDP weighted MSCI EAFE Index (the
"International Index"). The Fund will attempt to achieve a correlation between
the performance of its portfolio and that of the International Index of at least
0.95, without taking into account expenses. It is a reasonable expectation that
there will be a close correlation between the Fund's performance and that of the
International Index in both rising and falling markets. A correlation of 1.00
would indicate perfect correlation, which would be achieved when the Fund's net
asset value, including the value of its dividend and capital gains
distributions, increases or decreases in exact proportion to changes in the
International Index. The Fund's ability to correlate its performance with the
International Index, however, may be affected by, among other things, changes in
securities markets, the manner in which the International Index is calculated by
Morgan Stanley International ("MSCI") and the timing of purchases and
redemptions. In the future, the Trustees of the Trust, subject to the approval
of Shareholders, may select another index if such a standard of comparison is
deemed to be more representative of the performance of common stocks.
MSCI computes and publishes the International Index. MSCI also computes
the country weights which are established based on annual GDP data. Gross
Domestic Product is defined as a country's Gross National Product, or total
output of goods and services, adjusted by the following two factors: net labor
income (labor income of domestic residents working abroad less labor income of
foreigners working domestically) plus net interest income (interest income
earned from foreign investments less interest income earned from domestic
investments by foreigners). Country weights are thus established in proportion
to the size of their economies as measured by Gross Domestic Product, which
results in a more
17
<PAGE>
uniform distribution of capital across the EAFE markets than if capitalization
weights were used as the basis. The country weights within the International
Index are systematically rebalanced annually to the most recent GDP weights.
MSCI chooses the stocks to be included in the International Index
largely on a statistical basis. Inclusion of a stock in the International Index
in no way implies an opinion by MSCI as to its attractiveness as an investment.
The International Index is determined, composed and calculated by MSCI without
regard to the International Equity Index Fund. MSCI is neither a sponsor of, nor
in any way affiliated with the International Equity Index Fund, and MSCI makes
no representation or warranty, expressed or implied on the advisability of
investing in the International Equity Index Fund or as to the ability of the
International Index to track general stock market performance, and MSCI
disclaims all warranties of merchantability or fitness for a particular purpose
or use with respect to the International Index or any data included therein.
"MSCI EAFE Index" is a service mark of MSCI.
FOREIGN CURRENCY TRANSACTIONS OF THE INTERNATIONAL EQUITY INDEX FUND
Banc One Advisors or the Sub-Advisor of the International Equity Index
Fund may, if it so chooses, engage in various strategies to hedge against
interest rate and currency risks. These strategies may consist of use of any of
the following, some of which also have been described above: options on Fund
positions or currencies, financial and currency futures, options on such
futures, forward foreign currency transactions, forward rate agreements and
interest rate and currency swaps, caps and floors. The Fund may engage in such
transactions in both U.S. and non-U.S. markets. To the extent the Fund enters
into such transactions in markets other than in the United States, the Fund may
be subject to certain currency, settlement, liquidity, trading and other risks
similar to those described above with respect to the Fund's investments in
foreign securities. The Fund may enter into such transactions only in connection
with hedging strategies. While the Fund's use of hedging strategies is intended
to reduce the volatility of the net asset value of Fund shares, the net asset
value of the Fund will fluctuate. There can be no assurance that the Fund's
hedging transactions will be effective. Furthermore, the Fund may only engage in
hedging activities from time to time and may not necessarily be engaging in
hedging activities when movements in interest rates or currency exchange rates
occur. Tax requirements may limit the Fund's ability to engage in the hedging
transactions and strategies described below.
A substantial portion of the securities of the Fund will be denominated
in foreign currencies, and the Fund may hold funds in foreign currencies. Thus,
the value of the Fund's shares will be affected by changes in currency exchange
rates. The value of the Fund's investments denominated in foreign currencies and
any funds held in foreign currencies will depend on the relative strength of
those currencies and the U.S. Dollar, and the funds may be affected favorably or
unfavorably by exchange control regulations or changes in exchange rates between
foreign currencies and the U.S. Dollar. Changes in the foreign currency exchange
rates also may affect the value of dividends and interest earned, gains and
losses realized on the sale of securities and net investment income and gains,
if any, to be distributed to Shareholders by the Fund. The exchange rates
between the U.S. Dollar and other currencies are determined by the forces of
supply and demand in foreign exchange markets. Accordingly, the ability of the
Fund to achieve its investment objective may depend, to a certain extent, on
exchange rate movements.
The Fund is authorized to deal in forward foreign exchange between
currencies of the different countries in which the Fund will invest and
multi-national currency units as a hedge against possible variations in the
foreign exchange rate between these currencies. This is accomplished through
contractual agreements entered into in the interbank market to purchase or sell
one specified currency for another currency at a specified future date (up to
one year) and price at the time of the contract. The Fund's dealings in forward
foreign exchange will be limited to hedging involving either specific
transactions or portfolio positions.
Transaction Hedging. When the Fund engages in transaction hedging, it
enters into foreign currency transactions with respect to specific receivables
or payables of the Fund generally arising in connection with the purchase or
sale of its portfolio securities. The International Equity Index Fund will
engage in transaction hedging when it desires to "lock in" the U.S. dollar price
of a security it has agreed to purchase or sell, or the U.S. dollar equivalent
of a dividend or interest payment in a foreign currency. By transaction hedging,
the International Equity Index Fund will attempt to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
The International Equity Index Fund may purchase or sell a foreign
currency on a spot (or cash) basis at the prevailing spot rate in connection
with the settlement of transactions in portfolio securities denominated in that
foreign currency. The Fund may also enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts"). Although there is no
current intention to do so, the International Equity Index Fund reserves the
right to purchase and sell foreign currency futures contracts traded in the
United States and subject to regulation by the CFTC.
18
<PAGE>
For transaction hedging purposes the International Equity Index Fund
may also purchase U.S. exchange-listed call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives the Fund the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives the Fund the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives the Fund the right to assume a
long position in the futures contract until the expiration of the option. A call
option on currency gives the Fund the right to purchase a currency at the
exercise price until the expiration of the option.
Position Hedging. When it engages in position hedging, the
International Equity Index Fund enters into foreign currency exchange
transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the value of currency for securities which Banc One Advisors or the Sub-Advisor
expects to purchase, when the Fund holds cash or short-term investments). In
connection with the position hedging, the Fund may purchase or sell foreign
currency forward contracts or foreign currency on a spot basis. The
International Equity Index Fund may purchase U.S. exchange-listed put or call
options on foreign currency and foreign currency futures contracts and buy or
sell foreign currency futures contracts traded in the United States and subject
to regulation by the CFTC, although the International Equity Index Fund has no
current intention to do so.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward contract or
futures contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities if the market value of such security or securities exceeds the amount
of foreign currency the Fund is obligated to deliver.
Although the Fund has no current intention to do so, the International
Equity Index Fund may write covered call options on up to 100% of the currencies
in its portfolio to offset some of the costs of hedging against fluctuations in
currency exchange rates.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the International Equity Index Fund
owns or expects to purchase or sell. They simply seek to maintain an investment
portfolio that is relatively neutral to fluctuations in the value of the U.S.
Dollar relative to major foreign currencies and establish a rate of exchange
which one can achieve at some future point in time. Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the value of
the hedged currency, they tend to limit any potential gain which might result
from the increase in the value of such currency. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the anticipated devaluation level. The Fund will not speculate in
forward foreign exchange.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The International Equity Index Fund may purchase forward foreign
currency exchange contracts, which involve an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancellable forward contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades.
The maturity date of a forward contract may be any fixed number of days
from the date of the contract agreed upon by the parties, rather than a
predetermined date in a given month. Forward contracts may be in any amounts
agreed upon by the parties rather than predetermined amounts. Also, forward
foreign exchange contracts are entered into directly between currency traders so
that no intermediary is required. A forward contract generally requires no
margin or other deposit.
At the maturity of a forward contract, the Fund may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
19
<PAGE>
FOREIGN CURRENCY FUTURES CONTRACTS
The International Equity Index Fund may purchase forward foreign
currency exchange contracts, foreign currency futures contracts traded in the
United States are designed by and traded on exchanges regulated by the CFTC,
such as the New York Mercantile Exchange. The International Equity Index Fund
would enter into foreign currency futures contracts solely for bona fide hedging
or other appropriate risk management purposes as defined in CFTC regulations.
When a Fund purchases or sells a futures contract, it is required to
deposit with its custodian an amount of cash or U.S. Treasury bills known as
"initial margin." The nature of initial margin is different from that of margin
in security transactions in that it does not involve borrowing money to finance
transactions. Rather, initial margin is similar to a performance bond or good
faith deposit that is returned to the Fund upon termination of the contract,
assuming the Fund satisfies its contractual obligation.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market." These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying currency rises above the delivery price, the Fund's position declines
in value. The Fund then pays a broker a variation margin payment equal to the
difference between the delivery price of the futures contract and the market
price of the currency underlying the futures contract. Conversely, if the price
of the underlying currency falls below the delivery price of the contract, the
Fund's futures position increases in value. The broker then must make a
variation margin payment equal to the difference between the delivery price of
the futures contract and the market price of the currency underlying the futures
contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or gain. Such closing transactions involve
additional commission costs.
In addition to the margin requirements discussed above, transactions in
currency futures contracts may involve the segregation of funds pursuant to
requirements imposed by the Securities and Exchange Commission. Under those
requirements, where a Fund has a long position in a futures or forward contract,
it may be required to establish a segregated account (not with a futures
commission merchant or broker) containing cash or certain liquid assets equal to
the purchase price of the contract (less any margin on deposit). For a short
position in futures or forward contracts held by a Fund, those requirements may
mandate the establishment of a segregated account (not with a futures commission
merchant or broker) with cash or certain liquid assets that, when added to the
amounts deposited as margin, equal the market value of the instruments or
currency underlying the futures or forward contracts (but are not less than the
price at which the short positions were established). However, segregation of
assets is not required if the Fund "covers" a long position. For example,
instead of segregating assets, a Fund, when holding a long position in a futures
or forward contract, could purchase a put option on the same futures or forward
contract with a strike price as high or higher than the price of the contract
held by the Fund. In addition, where a Fund takes short positions, or engages in
sales of call options, it need not segregate assets if it "covers" these
positions. For example, where a Fund holds a short position in a futures or
forward contract, it may cover by owning the instruments or currency underlying
the contract. A Fund may also cover such a position by holding a call option
permitting it to purchase the same futures or forward contract at a price no
higher than the price at which the short position was established. Where a Fund
sells a call option on a futures or forward contract, it may cover either by
entering into a long position in the same contract at a price no higher than the
strike price of the call option or by owning the instruments or currency
underlying the futures or forward contract. The Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures or forward contract at a price no higher than the strike price of the
call option sold by the Fund.
At the maturity of a futures contract, the Fund may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed out
only on an exchange or board of trade which provides a secondary market in such
contracts. Although the International Equity Index Fund intends to purchase or
sell foreign currency futures contracts only on exchanges or boards of trade
where there appears to be an active secondary market, there is no assurance that
a secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments of
variation margin.
20
<PAGE>
FOREIGN CURRENCY OPTIONS
The International Equity Index Fund may purchase U.S. exchange-listed
call and put options on foreign currencies. Such options on foreign currencies
operate similarly to options on securities. Options on foreign currencies are
affected by all of those factors which influence foreign exchange rates and
investments generally.
The Fund is authorized to purchase or sell listed foreign currency
options, and currency swap contracts as a short or long hedge against possible
variations in foreign exchange rates. Such transactions may be effected with
respect to hedges on non-U.S. Dollar denominated securities (including
securities denominated in the ECU) owned by the Fund, sold by the Fund but not
yet delivered, committed or anticipated to be purchased by the Fund, or in
transaction or cross-hedging strategies. As an illustration, the Fund may use
such techniques to hedge the stated value in United States dollars of an
investment in a Japanese yen-dominated security. In such circumstances, for
example, the Fund may purchase a foreign currency put option enabling it to sell
a specified amount of yen for dollars at a specified price by a future date. To
the extent the hedge is successful, a loss in the value of the dollar relative
to the yen will tend to be offset by an increase in the value of the put option.
To offset, in whole or in part, the cost of acquiring such a put option, the
Fund also may sell a call option which, if exercised, requires it to sell a
specified amount of yen for dollars at a specified price by a future date (a
technique called a "straddle"). By selling such call option in this
illustration, the Fund gives up on the opportunity to profit without limit from
increases in the relative value of the yen to the dollar.
Certain differences exist between these foreign currency hedging
instruments. Foreign currency options provide the holder thereof the right to
buy or to sell a currency at a fixed price on a future date. Listed options are
third-party contracts (i.e., performance of the parties' obligations is
guaranteed by an exchange or clearing corporation) which are issued by a
clearing corporation, traded on an exchange and have standardized strike prices
and expiration dates. OTC options are two-party contracts and have negotiated
strike prices and expiration dates. Options on futures contracts are traded on
boards of trade or futures exchanges. Currency swap contacts are negotiated two
party agreements entered into in the interbank market whereby the parties
exchange two foreign currencies at the inception of the contract and agree to
reverse the exchange at a specified future time and at a specified exchange
rate. The Fund will not speculate in foreign currency options, futures or
related options or currency swap contracts. Accordingly, the Fund will not hedge
a currency substantially in excess (as determined by Banc One Advisors or the
Sub-Adviser) of the market value of the securities denominated in such currency
which it owns, the expected acquisition price of securities which it has
committed or anticipates to purchase which are denominated in such currency,
and, in the cases of securities which have been sold by the Fund but not yet
delivered, the proceeds thereof in its denominated currency. Further the Fund
will segregate, at its Custodian, U.S. government or other high quality
securities having a market value representing any subsequent net decrease in the
market value of such hedged positions including net positions with respect to
cross-currency hedges. The Fund may not incur potential net liabilities with
respect to currency and securities positions, including net liabilities with
respect to cross-currency hedges, of more than 33 1/3% of its total assets from
foreign currency options, futures, related options and forward currency
transactions.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealer or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options market.
FOREIGN CURRENCY CONVERSION
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the "spread")
between prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to a Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.
RISK FACTORS IN HEDGING TRANSACTIONS
All of the foregoing hedging transactions present certain risks. In
particular, the variable degree of correlation between price movements of the
instruments used in hedging strategies and price movements in the security being
hedged
21
<PAGE>
creates the possibility that losses on the hedge may be greater than gains in
the value of the Fund's securities. In addition, these instruments may not be
liquid in all circumstances. As a result, in volatile markets, the Fund may not
be able to dispose of or offset a transaction without incurring losses. Although
the contemplated use of hedging instruments should tend to reduce the risk of
loss due to a decline in the value of the hedged security, at the same time the
use of these instruments could tend to limit any potential gain which might
result from an increase in the value of such security.
Successful use of hedging instruments by the Fund is subject to the
ability of the Banc One Advisors and/or the Sub-Adviser to predict correctly
movements in the direction of interest and currency rates and other factors
affecting markets for securities. If the expectations of the Banc One Advisors
or the Sub-Adviser are not met, the Fund would be in a worse position than if a
hedging strategy had not been pursued. For example, if the Fund has hedged
against the possibility of an increase in interest rates which would adversely
affect the price of securities in its portfolio and the price of such securities
increases instead, the Fund will lose part or all of the benefit of the
increased value of its securities because it will have offsetting losses in its
hedging positions. In addition, when hedging with instruments that require
variation margin payments, if the Fund has insufficient cash to meet daily
variation margin requirements, it may have to sell securities to meet such
requirements. Such sales of securities may, but will not necessarily, be at
increased prices which reflect the rising market. Thus, the Fund may have to
sell securities at a time when it is disadvantageous to do so.
The ability of the Fund to engage in hedging transactions may be
limited by tax considerations.
New options and futures contracts and other financial products, and
various combinations thereof, continue to be developed, and the Fund may invest
in any such options, contracts and products as may be developed to the extent
consistent with the Fund's investment objective and the regulatory requirements
applicable to investment companies, and subject to the supervision of the
Trust's Board of Trustees.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain obligations purchased by some of the Funds may carry variable
or floating rates of interest, may involve a conditional or unconditional
demand feature and may include variable amount master demand notes.
Variable amount master demand notes are demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, a Fund
may demand payment of principal and accrued interest at any time. While the
notes are not typically rated by credit rating agencies, issuers of variable
amount master demand notes (which are normally manufacturing, retail,
financial, and other business concerns) must satisfy the same criteria as set
forth above for commercial paper. Banc One Advisers or the Sub-Advisor will
consider the earning power, cash flow, and other liquidity ratios of the
issuers of such notes and will continuously monitor their financial status and
ability to meet payment on demand. In determining average weighted portfolio
maturity, a variable amount master demand note will be deemed to have a
maturity equal to the period of time remaining until the principal amount can
be recovered from the issuer through demand.
Some of the Funds subject to their investment objective policies and
restrictions, may acquire variable and floating rate instuments. A variable
rate instrument is one whose terms provide for the adjustment of its interest
rate on set dates and which, upon such adjustment, can reasonably be expected
to have a market value that approximates its par value. A floating rate
instrument is one whose terms provide for the adjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Such instrument are frequently not rated by credit rating agencies; however,
unrated variable and floating rate instruments purchased by a Fund will be
determined by Banc One Advisors or the Sub-Advisor under guidelines established
by the Trust's Board of Trustees to be of comparable quality at the time of
purchase to rated instruments eligible for purchase under the Fund's investment
policies. In making such determinations, Banc One Advisors or the Sub-Advisor
will consider the earning power, cash flow and other liquidity ratios of the
issuers of such instruments (such issuers include financial, merchandising,
bank holding and other companies) and will continuously monitor their financial
condition. Although there may be no active secondary market with respect to a
particular variable or floating rate instrument purchased by a Fund, the Fund
may re-sell the instrument at any time to a third party. The absence of such an
active secondary market, however, could make it difficult for the Fund to
dispose of the variable or floating rate instrument involved in the event the
issuer of the instrument defaulted on its payment obligations, and the Fund
could, for this or other reasons, suffer a loss to the extent of the default.
Variable or floating rate instruments may be secured by bank letters of credit.
A Fund will purchase a variable or floating rate instrument to facilitate
portfolio liquidity or to permit investment of the Fund's assets at a favorable
rate of return.
Variable or floating rate instruments with stated maturities of more
than 397 days may, under the Securities and Exchange Commission's amortized
cost rule, Rule 2a-7 under the 1940 Act, be deemed to have shorter maturities
as follows:
(1) Adjustable Rate Government Securities. A Government Security which
is a Variable Rate Security where the variable rate of interest is readjusted no
less frequently than every 762 days shall be deemed to have a maturity equal to
the period remaining until the next readjustment of the interest rate. A
Government Security which is a Floating Rate Security shall be deemed to have a
remaining maturity of one day.
22
<PAGE>
(2) Short-Term Variable Rate Securities. A Variable Rate Security, the
principal amount of which, in accordance with the terms of the security, must
unconditionally be paid in 397 calendar days or less shall be deemed to have
maturity equal to the earlier of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand.
(3) Long-Term Variable Rate Securities. A Variable Rate Security, the
principal amount of which is scheduled to be paid in more than 397 days, that is
subject to a Demand Feature shall be deemed to have a maturity equal to the
longer of the period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be recovered through
demand.
(4) Short-Term Floating Rate Securities. A Floating Rate Security, the
principal amount of which, in accordance with the terms of the security, must
unconditionally be paid in 397 calendar days or less shall be deemed to have a
maturity of one day.
(5) Long-Term Floating Rate Securities. A Floating Rate Security, the
principal amount of which is scheduled to be paid in more than 397 days, that is
subject to a demand feature, shall be deemed to have a maturity equal to the
period remaining until the principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than thirty days' notice or at specified intervals not exceeding 397
calendar days and upon no more than 30 days notice.
Variable and floating rate instruments for which no readily available
market exists will be purchased in an amount which, together with securities
with legal or contractual restrictions on resale or for which no readily
available market exists (including repurchase agreements providing for
settlement more than seven days after notice), exceeds 10% (with respect to the
Money Market and Institutional Money Market Funds) or 15% (with respect to all
Funds, other than the Money Market and Institutional Money Market Funds, which
can purchase such notes) of the Fund's net assets only if such instruments are
subject to a demand feature that will permit the Fund to demand payment of the
principal within seven days after demand by the Fund. There is no limit on the
extent to which a Fund may purchase demand instruments that are not illiquid.
If not rated, such instruments must be found by Banc One Advisors or the
Sub-Advisor, under guidelines established by the Trust's Board of Trustees, to
be of comparable quality to instruments that are rated high quality. A rating
may be relied upon only if it is provided by a nationally recognized
statistical rating organization that is not affiliated with the issuer or
guarantor of the instruments. For a description of the rating symbols of S&P,
Moody's, and Fitch used in this paragraph, see the Appendix. The above Funds
may also invest in Canadian Commercial Paper which is commercial paper issued
by a Canadian corporation or a Canadian counterpart of a U.S. corporation and
in Europaper which is U.S. dollar denominated commercial paper of a foreign
issuer.
MUNICIPAL SECURITIES
As a matter of fundamental policy, under normal market conditions, at
least 80% of the total assets (net assets in the case of the Louisiana Municipal
Bond Fund) of each of the Municipal Money Market Fund, the Ohio Municipal Money
Market Fund, the Municipal Income Fund, the Intermediate Tax-Free Bond Fund, the
Ohio Municipal Bond Fund, the Texas Tax-Free Bond Fund, the Kentucky Municipal
Bond Fund, the Louisiana Municipal Bond Fund, the West Virginia Municipal Bond
Fund, the Arizona Municipal Bond Fund, and the Tax Exempt Money Market Fund will
be invested in Municipal Securities. Other Funds may also invest in Municipal
Securities if Banc One Advisors determines that such Municipal Securities offer
attractive yields. Municipal Securities are issued to obtain funds for various
public purposes, including the construction of a wide range of public facilities
such as bridges, highways, roads, schools, water and sewer works, and other
utilities. Other public purposes for which Municipal Securities may be issued
include refunding outstanding obligations, obtaining funds for general operating
expenses and obtaining funds to lend to other public institutions and
facilities. In addition, certain debt obligations known as "private activity
bonds" may be issued by or on behalf of municipalities and public authorities to
obtain funds to provide certain water, sewage and solid waste facilities,
qualified residential rental projects, certain local electric, gas and other
heating or cooling facilities, qualified hazardous waste facilities, high-speed
intercity rail facilities, governmentally-owned airports, docks and wharves and
mass commuting facilities, certain qualified mortgages, student loan and
redevelopment bonds and bonds used for certain organizations exempt from federal
income taxation. Certain debt obligations known as "industrial development
bonds" under prior federal tax law may have been issued by or on behalf of
public authorities to obtain funds to provide certain privately operated housing
facilities, sports facilities, industrial parks, convention or trade show
facilities, airport, mass transit, port or parking facilities, air or water
pollution control facilities, sewage or solid waste disposal facilities, and
certain facilities for water supply. Other private activity bonds and industrial
development bonds issued to fund the construction, improvement, equipment or
repair of privately-operated industrial, distribution, research, or commercial
facilities may also be Municipal Securities, but the size of such issues is
limited under current and prior federal tax law. The aggregate amount of most
private activity bonds and industrial development bonds is limited (except in
the case of certain types of facilities) under federal tax law by an annual
"volume
23
<PAGE>
cap." The volume cap limits the annual aggregate principal amount of such
obligations issued by or on behalf of all governmental instrumentalities in the
state. The Tax-Free Funds may not be a desirable investment for "substantial
users" of facilities financed by private activity bonds or industrial
development bonds or for "related persons" of substantial users.
Private activity bonds that are issued by or on behalf of public
authorities to finance various privately-operated facilities are included within
the term "Municipal Securities" as used in the Prospectuses of the
Tax-Advantaged Funds (other than the Municipal Money Market Fund) and in this
Statement of Additional Information with respect to such Funds only if the
interest paid thereon is both exempt from federal income tax and not treated as
a preference item for individuals for purposes of the federal alternative
minimum tax. Private activity bonds that are subject to federal income tax and
are treated as a preference item for individuals for purposes of the federal
alternative minimum tax are included within the term "Taxable Obligations" as
used in the Prospectuses of the Tax-Advantaged Funds (other than the Ohio
Municipal Money Market Fund, the Ohio Municipal Bond Fund and Municipal Money
Market Fund). As used in the Prospectuses of the Ohio Municipal Money Market
Fund, the Ohio Municipal Bond Fund and the Municipal Money Market Fund and in
this Statement of Additional Information with respect to such Funds, the term
Municipal Securities includes private activity bonds that are issued by or on
behalf of public authorities to finance privately operated facilities only if
the interest paid thereon is exempt from federal income tax (other than the
Federal alternative minimum tax). Private activity bonds that are subject to
federal income tax are included within the term Taxable Obligations as used in
the Prospectuses of the Ohio Municipal Money Market Fund, the Ohio Municipal
Bond Fund, and the Municipal Money Market Fund. The payment of principal and
interest on private activity bonds generally is dependent solely on the ability
of the facility users to meet its financial obligations and the pledge, if any,
of real and personal property as security for said payment.
The two principal classifications of Municipal Securities consist of
"general obligation" and "limited" (or revenue) issues. General obligation bonds
are obligations involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues and not from any
particular fund or source. The characteristics and method of enforcement of
general obligation bonds vary according to the law applicable to the particular
issuer, and payment may be dependent upon appropriation by the issuer's
legislative body. Limited obligation bonds are payable only from the revenues
derived from a particular facility or class of facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source. Private
activity bonds and industrial development bonds generally are revenue bonds and
thus not payable from the unrestricted revenues of the issuer. The credit and
quality of such bonds is generally related to the credit of the bank selected to
provide the letter of credit underlying the bond. Payment of principal of and
interest on industrial development revenue bonds is the responsibility of the
corporate user (and any guarantor).
The Funds may also acquire "moral obligation" issues, which are
normally issued by special purpose authorities, and in other tax-exempt
investments including pollution control bonds and tax-exempt commercial paper.
Each Fund may purchase short-term tax-exempt General Obligations Notes, Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Project
Notes, and other forms of short-term tax-exempt loans. Such notes are issued
with a short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements, or other revenues. Project Notes are issued by a
state or local housing agency and are sold by the Department of Housing and
Urban Development. While the issuing agency has the primary obligation with
respect to its Project Notes, they are also secured by the full faith and credit
of the United States through agreements with the issuing authority which provide
that, if required, the federal government will lend the issuer an amount equal
to the principal of and interest on the Project Notes.
There are, of course, variations in the quality of Municipal
Securities, both within a particular classification and between classifications,
and the yields on Municipal Securities depend upon a variety of factors,
including general money market conditions, the financial condition of the
issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligations, and the rating of the
issue. The ratings of Moody's and S&P represent their opinions as to the quality
of Municipal Securities. It should be emphasized, however, that ratings are
general and are not absolute standards of quality, and Municipal Securities with
the same maturity, interest rate and rating may have different yields while
Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to its purchase by a Fund, an issue
of Municipal Securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Fund. Banc One Advisors will
consider such an event in determining whether the Fund should continue to hold
the obligations.
Municipal securities may include obligations of municipal housing
authorities and single-family mortgage revenue bonds. Weaknesses in Federal
housing subsidy programs and their administration may result in a decrease of
subsidies available for payment of principal and interest on housing authority
bonds. Economic developments, including fluctuations in interest rates and
increasing construction and operating costs, may also adversely impact revenues
of housing authorities. In the case of some housing authorities, inability to
obtain additional financing could also reduce revenues available to pay existing
obligations. Single-family mortgage revenue bonds are subject to extraordinary
mandatory redemption at par in whole or in part from the proceeds derived from
prepayments of underlying mortgage loans and also from the unused proceeds of
the issue within a stated period which may be within a year from the date of
issue.
24
<PAGE>
Municipal leases are obligations issued by state and local governments
or authorities to finance the acquisition of equipment and facilities and may be
considered to be illiquid. They may take the form of a lease, an installment
purchase contract, a conditional sales contract, or a participation interest in
any of the above. Each Fund will limit its investment in municipal leases to no
more than 5% of its total assets. The Board of Trustees is responsible for
determining the credit quality of unrated municipal leases, on an ongoing basis,
including an assessment of the likelihood that the lease will not be cancelled.
The exclusion from gross income for Federal income tax purposes for
certain housing authority bonds depends on qualification under relevant
provisions of the Code and on other provisions of Federal law. These provisions
of Federal law contain certain ongoing requirements relating to the cost and
location of the residences financed with the proceeds of the single-family
mortgage bonds and the income levels of tenants of the rental projects financed
with the proceeds of the multi-family housing bonds. While the issuers of the
bonds, and other parties, including the originators and servicers of the
single-family mortgages and the owners of the rental projects financed with the
multi-family housing bonds, covenant to meet these ongoing requirements and
generally agree to institute procedures designed to insure that these
requirements will be consistently met, there is no assurance that the
requirements will be consistently met. The failure to meet these requirements
could cause the interest on the bonds to become taxable, possibly retroactively
from the date of issuance, thereby reducing the value of the bonds and
subjecting Shareholders to unanticipated tax liabilities and possibly requiring
a Fund to sell the bonds at the reduced value. Furthermore, any failure to meet
these ongoing requirements might constitute an event of default under the
applicable mortgage or permit the holder to accelerate payment of the bond or
require the issuer to redeem the bond. In any event, where the mortgage is
insured by the Federal Housing Administration ("FHA"), the consent of the FHA
may be required before insurance proceeds would become payable to redeem the
mortgage subsidy bonds.
Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations having a class of
securities registered under the Securities Exchange Act of 1934.
An issuer's obligations under its Municipal Securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the federal bankruptcy code, and laws, if
any, which may be enacted by Congress or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon the enforcement of such obligations. The power or ability of an issuer to
meet its obligations for the payment of interest on and principal of its
Municipal Securities may be materially adversely affected by litigation or other
conditions.
Such litigation or conditions may from time to time have the effect of
introducing uncertainties in the market for tax-exempt obligations or certain
segments thereof, or may materially affect the credit risk with respect to
particular bonds or notes. Adverse economic, business, legal or political
developments might affect all or a substantial portion of a Fund's Municipal
Securities in the same manner.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on tax exempt bonds, and similar proposals may be introduced in the
future. A recent decision of the United States Supreme Court has held that
Congress has the constitutional authority to enact such legislation. It is not
possible to determine what effect the adoption of such proposals could have on
(i) the availability of Municipal Securities for investment by the Funds, and
(ii) the value of the investment portfolios of the Funds.
The Internal Revenue Code of 1986, as amended (the "Code") imposes
certain continuing requirements on issuers of tax-exempt bonds regarding the
use, expenditure and investment of bond proceeds and the payment of rebates to
the United States of America. Failure by the issuer to comply subsequent to the
issuance of tax-exempt bonds with certain of these requirements could cause
interest on the bonds to become includable in gross income retroactive to the
date of issuance.
The Funds may invest in Municipal Securities either by purchasing them
directly or by purchasing certificates of accrual or similar instruments
evidencing direct ownership of interest payments or principal payments, or both,
on Municipal Securities, provided that, in the opinion of counsel to the initial
seller of each such certificate or instrument, any discount accruing on such
certificate or instrument that is purchased at a yield not greater than the
coupon rate of interest on the related Municipal Securities will to the same
extent as interest on such Municipal Securities be exempt from federal income
tax and state income tax (where applicable) and not treated as a preference item
for individuals for purposes of the federal alternative minimum tax. The Funds
may also invest in Municipal Securities by purchasing from banks participation
interests in all or part of specific holdings of Municipal Securities. Such
participation may be backed in whole or in part by an irrevocable letter of
credit or guarantee of the selling bank. The selling bank may receive a fee from
a Fund in connection with the arrangement. A Fund will not purchase
participation interests unless it receives an opinion of counsel or a ruling of
the Internal Revenue Service that interest earned by it on Municipal Securities
in which it holds such participation interest is exempt from federal income tax
and state income tax (where applicable) and not treated as a preference item for
individuals for purposes of the federal alternative minimum tax.
25
<PAGE>
DEMAND FEATURES
The Funds (except the Funds of Funds and the Treasury & Agency Fund)
may acquire securities that are subject to puts and standby commitments ("demand
features") to purchase the securities at their principal amount (usually with
accrued interest) within a fixed period (usually seven days) following a demand
by the Fund. The demand feature may be issued by the issuer of the underlying
securities, a dealer in the securities or by another third party, and may not be
transferred separately from the underlying security. The underlying securities
subject to a put may be sold at any time at market rates. The Funds expect that
they will acquire puts only where the puts are available without the payment of
any direct or indirect consideration. However, if advisable or necessary, a
premium may be paid for put features. A premium paid will have the effect of
reducing the yield otherwise payable on the underlying security.
Under a "stand-by commitment," a dealer would agree to purchase, at a
Fund's option, specified municipal securities at a specified price. A Fund will
acquire these commitments solely to facilitate portfolio liquidity and does not
intend to exercise its rights thereunder for trading purposes. Stand-by
commitments may also be referred to as put options. A Fund will generally limit
its investments in stand-by commitments to 25% of its total assets.
The purpose of engaging in transactions involving puts is to maintain
flexibility and liquidity to permit the Fund to meet redemption requests and
remain as fully invested as possible.
SWAPS, CAPS AND FLOORS
Certain of the Funds may enter into swaps, caps, and floors on various
securities (such as U.S. government securities), securities indexes, interest
rates, prepayment rates, foreign currencies or other financial instruments or
indexes, in order to protect the value of the Fund from interest rate
fluctuations and to hedge against fluctuations in the floating rate market in
which the Fund's investments are traded, for both hedging and non-hedging
purposes. While swaps, caps, and floors (sometimes hereinafter collectively
referred to as "swap contracts") are different from futures contracts (and
options on futures contracts) in that swap contracts are individually negotiated
with specific counterparties, the Funds will use swap contracts for purposes
similar to the purposes for which they use options, futures, and options on
futures. Those uses of swap contracts (i.e., risk management and hedging)
present the Funds with risks and opportunities similar to those associated with
options contracts, futures contracts, and options on futures. See "Futures
Contracts" and "Risk Factors in Futures Contracts."
The Funds may enter into these transactions to manage their exposure to
changing interest rates and other market factors. Some transactions may reduce
each Fund's exposure to market fluctuations while others may tend to increase
market exposure.
Swap contracts typically involve an exchange of obligations by two
sophisticated parties. For example, in an interest rate swap, the Fund may
exchange with another party their respective rights to receive interest, such as
an exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of respective rights to make or receive payments in
specified currencies. Mortgage swaps are similar to interest rate swaps in that
they represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages.
Caps and floors are variations on swaps. The purchase of a cap entitles
the purchaser to receive a principal amount from the party selling the cap to
the extent that a specified index exceeds a predetermined interest rate or
amount. The purchase of an interest rate floor entitles the purchaser to receive
payments on a notional principal amount from the party selling the floor to the
extent that a specified index falls below a predetermined interest rate or
amount. Caps and floors are similar in many respects to over-the-counter options
transactions, and may involve investment risks that are similar to those
associated with options transactions and options on futures contracts.
Because swap contracts are individually negotiated, they remain the
obligation of the respective counterparties, and there is a risk that a
counterparty will be unable to meet its obligations under a particular swap
contract. If a counterparty defaults on a swap contract with a Fund, the Fund
may suffer a loss. To address this risk, each Fund will usually enter into
interest rate swaps on a net basis, which means that the two payment streams
(one from the Fund to the counterparty, one to the Fund from the counterparty)
are netted out, with the Fund receiving or paying, as the case may be, only the
net amount of the two payments. Interest rate swaps do not involve the delivery
of securities, other underlying assets, or principal, except for the purposes of
collateralization as discussed below. Accordingly, the risk of loss with respect
to interest rate swaps entered into on a net basis would be limited to the net
amount of the interest payments that the Fund is contractually obligated to
make. If the other party to an interest rate swap defaults, the Fund's risk of
loss consists of the net amount of interest payments that a Fund is
contractually entitled to receive. In addition, the Fund may incur a market
value adjustment on securities held upon the early termination of the swap. To
protect against losses related to counterparty default, the Funds may enter into
swaps that require transfers of collateral for changes in market value. In
contrast, currency swaps and other types of swaps may involve the delivery of
the entire principal value of one designated currency or financial instrument in
26
<PAGE>
exchange for the other designated currency or financial instrument. Therefore,
the entire principal value of such swaps may be subject to the risk that the
other party will default on its contractual delivery obligations.
In addition, because swap contracts are individually negotiated and
ordinarily non-transferable, there also may be circumstances in which it would
be impossible for a Fund to close out its obligations under the swap contract
prior to its maturity. Under such circumstances, the Fund might be able to
negotiate another swap contract with a different counterparty to offset the risk
associated with the first swap contract. Unless the Fund is able to negotiate
such an offsetting swap contract, however, the Fund could be subject to
continued adverse developments, even after Banc One Advisors has determined that
it would be prudent to close out or offset the first swap contract.
The Funds will not enter into any mortgage swap, interest rate swap,
cap or floor transaction unless the unsecured commercial paper, senior debt, or
the claims paying ability of the other party thereto is rated in one of the top
two rating categories by at least one NRSRO, or if unrated, determined by Banc
One Advisors to be of comparable quality.
The use of swaps involves investment techniques and risks different
from and potentially greater than those associated with ordinary Fund securities
transactions. If Banc One Advisors is incorrect in its expectations of market
values, interest rates, or currency exchange rates, the investment performance
of the Funds would be less favorable than it would have been if this investment
technique were not used. In addition, in certain circumstances entry into a swap
contract that substantially eliminates risk of loss and the opportunity for gain
in an "appreciated financial position" will accelerate gain to the Funds.
The Staff of the Securities and Exchange Commission is presently
considering its position with respect to swaps, caps and floors as senior
securities. Pending a determination by the Staff, the Funds will either treat
swaps, caps and floors as being subject to their senior securities restrictions
or will refrain from engaging in swaps, caps and floors. Once the Staff has
expressed a position with respect to swaps, caps and floors, the Funds intend to
engage in swaps, caps and floors, if at all, in a manner consistent with such
position. To the extent the net amount of an interest rate or mortgage swap is
held in a segregated account, consisting of cash or liquid, high grade debt
securities, the Funds and Banc One Advisors believe that swaps do not constitute
senior securities under the Investment Company Act of 1940 and, accordingly,
will not treat them as being subject to each Fund's borrowing restrictions. The
net amount of the excess, if any, of each Fund's obligations over its
entitlements with respect to each interest rate swap will be accrued on a daily
basis and an amount of cash or liquid securities having an aggregate net asset
value at least equal to the accrued excess will be maintained in a segregated
account by the Funds' Custodian. Each of the Bond Funds generally will limit
their investments in swaps, caps and floors to 25% of its total assets.
STRUCTURED INSTRUMENTS
Structured instruments are debt securities issued by agencies of the
U.S. government (such as Ginnie Mae, Fannie Mae, and Freddie Mac), banks,
corporations, and other business entities whose interest and/or principal
payments are indexed to certain specific foreign currency exchange rates,
interest rates, or one or more other reference indices. Structured instruments
frequently are assembled in the form of medium-term notes, but a variety of
forms are available and may be used in particular circumstances. Structured
instruments are commonly considered to be derivatives.
The terms of such structured instruments provide that their principal
and/or interest payments are adjusted upwards or downwards to reflect changes in
the reference index while the structured instruments are outstanding. In
addition, the reference index may be used in determining when the principal is
redeemed. As a result, the interest and/or principal payments that may be made
on a structured product may vary widely, depending on a variety of factors,
including the volatility of the reference index and the effect of changes in the
reference index on principal and/or interest payment.
While structured instruments may offer the potential for a favorable
rate of return from time to time, they also entail certain risks. Structured
instruments may be less liquid than other debt securities, and the price of
structured instruments may be more volatile. If the value of the reference index
changes in a manner other than that expected by Banc One Advisors, principal
and/or interest payments on the structured instrument may be substantially less
than expected. The Funds will invest only in structured securities that are
consistent with each Fund's investment objective, policies and restrictions and
Banc One Advisors' outlook on market conditions. In some cases, depending on the
terms of the reference index, a structured instrument may provide that the
principal and/or interest payments may be adjusted below zero; however, the
Funds will not invest in structured instruments if the terms of the structured
instrument provide that the Funds may be obligated to pay more than their
initial investment in the structured instrument, or to repay any interest or
principal that has already been collected or paid back. Structured instruments
that are registered under the federal securities laws may be treated as liquid.
In addition, many structured instruments may not be registered under the federal
securities laws. In that event, a Fund's ability to resell such a structured
instrument may be more limited than its ability to resell other Fund securities.
The Funds will treat such instruments as illiquid, and will limit their
investments in such instruments to no more than 15% of each Fund's net assets,
when combined with all other illiquid investments of each Fund. In addition,
although structured instruments may be sold
27
<PAGE>
in the form of a corporate debt obligation, they may not have some of the
protection against counterparty default that may be available with respect to
publicly traded debt securities (i.e., the existence of a trust indenture). In
that respect, the risks of default associated with structured instruments may be
similar to those associated with swap contracts. See "Swaps, Caps and Floors."
NEW FINANCIAL PRODUCTS
New options and futures contracts and other financial products, and
various combinations thereof, continue to be developed and certain of the Funds
may invest in any such options, contracts and products as may be developed to
the extent consistent with each Fund's investment objective, policies and
restrictions and the regulatory requirements applicable to investment companies.
These various products may be used to adjust the risk and return
characteristics of each Fund's investments. These various products may increase
or decrease exposure to security prices, interest rates, commodity prices, or
other factors that affect security values, regardless of the issuer's credit
risk. If market conditions do not perform consistent with expectations, the
performance of each Fund would be less favorable than it would have been if
these products were not used. In addition, losses may occur if counterparties
involved in transactions do not perform as promised. These products may expose
the Fund to potentially greater return as well as potentially greater risk of
loss than more traditional fixed income investments.
RESTRICTED SECURITIES
Some of the Funds may invest in commercial paper issued in reliance on
the exemption from registration afforded by Section 4(2) of the Securities Act
of 1933 and other restricted securities. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally sold
to institutional investors, such as the Funds, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, thus
providing liquidity. The Funds believe that Section 4(2) commercial paper and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Funds intend,
therefore, to treat restricted securities that meet the liquidity criteria
established by the Board of Trustees, including Section 4(2) commercial paper
and Rule 144A Securities, as determined by Banc One Advisors, as liquid and not
subject to the investment limitation applicable to illiquid securities.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
("SEC") Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a nonexclusive safe-harbor for
certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Funds believe that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees have directed Banc One Advisors to consider the following criteria in
determining the liquidity of certain restricted securities:
- the frequency of trades and quotes for the security;
- the number of dealers willing to purchase or sell the security
and the number of other potential buyers;
- dealer undertakings to make a market in the security; and
- the nature of the security and the nature of the marketplace
trades.
Certain Section 4(2) commercial paper programs cannot rely on Rule 144a
because, among other things, they were established before the adoption of the
rule. However, the Trustees may determine for purposes of the Trust's liquidity
requirements that an issue of 4(2) commercial paper is liquid if the following
conditions, which are set forth in a 1994 SEC no-action letter, are met:
- The 4(2) paper must not be traded flat or in default as to
principal or interest;
- The 4(2) paper must be rated in one of the two highest rating
categories by a least two nationally recognized statistical
rating organizations ("NRSROs"), or if only one NRSRO rates
the security, by that NRSRO, or if unrated, is determined by
Banc One Advisors to be of equivalent quality; and
28
<PAGE>
- Banc One Advisors must consider the trading market for the
specific security, taking into account all relevant factors,
including but not limited, to whether the paper is the subject
of a commercial paper program that is administered by an
issuing and paying agent bank and for which there exists a
dealer willing to make a market in that paper, or is
administered by a direct issuer pursuant to a direct placement
program; and
- Banc One Advisors shall monitor the liquidity of the 4(2)
commercial paper purchased and shall report to the Board of
Trustees promptly if any such securities are no longer
determined to be liquid if such determination causes a fund to
hold more than 15% (10% for Money Market Funds) of its net
assets in illiquid securities in order for the Board of
Trustees to consider what action, if any, should be taken on
behalf of The One Group, unless Banc One Advisors is able to
dispose of illiquid assets in an orderly manner in an amount
that reduces the Fund's holdings of illiquid assets to less
than 15% (10% for Money Market Funds) of its net assets; and
- Banc One Advisors shall report to the Board of Trustees on the
appropriateness of the purchase and retention of liquid
restricted securities under these Guidelines no less
frequently that quarterly.
HIGH YIELD SECURITIES
The Income Fund and the Income Bond Fund may invest in high yield
securities. High yield bonds are securities that are rated below investment
grade by the primary rating agencies (BB or lower by S&P and BA or lower by
Moody's). Other terms used to describe such securities include "lower rated
bonds", "non-investment grade bonds" and "junk bonds". Generally, lower rated
debt securities provide a higher yield than higher rated debt securities of
similar maturity, but are subject to a greater degree of risk with respect to
the ability of the issuer to meet its principal and interest obligations.
Issuers of high yield securities may not be as strong financially as those
issuing higher rated securities. These securities are regarded as predominately
speculative. The market value of high yield securities may fluctuate more than
the market value of higher rated securities, since high yield securities tend to
reflect short-term corporate and market developments to a greater extent than
higher rated securities, which fluctuate primarily in response to the general
level of interest rates, assuming that there has been no change in the
fundamental quality of such securities. The market prices of fixed income
securities generally fall when interest rates rise. Conversely, the market
prices of fixed-income securities generally rise when interest rates fall.
Additional risks of high yield securities include limited liquidity and
secondary market support. As a result, the prices of high yield securities may
decline rapidly in the event that a significant number of holders decide to
sell. Changes in expectations regarding an individual issuer, an industry or
high yield securities generally could reduce market liquidity for such
securities and make their sale by the Funds more difficult, at least in the
absence of price concessions. Reduced liquidity also could adversely affect the
Funds' ability to accurately value high yield securities. Issuers of high yield
securities also are more vulnerable to real or perceived economic changes (for
instance, an economic downturn or prolonged period of rising interest rates),
political changes or adverse developments specific to the issuer. Adverse
economic, political or other developments may impair the issuer's ability to
service principal and interest obligations, to meet projected business goals and
to obtain additional financing, particularly if the issuer is highly leveraged.
In the event of a default, the Funds would experience a reduction of their
income and could expect a decline in the market value of the defaulted
securities.
Further, proposed or yet to be proposed new laws may have a possible
negative impact on the market for high yield bonds. As an example, legislation
required federally-insured savings and loan associations to divest their
investments in high yield bonds. New legislation, if enacted, could have a
material negative effect on a Fund's net asset value and investment practices.
Finally, the market prices of high-yield securities structured as zero
coupon or pay-in-kind securities are generally affected to a greater extent by
interest rate changes and tend to be more volatile than securities which pay
interest periodically. In addition, zero coupon, pay-in-kind and delayed
interest bonds often do not pay interest until maturity. Accordingly, such bonds
may involve greater credit risks than bonds paying interest currently. However,
a Fund must recognize a computed amount of interest income and pay dividends to
shareholders even though it has received no cash. In some instances, the Funds
may have to sell securities to have sufficient cash to pay the dividends.
The high yield securities in which the Funds may invest include the
following:
-- Straight fixed-income debt securities. These include bonds and other
debt obligations which bear a fixed or variable rate of interest
payable at regular intervals and have a fixed or resettable maturity
date. The particular terms of such securities vary and may include
features such as call provisions and sinking funds.
-- Zero-coupon debt securities. These bear no interest obligation but
are issued at a discount from their value at maturity. When held to
maturity, their entire return equals the difference between their issue
price and their maturity value.
29
<PAGE>
-- Zero-fixed-coupon debt securities. These are zero-coupon debt
securities which convert on a specified date to interest-bearing debt
securities.
-- Pay-in-kind bonds. These are bonds which allow the issuer, at its
option, to make current interest payments on the bonds either in cash
or in additional bonds.
U.S. TREASURY OBLIGATIONS
The Funds may invest in bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal Securities ("STRIPS") and
Coupon Under Book Entry Safekeeping ("CUBES").
TREASURY RECEIPTS
Certain of the Funds may purchase interests in separately traded
interest and principal component parts of U.S. Treasury obligations that are
issued by banks or brokerage firms and are created by depositing U.S. Treasury
notes and U.S. Treasury bonds into a special account at a custodian bank.
Receipts include Treasury Receipts ("TRS"), Treasury Investment Growth Receipts
("TIGRS"), and Certificates of Accrual on Treasury Securities ("CATS").
COMMON STOCK
Common stock represents a share of ownership in a company and usually
carries voting rights and earns dividends. Unlike preferred stock, dividends on
common stock are not fixed but are declared at the discretion of the issuer's
board of directors.
PREFERRED STOCK
Preferred stock is a class of stock that generally pays dividends at a
specified rate and has preference over common stock in the payment of dividends
and liquidation. Preferred stock generally does not carry voting rights. As with
all equity securities, the price of preferred stock fluctuates based on changes
in a company's financial condition and on overall market and economic
conditions.
INVESTMENT COMPANY SECURITIES
Some of the Funds may invest up to 5% of their total assets in the
securities of any one investment company, but may not own more than 3% of the
securities of any one investment company or invest more than 10% of their total
assets in the securities of other investment companies. These limits do not
apply to the Fund of Funds. Other investment company securities may include
securities of a money market fund of the Trust, and securities of other
investment companies for which Banc One Advisors serves as investment advisor or
administrator. Because other investment companies employ an investment advisor,
such investments by the Funds may cause Shareholders to bear duplicative fees.
Banc One Advisors will waive its fee attributable to the assets of the investing
fund invested in a money market fund of the Trust and in other funds advised by
Banc One Advisors; and, to the extent required by the laws of any state in which
shares of the Trust are sold, Banc One Advisors will waive its fees attributable
to the assets of any Fund invested in any investment company.
CONVERTIBLE SECURITIES
Convertible securities have characteristics similar to both fixed
income and equity securities. Convertible securities may be issued as bonds or
preferred stock. Because of the conversion feature, the market value of
convertible securities tends to move together with the market value of the
underlying stock. As a result, the Funds' selection of convertible securities is
based, to a great extent, on the potential for capital appreciation that may
exist in the underlying stock. The value of convertible securities is also
affected by prevailing interest rates, the credit quality of the issuer, and any
call provisions.
WARRANTS
Warrants are securities, typically issued with preferred stock or
bonds, that give the holder the right to buy a proportionate amount of common
stock at a specified price, usually at a price that is higher than the market
price at the time of issuance of the warrant. The right may last for a period of
years or indefinitely.
30
<PAGE>
ASSET-BACKED SECURITIES
Asset-backed securities consist of securities secured by company
receivables, home equity loans, truck and auto loans, leases, credit card
receivables and other securities backed by other types of receivables or other
assets. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying debt may be
refinanced or paid off prior to their maturities during periods of declining
interest rates. In that case, a portfolio manager may have to reinvest the
proceeds from the securities at a lower rate. Potential market gains on a
security subject to prepayment risk may be more limited than potential market
gains on a comparable security that is not subject to prepayment risk. Under
certain prepayment rate scenarios, the Fund may fail to recoup any premium paid
on asset-backed securities.
SHORT-TERM FUNDING AGREEMENT
Some Funds may, in order to enhance yield, make limited investments in
short-term funding agreements issued by banks and highly rated U.S. insurance
companies. Short-term funding agreements issued by insurance companies are
sometimes referred to as Guaranteed Investment Contracts ("GICs"), while those
issued by banks are referred to as Bank Investment Contracts ("BICs"). Pursuant
to such agreements, the Funds make cash contributions to a deposit account at a
bank or insurance company. The bank or insurance company then credits to the
Funds on a monthly basis guaranteed interest at either a fixed, variable or
floating rate. These contracts are general obligations of the issuing bank or
insurance company (although they may be the obligations of an insurance company
separate account) and are paid from the general assets of the issuing entity.
The funds will purchase short-term funding agreements only from banks and
insurance companies which, at the time of purchase, are rated in one of the
three highest rating categories and have assets of $1 billion or more.
Generally, there is no active secondary market in short-term funding agreements.
Therefore, short-term funding agreements may be considered by the Funds to be
illiquid investments. To the extent that a short-term funding agreement is
determined to be illiquid, such agreements will be acquired by the Funds only
if, at the time of purchase, no more than 15% of the Fund's net assets will be
invested in short-term funding agreements and other illiquid securities.
OHIO MUNICIPAL SECURITIES
As used in the Prospectuses and this Statement of Additional
Information, the term "Ohio Municipal Securities" refers to debt securities
which are issued by or on behalf of Ohio or its respective authorities,
agencies, instrumentalities and political subdivisions which produce interest
which, in the opinion of counsel for the issuer are exempt from both federal
income tax, and Ohio personal income tax.
Risk Factors Regarding Investments in Ohio Municipal Securities
The economy of Ohio, while becoming increasingly diversified and
increasingly reliant on the service sector, continues to rely in significant
part on durable goods manufacturing, which is largely concentrated in motor
vehicles and equipment, steel, rubber products and household appliances. As a
result, general economic activity in Ohio, as in many other industrial states,
tends to be more cyclical than in some other states and in the nation as a
whole. Agriculture also is an important segment of the Ohio economy, and the
state has instituted several programs to provide financial assistance to
farmers. Although revenue obligations of the state or its political subdivisions
may be payable from a specific source or project, and general obligation debt
may be payable from a specific tax, there can be no assurance that future
economic difficulties and the resulting impact on state and local government
finances will not adversely affect the market value of the Ohio Municipal
Securities in the Funds of the Trust or the ability of the respective obligators
to make timely payment of interest and principal on such obligations.
Since the Ohio Municipal Bond Fund and Ohio Municipal Money Market Fund
invest primarily in Ohio Municipal Securities, the value of each Fund's Shares
may be especially affected by factors pertaining to the economy of Ohio and
other factors specifically affecting the ability of issuers of Ohio Municipal
Securities to meet their obligations. As a result, the value of the Shares of
the Ohio Municipal Bond Fund and the Ohio Municipal Money Market Fund may
fluctuate more widely than the value of Shares of a portfolio investing in
securities relating to a number of different states. The ability of Ohio state,
county, or local governments to meet their obligations will depend primarily on
the availability of tax and other revenues to those governments and on their
fiscal conditions generally. The amounts of tax and other revenues available to
issuers of Ohio Municipal Securities may be affected from time to time by
economic, political and demographic conditions within the state. In addition,
constitutional or statutory restrictions may limit a government's power to raise
revenues or increase taxes. The availability of federal, state, and local aid to
issuers of Ohio Municipal Securities may also affect their ability to meet their
obligations. Payments of principal and interest on limited obligation securities
will depend on the economic condition of the facility or specific revenue source
from which revenues the payments will be made, which in turn could be affected
by economic, political, and demographic conditions in the state. Any reduction
in the actual or perceived ability to meet obligations on the part of either an
issuer of an Ohio Municipal Security or a provider of credit enhancement for
such Ohio
31
<PAGE>
Municipal Security (including a reduction in the rating of its outstanding
securities) would likely affect adversely the market value and marketability of
that Ohio Municipal Security and could adversely affect the values of other Ohio
Municipal Securities as well.
WEST VIRGINIA MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "West Virginia Municipal Securities" refers to debt securities which
are issued by or on behalf of West Virginia or its respective authorities,
agencies, instrumentalities and political subdivisions and which produce
interest which, in the opinion of counsel for the issuer, is exempt from both
federal income tax and is generally exempt from West Virginia personal income
tax.
Risk Factors Regarding Investments in West Virginia Municipal
Securities. Because of concentration of the West Virginia Fund's investments in
West Virginia municipal securities, the Fund is more subject to the risks of
West Virginia's economy than if the Fund was invested in municipal securities of
various states.
Coal mining and related industries remain an important part of the West
Virginia economy, but increasing governmental regulation affecting production
and usage of coal and reduction in demand for certain types of coal have had an
adverse impact on the industry, state and local governments have made and
continue to make concentrated efforts to encourage diversification of the
state's economy with some success, such as the growth in tourism and the
location of a new Toyota plant in the state.
While there has been progress in creating new jobs, West Virginia's
unemployment continues to exceed the national average. For May, 1997, West
Virginia's seasonally adjusted unemployment rate was 6.0% as compared to the
national average of 4.8%.
Because of increased taxes since 1989, the State's current financial
position is relatively stable, and in recent years, there have been budget
surpluses at the end of the State's fiscal year. In addition, the completion of
the statewide reappraisal of property subject to ad valorem taxation in 1994 has
increased funding available to local governments and school boards. However,
with little or no population growth, unemployment remaining above the national
average in most of the state, the continuing decline in school enrollment and an
aging population, among other factors, the State, local governments and school
boards continue to struggle to produce sufficient revenues to fund operations
and support public education.
KENTUCKY MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Kentucky Municipal Securities" refers to debt securities which are
issued by or on behalf of Kentucky or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from both federal income tax
and Kentucky personal income tax.
Risk Factors Regarding Investments in Kentucky Municipal Securities. As
of May 31, 1997, Kentucky had an unemployment rate of 5.9%, which equaled the
national average. For calendar year 1996, Kentucky's per capita income ranked
42nd in the nation and was 81% of the national average. The most current audited
financial statements for Kentucky indicate a surplus of funds in the General
Fund of $503,200,000 as of June 30, 1996, which was $482,500,000 above the
budgeted balance.
Unlike the municipal securities of most states, nearly all Kentucky
Municipal Securities are not general obligations of the issuer; rather, payment
depends on revenues generated by the property financed by the securities.
TEXAS MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Texas Municipal Securities" refers to debt securities which are issued
by or on behalf of Texas or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from federal income tax.
Risk Factors Regarding Investments in Texas Municipal Securities.
Because the Fund invests primarily in obligations issued by Texas entities, the
Fund's performance is partially dependent upon economic conditions within the
State of Texas generally and upon the economic condition of issuing governments
and their instrumentalities in particular. In the late 1980's, weakness in the
oil and gas related and agricultural sectors of the Texas economy adversely
affected consumer spending, financial institutions, utility demand, and real
estate values within the state. Consequently, the state and many of its local
governments had to increase sales, utilities, and ad valorem tax rates in order
to maintain revenue yields. In the past two
32
<PAGE>
years, however, in contrast to the national economy, business activity in Texas
has strengthened, with employment growth occurring in most sectors. In addition,
Texas' major financial institutions have been recapitalized and bank failures
have generally ceased.
ARIZONA MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Arizona Municipal Securities" refers to debt securities which are
issued by or on behalf of Arizona or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from both federal income tax
and Arizona personal income tax .
Risk Factors Regarding Investments in Arizona Municipal Securities.
Arizona's outlook remains uncertain as long as the state does not adopt a plan
regarding long term matching of revenues and expenditures, especially for
education, health care and corrections. Arizona's growth continues to out pace
national averages, for example: (i) the state's 35% population growth during the
1980's was the third fastest rate in the nation, next to Alaska and Nevada; (ii)
Arizona's current population growth is over 2% per year, about twice the
national average; and (iii) the state's unemployment rate for the month of June,
1997 was 4.3%.
Nonetheless, growth has been expensive for Arizona. During the
high-growth 1980's, combined per capita state and local expenditures climbed to
about 105% of the U.S. average from about 95%, according to data from the
Advisory Commission on Intergovernmental Relations. Between fiscal 1985 and
1990, the state managed five successive years of shortfalls with internal
borrowing, tax accelerations, one-time adjustments, and budget cuts. Since 1991,
the state's budget has been balanced. Although the Arizona State debt limit is
$350,000, and, by its Constitution, Arizona is a "pay as you go" State, the
State finances many capital improvements through revenue bonds, special tax
bonds or lease purchase arrangements, which are not treated as "debts", but
which greatly reduce the pressure on the State's annual budget. For example, the
Arizona Department of Transportation issues bonds supported by excise taxes on
fuel for propulsion of motor vehicles, the State's universities and community
colleges are funded in part through revenue bonds payable solely from tuitions
and student fees, and the State itself, from time to time, finances facilities
through annually renewable lease-purchase agreements. The various political
subdivisions of the state have differing debt limits, and their debts are not
aggregated into the State's debt limit.
In addition, local conditions may materially effect any given issue or
issuer. Such conditions include, without limitation, (1) acts of God (such as
flooding or droughts), (2) mismanagement or bankruptcy of large tax payers or
users of an issuer's services or conduit borrowers who may be the true obligors
of a tax exempt issue, or who may bear a disproportionate share of the taxes,
special assessments or revenues supporting securities issued by an issuer, (3)
environmental enforcement actions instituted by the State or federal government,
(4) mismanagement of the issuer's affairs, (5) damage claims which exceed
insurance coverage or self-insurance reserves (neither the State of Arizona nor
its political subdivisions enjoy sovereign immunity from damage claims), or (6)
issuer bankruptcy.
In addition, Arizona's continued population growth depends to some
extent on its ability to manage its water resources, as the State is
predominantly arid. Specifically, the great bulk of Arizona's population, and
the area wherein most future growth is expected to occur, is located in three
central Arizona counties, i.e. Maricopa (including the greater Phoenix
metropolitan area), Pima (including the Tucson metropolitan area), and Pinal
Counties.
To a great extent continued growth in these counties will depend on
continued importation of water from the Colorado River. This is accomplished
through the Central Arizona Project, a federal water reclamation project, a
major portion (2 to 2.5 billion dollars) of which must be repaid through water
sales to, and taxes levied on, the water users in such counties. The actual
amount to be repaid is now the subject of litigation, which can be expected to
continue for several years. Construction of the Central Arizona Project was
declared to be substantially complete in October of 1993.
Arizona's share of Colorado River water, although adjudicated by the
U.S. Supreme Court, is, to some extent, sought by the States of California and
Nevada who have expressed interest in gaining access to that portion of
Arizona's share not being put to beneficial use within the State. Arizona demand
for Central Arizona Project water is currently in the range of 35 to 40% of
Project capacity. The long range success of either California or Nevada's
position cannot be determined at this time.
There is litigation pending in Arizona which could have material
effects on the value of Arizona school district bonds. Plaintiffs allege a
failure on behalf of the State to ensure that school facilities in districts
with lower assessed valuations are properly capitalized, in line with uniformly
applied objective standards. The Arizona Supreme Court ruled that Arizona's
statutory financing scheme for public education is not in compliance with the
Arizona Constitution.
33
<PAGE>
In 1996, the Arizona Legislature adopted legislation appropriating
additional state funding for school districts. It is unclear whether, when or in
what form the Arizona Legislature may further respond to the Court's direction
in Roosevelt to enact appropriate school budget and finance laws, nor can any
assurance be given that the Supreme Court will approve any such legislative
response or that the Supreme Court will not take further action in this matter,
either before or after any legislative response. The effect of any such
legislative or judicial action cannot be determined at this time, but such
action may have future material effects on the financial operations of Arizona
School Districts.
In the Creighton Elementary School District case, taxpayers within
Creighton Elementary School District No. 14 of Maricopa County, Arizona (the
"Creighton District"), brought suit in the Superior Court of Maricopa County
against the Creighton District on the basis that the outstanding principal
amount of bonds previously issued by the Creighton District, together with
premium received in connection with the issuance of such bonds, should be
treated as debt for constitutional and statutory debt limit purposes. The
plaintiffs sought to enjoin the issuance of additional bonds, arguing that
accumulated initial issue premium should be treated as debt for constitutional
debt limit purposes. This premium, associated with the issuance of prior
Creighton District Bonds, if counted as debt, would, plaintiffs contended, cause
the bonds sought to be issued to exceed the Creighton District's debt limit. On
April 18, 1996, the Court entered a judgment in favor of the taxpayers,
enjoining the issuance of additional Creighton District Bonds. In a subsequent
minute entry, the court stated that the premium to be treated as debt is
determined on the amount the underwriter paid to the Creighton District for the
bonds in question and not on the price for which the underwriter resold such
bonds. In addition, the court has also subsequently stated that the premium
treated as debt attributable to each maturity is retired upon the payment of the
principal amount of the applicable maturity. It is not clear if, pursuant to the
judgment against the Creighton District, all or part of any premium received by
the Creighton District is subject to constitutional and statutory requirements
other than debt limits, such as the requirement for voter authorization. The
judgment was not appealed by the Creighton District. Many school districts in
Arizona have outstanding obligations (i.e. obligations, wherein large initial
issue premiums were received) similar to that of the Creighton District.
Notwithstanding such litigation, issuer's counsel, representing school
districts has or will issue an unqualified opinion with respect to the validity,
enforceability and tax-exempt status of School District Bonds before such Bonds
are acquired by the fund. The standard of certainty applicable to such opinion
is that it would be unreasonable for a court to hold to the contrary with
respect to matters addressed therein.
The Arizona Legislature has passed legislation with respect to the
treatment of premium and debt. Under this legislation, the outstanding
indebtedness of a jurisdiction is equal to the total principal amount of all
bonds outstanding at the time of calculation. Additionally, premium is not
counted as debt, but the amount of premium permitted for bonds issued after the
passage of the legislation is limited to the greater of 2% of the par value of
the bond issue or $100,000. This legislation further validated all then
outstanding general obligation and general obligation refunding Bonds which
might have been subject to challenge after the Creighton ruling.
It is not known whether the Act will be challenged in court or whether,
if challenged, all or any portion of the act would be upheld.
LOUISIANA MUNICIPAL SECURITIES
As used in the Prospectus and this Statement of Additional Information,
the term "Louisiana Municipal Securities" refers to debt securities which are
issued by or on behalf of Louisiana or its respective authorities, agencies,
instrumentalities and political subdivisions and which produce interest which,
in the opinion of counsel for the issuer, is exempt from both federal income tax
and Louisiana personal income tax.
Risk Factors Regarding Investments in Louisiana Municipal Securities.
Louisiana's general obligation bonds are currently rated A3 by Moody's and A
minus by S&P. Louisiana's ratings reflect an ongoing recovery process from the
severe financial problems which developed after oil prices declined in the
mid-to-late 1980's. Also, both rating agencies have commended the State for
enacting constitutional reforms in the Fall of 1993 that curb borrowing and
require that non-recurring revenues be applied to debt reduction. However,
Louisiana is still somewhat weak in terms of its credit fundamentals. While
ratings of individual cities, parishes, agencies and special districts vary,
most Louisiana issuers have been affected to some degree by Louisiana's economy.
Through the oil boom of the late 1970s and early 1980s, Louisiana's
labor force and employment grew steadily, as did its financial position.
However, when the oil industry weakened, economic growth slowed and operating
deficits occurred, Louisiana's undesignated General Fund deficit reached $512
million in fiscal 1988 (ended June 30) and the fund balance was a negative $377
million.
34
<PAGE>
Louisiana implemented a plan to eliminate its deficits and $979 million
of revenue bonds were sold in 1988, secured by (i) the revenues from a 1%
statewide sales and use tax, and (ii) all funds, accounting and investment
earnings with respect to said revenue bonds. All of the bonds issued have now
been retired.
During the period from fiscal year 1991-92 through fiscal year 1995-96,
the state experienced operating budget surpluses in four of the five fiscal
years. The table below sets forth in summary fashion the condition of the
State's General Fund from fiscal years 1991-92 through 1994-95.
<TABLE>
<CAPTION>
1995-96 1994-95(2) 1993-94(1) 1992-93 1991-92(2)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total Revenue $ 11,186,213 $ 10,515,148 $ 10,674,052 $ 10,655,246 $ 8,743,623
Total Expenditures 11,058,840 10,721,280 10,570,658 10,344,339 9,249,014
Net Other Financing Sources 34,173 24,607 25,698 8,501 18,960
Excess (Deficiency) of Revenues and
Other Sources Over Expenditures
and Other Uses 161,546 (181,525) 129,102 319,408 (485,431)
Beginning Fund Balance 430,316 594,920 457,909 50,013 535,906
Fund Balance Adjustments (996) 13,764 7,909 88,488 538
Ending Fund Balance 587,709 430,316 594,920 457,909 50,013
Undesignated Fund Balance 318,039 145,689 212,941 101,138 (83,342)
</TABLE>
Note: For purposes of this comparison, transfers have been reclassified as
revenue/expenditure
(1) Approximately $106 million in beginning undesignated fund balance was
utilized to defease future debt service attributable to fiscal year
1995-96 as described below.
(2) The $146 million in ending underestimated fund balance was utilized to
defease future debt service attributable to fiscal year 1996-97.
Upon the actual completion of the fiscal year 1991-1992, it was learned
that the State's General Fund actually ended fiscal year 1991-92 with an
undesignated fund balance deficit of $83 million. This shortfall was eliminated
within the 1992-93 budgetary fiscal cycle by utilizing a set aside against the
total balance available for appropriations, resulting from the official
projections of the Revenue Estimating Conference, prior to any budget adjustment
approval submitted to the Joint Legislative Committee on the Budget.
The State ended the fiscal year 1992-93 with a positive undesignated
fund balance in its General Fund of $101 million. During 1994, $30.6 million of
the surplus funds were utilized to cover known shortfalls in current year
program operations. As noted in the table above, the State ended the fiscal year
1993-94 with an operating surplus of $129 million dollars. This amount together
with the prior year fund balance of $101 million and reserve changes left an all
unreserved-undesignated balance in the General Fund of $212.9 million.
The State began fiscal year 1994-95 with a General Fund balance of $594
million. At the time the projections of the Revenue Estimating Conference for
fiscal year 1993-94 were published, the undesignated fund balance was reflected
at $212 million. Subsequent to publication, it was determinate that $106 million
of the $212 million was, in fact, designated for other mandated purposes and was
not available for general operating purposes. The remaining $106 million was
subsequently utilized prior to June 30, 1995, to structure a current portfolio
that was utilized to defease a portion of the State's fiscal year 1994-95
general obligation debt service requirement, which freed an equivalent amount of
projected general fund revenues for fiscal year 1994-95 to be utilized to cover
normal operating costs.
The State's General Fund had an operating loss (on a generally accepted
accounting principles basis) of $181 million in fiscal year 1994-95 (on a
budgetary basis, this balance would be reduced by those fund balances utilized
to structure the aforementioned portfolio). As a result of operations and
inventory valuation changes, the State General Fund balance, as of June 30,
1996, declined to $427 million, of which $145 million was undesignated or
reserved for a future purpose.
The current general fund expenditure authorization necessary to
continue all existing programs through fiscal year 1996-97 is approximately
$5,271.9 million, inclusive of currently known supplemental appropriation needs.
The revised estimate of revenues for fiscal year 1996-97 is $5,487.5 million. In
addition, general fund revenues of $12.6 million were carried forward from
fiscal year 1995-96, making a total of $5,500.1 million available for general
fund expenditures in fiscal year 1996-97. The $228.2 million balance between
available revenues and projected expenditures is available for any lawful
purpose. The State's cash flow position for fiscal year 1996-97 has improved in
comparison to the State's cash flow position
35
<PAGE>
for fiscal year 1995-96. Month end balances for fiscal year 1996-97 show less
pronounced fluctuations than in the previous year.
The State's budget projections may also be impacted by certain matters
relating to the Medicaid program. On April 26, 1996, Congress adopted a budget
bill which included a two year funding base specifically for the State Medicaid
program, covering October 1, 1995 though June 30, 1997. That budget bill capped
federal Medicaid funds allocated to the State at a certain amount until the
State could increase its matching contribution to federally required levels.
The State implemented a series of Medicaid program reductions in Fiscal
Year 1996-97 to ensure the Medicaid program would not exceed the total of the
State-required match and federal share. Proposed changes in the design of the
Medicaid program at the federal level may further cause the State to alter its
Medicaid program in order to continue to provide necessary medical services to
the indigent population of the State in future years.
Total Medicaid spending has been reduced by 30% from its Fiscal Year
1993-94 level of $4.6 billion. The appropriation for the Medicaid program
(including administration) at the beginning of Fiscal Year 1996-97 was $3.23
billion. This appropriation was increased to $3.31 billion in order to provide
for a State-funded medically needy program and for certain non-recurring costs.
Although the Congressional Fiscal Year 1995-96 budget bill indicated an
intent to allow the State a third year (Fiscal Year 1997-98) to reach the
federally required matching levels, the chances of that reauthorization are
uncertain, and therefore, the State's Fiscal year 1997-98 budget does not
reflect continuation of that funding. The Medicaid funding picture for Fiscal
Year 1997-98 was clarified with the Administration's recent proposal that the
Medicaid program be supported at $3.19 billion in total funding with $966
million in State matching funds. This level of State match is nearly $200
million higher than that called for under the special financing arrangement
passed by Congress in 1996 because Congressional reauthorization of this
arrangement for Fiscal Year 1997-98 is given little chance of passage. The total
Medicaid funding level of $3.19 billion is approximately $100 million lower than
the Fiscal Year 1996-97 budget. DHH will propose a plan to the Legislature to
align program spending with available revenues.
In 1996, the Legislature passed a "local option" bill which permitted
voters in all parishes to decide during the 1996 November general election
whether to allow specified forms of gaming to continue. Thirty-three parishes
voted against continuation of video draw poke device operations and 31 parishes
voted to allow video draw poker device operations to continue. In parishes where
video draw poker was voted out, no new video draw poker licenses may be issued,
and those already operating may renew their one-year video draw poker licenses
for only two more times. Initial estimates for the loss of revenues associated
with almost half the State's parishes voting against continuation of the video
draw poker devices is estimated at $70 million for fiscal year 1997-2000.
Economically, Louisiana will continue to be affected by world energy
markets. Approximately 15% of the nation's crude oil and approximately 28% of
its natural gas are produced in Louisiana. In the past the State has estimated
that up to 25% of its economy is directly or indirectly related to energy. This
is despite the fact that only 5.5% of employment is in oil and gas extraction,
chemicals and allied products and petroleum refining. Oil and oil related jobs
also tend to be at relatively high wages, magnifying their economic effect.
Similarly, although severance taxes and royalties accounted for almost 4.3% of
operating revenues for fiscal year 1993-1994, compared with almost 25% ten years
ago, energy related activity affects individual and corporate taxes, which
together with sales taxes account for 21.3% of general revenues. Unemployment
declined in Louisiana from 12% in 1987 to 6.2% in 1990. This was due in part to
increased employment but also to out-migration of population and a decline in
labor force. Louisiana's jobless rate has since risen to 6.9% as of December 31,
1995. The comparable national unemployment rate was 5.6%. In addition to oil and
gas, major contributors to Louisiana's economy include chemical production,
shipping, agriculture and tourism.
Louisiana's debt burden is well above that of other states, while
wealth and income indicators are below the national average. In 1995,
Louisiana's per capital personal income was $18,981 as compared with the
national average of $23,208. According to Moody's, Louisiana's State-level tax
supported debt is the sixth highest as a percentage of personal income and
eighth highest on a per-capita basis.
Municipal obligations are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Code, and laws, if any, which may be enacted by
Congress or State legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations or upon municipalities to levy taxes. There is also the possibility
that as a result of litigation or other conditions the power or ability of any
one or more issuers to pay when due principal or interest on its or their
municipal obligations may be materially affected.
36
<PAGE>
INVESTMENT RESTRICTIONS
The following investment restrictions are FUNDAMENTAL and may be
changed with respect to a particular Fund only by a vote of a majority of the
outstanding Shares of that Fund. See "ADDITIONAL INFORMATION-- Miscellaneous" in
this Statement of Additional Information.
Each of the Equity Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer.
This restriction applies to 75% of a Fund's assets. With respect to The One
Group Equity Index Fund, no more than 10% of the Funds assets may be invested in
securities issued or guaranteed by the United States, its agencies or
instrumentalities. For purposes of these limitations, a security is considered
to be issued by the government entity whose assets and revenues guarantee or
back the security. With respect to private activity bonds or industrial
development bonds backed only by the assets and revenues of a non-governmental
user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in the obligations issued or
guaranteed by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities. For purposes of this limitation
(i) utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in the Prospectus and in this Statement of Additional Information.
Each of the Bond Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer.
This restriction applies to 75% of a Fund's assets. For purposes of these
limitations, a security is considered to be issued by the government entity
whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a non-governmental user, such user would be considered the
issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in the obligations issued or
guaranteed by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities. For purposes of this limitation
(i) utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in the Prospectus and in this Statement of Additional Information.
Each of the Fund of Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, securities
of regulated investment companies, and, if consistent with a Fund's investment
objective and policies, repurchase agreements involving such securities) if as a
result more than 5% of the total assets of a Fund would be invested in the
securities of such issuer or a Fund would own more than 10% of the outstanding
voting securities of such issuer. This restriction applies to 75% of a Fund's
assets. For purposes of these limitations, a security is considered to be issued
by the government entity whose assets and revenues guarantee or back the
security. With respect to private activity bonds or industrial development bonds
backed only by the assets and revenues of a non-governmental user, such user
would be considered the issuer.
37
<PAGE>
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, except for
investments in funds of the One Group, provided that this limitation does not
apply to investments in obligations issued or guaranteed by the U.S. government
or its agencies and instrumentalities and repurchase agreements involving such
services. For purposes of this limitation (i) utilities will be divided
according to their services (for example, gas, gas transmission, electric and
telephone will each be considered a separate industry); and (ii) wholly-owned
finance companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in the Prospectus and in this Statement of Additional Information.
Each of the Money Market Funds may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with the Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer,
provided, however, that a Fund may invest up to 25% of its total assets without
regard to this restriction as permitted by applicable law and also provided that
with respect to the Ohio Municipal Money Market Fund, as to 50% of such Fund's
assets, the Fund may invest up to 25% of its assets in the securities of a
single issuer. With respect to remaining 50% of its total assets, the Ohio
Municipal Money Market Fund may not purchase the securities of any issuer if as
a result more than 5% of the total assets of the Fund would be invested in the
securities of such issuer. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
nongovernmental user, such user would be considered the issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry. With
respect to the Prime Money Market Fund, (i) that this limitation does not apply
to investments in the obligations issued or guaranteed by the U.S. government or
its agencies and instrumentalities, domestic bank certificates of deposit or
bankers' acceptance and repurchase agreements involving such securities; (ii)
wholly-owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of their parents; and (iii) utilities will be divided according to
their services (for example, gas, gas transmission, electric and telephone will
each be considered a separate industry.) With respect to the Prime Money Market
Fund, the Ohio Municipal Money Market Fund and the Municipal Money Market Fund,
this limitation shall not apply to Municipal Securities or governmental
guarantees of Municipal Securities; and further provided, that for the purposes
of this limitation only, private activity bonds that are backed only by the
assets and revenues of a non-governmental user shall not be deemed to be Ohio
Municipal Securities for purposes of the Ohio Municipal Money Market Fund nor
Municipal Securities for purposes of the Prime Money Market Fund and the
Municipal Money Market Fund.
3. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in the Prospectus and in this Statement of Additional Information.
With respect to the Institutional Money Market Funds:
The Treasury Only Money Market Fund may not:
1. Purchase securities other than U.S. Treasury bills, notes and other
U.S. obligations issued or guaranteed by the U.S. Treasury.
2. Invest in any securities subject to repurchase agreements.
The Government Money Market Fund may not:
1. Purchase securities other than those issued or guaranteed by the
U.S. government or its agencies or instrumentalities, some of which may be
subject to repurchase agreements.
Each of the Institutional Money Market Funds may not:
1. Borrow money or issue senior securities, except that each Fund may
borrow from banks for temporary purposes in amounts up to 10% of the value of
the Fund's total assets at the time of such borrowing; or mortgage, pledge or
38
<PAGE>
hypothecate any assets, except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the respective Fund's total assets at the time of its borrowing.
2. Purchase securities while borrowings (including reverse repurchase
agreements) exceed 5% of the respective Fund's net assets.
3. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities and, if
consistent with such Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of the Fund would be invested in the securities of such issuer or the
Fund would own more than 10% of the outstanding voting securities of such
issuer; provided, however, that a Fund may invest up to 25% of its total assets
without regard to this restriction as permitted by applicable law. For purposes
of these limitations, a security is considered to be issued by the government
entity whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a non-governmental user, such user would be considered the
issuer.
With respect to the Municipal Bond Funds.
The Intermediate Tax Free-Bond Fund and the Municipal Income Fund may
not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of a Fund would be invested in the securities of such issuer or a Fund
would own more than 10% of the outstanding voting securities of such issuer.
This restriction applies to 75% of a Fund's assets. For purposes of these
limitations, a security is considered to be issued by the government entity
whose assets and revenues guarantee or back the security. With respect to
private activity bonds or industrial development bonds backed only by the assets
and revenues of a non-governmental user, such user would be considered the
issuer.
2. Purchase any securities that would cause more than 25% of the total
assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to Municipal Securities or governmental
guarantees of Municipal Securities, and with respect to the Municipal Income
Fund, housing authority obligations. For purposes of this limitation (i)
utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents.
The Arizona Municipal Bond Fund, the West Virginia Municipal Bond, the
Louisiana Municipal Bond Fund, The Ohio Municipal Bond Fund and the Kentucky
Bond Fund may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the United States, its agencies or instrumentalities, and, if
consistent with a Fund's investment objective and policies, repurchase
agreements involving such securities) if as a result more than 25% of the total
assets of a Fund would be invested in the securities of such issuer. This
restriction applies to 50% of a Fund's assets. With respect to the remaining 50%
of its total assets, a Fund may not purchase the securities of any issuer if as
a result more than 5% of the total assets of the Fund would be invested in the
securities of such Issuer. For purposes of these limitations, a security is
considered to be issued by the government entity whose assets and revenues
guarantee or back the security. With respect to private activity bonds or
industrial development bonds backed only by the assets and revenues of a
non-governmental user, such user would be considered the issuer.
2. Purchase any securities (i) that would cause more than 25% of the
total assets of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in obligations issued or
guaranteed by the U.S. government or its agencies and instrumentalities and
repurchase agreements involving such securities; and (ii) this limitation does
not apply to Municipal Securities or Ohio Municipal Securities, Kentucky
Municipal Securities, Arizona Municipal Securities, West Virginia Municipal
Securities and Louisiana Municipal Securities. For purposes of this limitation
(i) utilities will be divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (ii) wholly-owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of their parents. In addition, with respect to the
Arizona Municipal Bond Fund and the West Virginia Municipal Bond Fund, for
purposes of this limitation only, private activity bonds that are backed only by
the assets and revenues of a non-governmental issued shall not be deemed to be
Municipal Securities or Arizona Municipal Securities (for the Arizona Municipal
Bond Fund) or West Virginia Securities (for the West Virginia Municipal Bond
Fund).
39
<PAGE>
None of the Municipal Bond Funds may:
1. Make loans, except that a Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in this Prospectus and in the Statement of Additional Information.
None of the Funds may:
1. Purchase securities on margin, sell securities short, or participate
in a joint or joint and several basis in any securities trading account, except,
in the case of the Municipal Bond Funds, for use of short-term credit necessary
for clearance of purchases of portfolio securities.
2. Underwrite the securities of other issuers except to the extent that
a Fund may be deemed to be an underwriter under certain securities laws in the
disposition of "restricted securities."
3. Purchase or sell commodities or commodity contracts (including
futures contracts), except that for bona fide hedging and other permissible
purposes: (i) the Equity, Bond and International Equity Index Funds may purchase
or sell financial futures contracts and (except for the Treasury & Agency Fund)
may purchase call or put options on financial futures contracts, and (ii) the
International Equity Index Fund may purchase or sell foreign currency futures
contracts and foreign currency forward contacts, and may purchase put or call
options on foreign currency futures contracts and on foreign currencies on
appropriate U.S. exchanges, and may purchase or sell foreign currency on a spot
basis.
4. Except for the Treasury & Agency Fund, purchase participation or
other direct interests in oil, gas or mineral exploration or development
programs (although investments by all Funds other than the U.S. Treasury
Securities Money Market, Treasury Money Market, Treasury Only Money Market and
Government Money Market Fund in marketable securities of companies engaged in
such activities are not hereby precluded).
5. Invest in any issuer for purposes of exercising control or
management.
6. Purchase securities of other investment companies except as
permitted by the 1940 Act and rules, regulations and applicable exemptive relief
thereunder.
7. Purchase or sell real estate (however, each Fund except the Money
Market Funds may, to the extent appropriate to its investment objective,
purchase securities secured by real estate or interests therein or securities
issued by companies investing in real estate or interests therein).
8. Borrow money or issue senior securities, except that each Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets at
the time of its borrowing. A Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
In addition, the U.S. Treasury Securities Money Market, the Prime Money
Market and the Institutional Money Market Funds may not:
1. Buy common stocks or voting securities.
In addition, the U.S. Treasury Securities Money Market Fund, the Prime
Money Market Fund and the Government Money Market Fund may not
1. Buy state, municipal, or private activity bonds.
The following investment restrictions are NON-FUNDAMENTAL except as
noted otherwise and therefore can be changed by the Board of Trustees without
prior shareholder approval.
No Fund may:
1. Invest in illiquid securities in an amount exceeding, in the
aggregate 15% of the Fund's net assets (10% of net assets for a Fund that is a
Money Market Fund). An illiquid security is a security which cannot be disposed
of promptly (within seven days) and in the usual course of business without a
loss, and includes repurchase agreements maturing in excess
40
<PAGE>
of seven days, time deposits with a withdrawal penalty, non-negotiable
instruments and instruments for which no market exists. (This restriction is
fundamental with respect to the Ohio Municipal Money Market Fund.)
2. Acquire the securities of registered open-end investment companies
or registered unit investment trusts in reliance on Section 12(d)(1)(F) or
12(d)(1)(G) of the 1940 Act, other than the Investor Growth Fund, the Investor
Growth & Income Fund, the Investor Conservative Growth Fund, the Investor
Balanced Fund, the Investor Aggressive Growth Fund, and the Investor Fixed
Income Fund.
The foregoing percentages apply at the time of purchase of a security.
Additionally, although not a matter controlled by their fundamental
investment restrictions, so long as their shares are registered under the
securities laws of the State of Texas, the Prime Money Market Fund and the Ohio
Municipal Money Market Fund will: (i) limit their investments in other
investment companies to no more than 10% of each Funds total asset; (ii) invest
only in other investment companies with substantially similar investment
objectives; and (iii) invest only in other investment companies with charges and
fees substantially similar to those set forth in paragraph (3) and (4) of
Section 123.3 of the Texas State Statute, not to exceed .25% in 12b-1 and no
other commission or other remuneration is paid or given directly or indirectly
for soliciting any security holder in Texas.
In addition, the Intermediate Tax-Free Bond Fund will not invest more
than 25% of its assets in municipal securities that are related in such a way
that a political, economic or business development affecting one security will
also affect other municipal securities.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average value of the portfolio securities. The calculation excludes all
securities whose maturities at the time of acquisition were one year or less.
Thus, for regulatory purposes, the portfolio turnovers with respect to the Money
Market Funds were zero for the period from the commencement of their respective
operations to June 30, 1997 and are expected to remain zero, and the portfolio
turnover rate with respect to the Institutional Money Market Funds is expected
to be zero.
The portfolio turnover rates of the Funds for the fiscal years ended
June 30, 1997 and 1996 were as follows:
THE ONE GROUP PORTFOLIO TURNOVER
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
FUND 1997 1996
- ---- ---- ----
<S> <C> <C>
U.S. Treasury Securities Money Market 0%** 0%**
Prime Money Market 0%** 0%**
Municipal Money Market 0%** 0%**
Ohio Municipal Money Market 0%** 0%**
Income Equity 28.18% 14.92%
Disciplined Value 92.66% 90.55%
Growth Opportunities 301.35% 435.30%
Equity Index 5.81% 9.08%
Large Company Value 77.05% 186.84%
Asset Allocation 80.96% 73.38%
International Equity Index 9.61% 6.28%
Large Company Growth 57.17% 35.51%
Income Bond 55.18% 95.52%
Limited Volatility Bond 66.61% 75.20%
Intermediate Tax-Free Bond 86.89% 111.58%
Municipal Income 62.83% 83.17%
Ohio Municipal Bond 7.45% 24.61%
Government Bond 60.53% 62.70%
Ultra Short-Term Income 70.36% 67.65%
Intermediate Bond 55.91% 101.06%
Treasury Only Money Market 0%** 0%**
Government Money Market 0%** 0%**
Kentucky Municipal Bond 13.30% 16.78%
Institutional Prime Money Market NA+ NA*
Treasury Money Market NA+ NA*
Tax-Exempt Money Market NA+ NA*
Arizona Municipal Bond 5.66%*** NA*
Texas Tax-Free Bond NA+ NA*
W. Virginia Municipal Bond 6.21%*** NA*
Louisiana Municipal Bond 17.39% 16.72%++
Value Growth 113.17% 65.21%++
Small Capitalization 92.01% 59.57%++
Investor Growth 18.49%+++ NA*
Investor Growth & Income 18.07+++ NA*
Investor Aggressive Growth NA+ NA*
Investor Conservative Growth 28.46%+++ NA*
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
FUND 1997 1996
- ---- ---- ----
<S> <C> <C>
Investor Balanced 12.20%+++ NA*
Investor Fixed Income NA+ NA*
Income NA+ NA*
Treasury & Agency 54.44%*** NA*
</TABLE>
* As of June 30, 1996, the Fund had not commenced operations.
** Turnover rate is not applicable to money market funds.
*** Portfolio turnover rate for the period January 20, 1997 through June
30, 1997.
+ As of June 30, 1997, the Fund had not commenced operations.
++ Portfolio turnover rate for the period December 1, 1995 to June 30,
1996.
+++ Portfolio turnover rate for the period December 10, 1996 through June
30, 1997.
The high portfolio turnover rates for the fiscal year ended June 30,
1997 for the Growth Opportunities Fund and the Value Growth Fund resulted from
various factors, including some or all of the following: investment strategies,
unusually high market volatility and significant growth of the Funds. Portfolio
turnover may vary greatly from year to year as well as within a particular year,
and may also be affected by cash requirements for redemptions of Shares and by
requirements which enable the Trust to receive certain favorable tax treatments.
Portfolio turnover will not be a limiting factor in making portfolio decisions.
ADDITIONAL TAX INFORMATION CONCERNING ALL FUNDS
Each Fund is treated as a separate entity for federal income tax
purposes and is not combined with The One Group's other funds. It is the policy
of each Fund of the Trust to meet the requirements necessary to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). By following such policy, each Fund expects to
eliminate or reduce to a nominal amount the federal income taxes to which it may
be subject.
In order to qualify as a regulated investment company, each Fund of the
Trust must, among other things, (1) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, foreign currencies or
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in stock, securities or
currencies, (2) derive less than 30% of its gross income from the sale or other
disposition of stock, securities, options, futures, forward contracts, and
certain foreign currencies (or certain options, futures, or forward contracts on
foreign currencies) held for less than three months, and (3) diversify its
holdings so that at the end of each quarter of its taxable year (i) at least 50%
of the market value of the Fund's assets is represented by cash or cash items,
United States government securities, securities of other regulated investment
companies, and other securities limited, in respect of any one issuer, to an
amount not greater than 5% of the value of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
United States government securities or the securities of other regulated
investment companies) or of two or more issuers that the Fund controls and that
are engaged in the same, similar, or related trades or businesses. These
requirements may restrict the degree to which the Fund may engage in short-term
trading and limit the range of the Fund's investments. If a Fund of the Trust
qualifies as a regulated investment company, it will not be subject to federal
income tax on the part of its income distributed to Shareholders, provided the
Fund distributes during its taxable year at least (a) 90% of its taxable net
investment income (very generally, dividends, interest, certain other income,
and the excess, if any, of net short-term capital gain over net long-term loss),
and (b) 90% of the excess of (i) its tax-exempt interest income (if any) less
(ii) certain deductions attributable to that income. Each Fund of the Trust
intends to make sufficient distributions to Shareholders to qualify for this
special tax treatment.
If a Fund failed to qualify as a regulated investment company receiving
special tax treatment in any taxable year, the Fund would be subject to tax on
its taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term
capital gains, would be taxable to Shareholders as ordinary income. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company and being accorded special tax treatment.
Regulated investment companies that do not distribute in each calendar
year (regardless of whether they otherwise have a non-calendar taxable year) an
amount equal to 98% of their "ordinary income" (as defined) for the calendar
year, plus 98% of their capital gain net income (as defined) for the one-year
period ending on October 31 of such calendar year, plus any undistributed
amounts from the previous year are subject to a non-deductible excise tax equal
to 4% of the undistributed amounts. For purposes of the excise tax, a Fund is
treated as having distributed any amount on which it is subject to income tax
for any taxable year ending in such calendar year. Each Fund of the Trust
intends to make sufficient distributions to avoid liability for the excise tax.
42
<PAGE>
Shareholders of the Funds will generally be subject to federal income
tax on distributions received from the Funds. Dividends that are attributable to
a Fund's net investment income will be taxed to shareholders as ordinary income.
Distributions of net capital gain that are designated by a Fund as capital gain
dividends will generally be taxable to a Shareholder receiving such
distributions as long-term capital gain regardless of how long the Shareholder
has held its shares. Distributions in excess of a Fund's current and accumulated
"earnings and profits" will be treated by a Shareholder receiving such
distributions as a return of capital to the extent of such Shareholder's basis
in its Shares in the Fund, and thereafter as capital gain. A return of capital
is not taxable, but reduces a Shareholder's basis in its shares. Shareholders
not subject to tax on their income generally will not be required to pay tax on
amounts distributed to them. The sale, exchange or redemption of Fund shares by
a Shareholder may give rise to a taxable gain or loss to that Shareholder. In
general, any gain or loss realized upon a taxable disposition of shares will be
treated as long-term capital gain or loss if the Shareholder has held the shares
for more than 12 months, and otherwise as short-term capital gain or loss.
However, if a Shareholder sells shares at a loss within six months of purchase,
any loss will be disallowed for Federal income tax purposes to the extent of any
exempt-interest dividends received on such shares. A Fund may designate a
portion of its distributions of net capital gain as deriving from capital assets
held for more than one year but not more than 18 months ("mid-term gain"). The
balance of such distributions, deriving from capital assets held for more than
18 months, may be included in a Shareholder's computation of its adjusted net
capital gain. In addition, a Shareholder's gain upon a taxable disposition of
shares held for more than one year but not more than 18 months will qualify as
mid-term gain, and gain upon a taxable disposition of shares held for more than
18 months may be included in the Shareholders' computation of its adjusted net
capital gain. It is expected that pursuant to forthcoming regulations, the Fund
will provide shareholders with information allowing them to calculate their
mid-term gains and adjusted net capital gains.
In addition, any loss (not already disallowed as provided in the
preceding sentence) realized upon a taxable disposition of shares held for six
months or less will be treated as long-term to the extent of any long-term
capital gain distributions received by the Shareholder with respect to the
shares. All or a portion of any loss realized upon a taxable disposition of Fund
shares will be disallowed if other Fund shares are purchased within 30 days
before or after the disposition. In such a case, the basis of the newly
purchased shares will be adjusted to reflect the disallowed loss.
Certain investment and hedging activities of the Funds, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, swaps, short sales, foreign currencies, and foreign
securities will be subject to special tax rules. In a given case, these rules
may accelerate income to the Fund, defer losses to the Fund, cause adjustments
in the holding periods of the Fund's securities, convert short-term capital
losses into long-term capital losses, or otherwise affect the character of the
Fund's income. These rules could therefore affect the amount, timing and
character of distributions to Shareholders and cause differences between a
Fund's book income and taxable income. Income earned as a result of these
transactions would, in general, not be eligible for the dividends-received
deduction or for treatment as exempt-interest dividends when distributed to
Shareholders. The Fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best interest of the
Fund.
Certain securities purchased by the Funds (such as STRIPS, CUBES, TRS,
TIGRS, and CATS), as defined in "Details About the Funds' Investment Practices
and Policies" in the Funds' Prospectuses, are sold at original issue discount
and thus do not make periodic cash interest payments. Similarly, zero-coupon
bonds do not make periodic interest payments. A Fund will be required to include
as part of its current income for tax purposes the imputed interest on such
obligations even though the Fund has not received any interest payments on such
obligations during that period. Because each Fund distributes substantially all
of its net investment income to its Shareholders (including such imputed
interest), the Fund may have to sell portfolio securities in order to generate
the cash necessary for the required distributions. Such sales may occur at a
time when Banc One Advisors would not otherwise have chosen to sell such
securities and may result in a taxable gain or loss.
A Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or of gross proceeds from
redemptions paid to any individual Shareholder who has provided to the Fund
either an incorrect tax identification number or no number at all, or who is
subject to withholding by the Internal Revenue Service for failure properly to
report payments of interest or dividends. This withholding, known as backup
withholding, is not an additional tax, and any amounts withheld may be credited
against the Shareholder's ultimate U.S. tax liability.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of a Fund of the Trust.
Further tax information regarding the Tax-Advantaged Funds and the International
Equity Index Fund is included in following sections of this Statement of
Additional Information. No attempt is made to present herein a complete
explanation of the federal income tax treatment of each Fund or its
Shareholders, and this discussion is not intended as a substitute for careful
tax planning. Accordingly, prospective purchasers of Shares of a Fund are urged
to consult their tax advisors with specific reference to their own tax
situation, including the potential application of state, local and (if
applicable) foreign taxes.
The foregoing discussion and the discussion below regarding the
Tax-Advantaged Funds and the International Equity Index Fund are based on tax
laws and regulations which are in effect on the date of this Statement of
Additional Information;
43
<PAGE>
such laws and regulations may be changed by legislative, judicial or
administrative action, and such changes may be retroactive.
ADDITIONAL TAX INFORMATION CONCERNING THE TAX-ADVANTAGED FUNDS
The Code permits a regulated investment company which has invested, at
the close of each quarter of its taxable year, at least 50% of its total assets
in tax-free Municipal Securities and other securities the interest on which is
exempt from the regular federal income tax to pay exempt-interest dividends to
its Shareholders.
The policy of each Tax-Advantaged Fund is to distribute each year as
exempt-interest dividends substantially all the Fund's net exempt interest
income. An exempt-interest dividend is any dividend or part thereof (other than
a capital gain dividend) paid by a Tax-Advantaged Fund and designated as an
exempt-interest dividend in a written notice mailed to Shareholders after the
close of the Fund's taxable year, which does not exceed, in the aggregate, the
net interest income from Municipal Securities and other securities the interest
on which is exempt from the regular federal income tax received by the Fund
during the taxable year. The percentage of the total dividends paid for any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all Shareholders receiving dividends from a Tax-Advantaged Fund during
such year, regardless of the period for which the Shares were held.
Exempt-interest dividends may generally be treated by a Tax-Advantaged
Fund's Shareholders as items of interest excludable from their gross income
under Section 103(a) of the Code. However, each Shareholder of a Tax-Free Fund
is advised to consult his or her tax advisor with respect to whether such
Shareholder may be treated as a "substantial user" or a "related person" to such
user under Section 147(a) with respect to facilities financed through any of the
tax-exempt obligations held by the Fund. "Substantial user" is defined under
U.S. Treasury Regulations to include a non-exempt person who regularly uses a
part of such facilities in his trade or business and (a)(i) whose gross revenues
derived with respect to the facilities financed by the issuance of bonds are
more than 5% of the total revenues derived by all users of such facilities or
(ii) who occupies more than 5% of the usable area of the facility or (b) for
whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired.
"Related persons" includes certain related natural persons, affiliated
corporations, partners and partnerships.
Dividends attributable to interest on certain private activity bonds
issued after August 7, 1986 must be taken into account in determining
alternative minimum taxable income for purposes of determining liability (if
any) for the alternative minimum tax applicable to individuals and the
alternative minimum tax applicable to corporations. In the case of corporations,
all tax-exempt interest dividends will be taken into account in determining
adjusted current earnings for the purpose of computing the alternative minimum
tax imposed on corporations (as defined for federal income tax purposes).
Current Federal law limits the types and volume of bonds qualifying for
Federal income tax exemption of interest, which may have an effect on the
ability of the Funds to purchase sufficient amounts of tax exempt securities to
satisfy the Code's requirements for the payment of "exempt-interest" dividends.
Each Tax-Advantaged Fund may at times purchase Municipal Securities (or
other securities the interest on which is exempt from the regular federal income
tax) at a discount from the price at which they were originally issued. For
federal income tax purposes, some or all of the market discount will be included
in the Fund's ordinary income and will be taxable to shareholders as such when
it is distributed to them.
Each Tax-Advantaged Fund may acquire rights regarding specified
portfolio securities under puts. See "Puts." The policy of each Tax-Free Fund is
to limit its acquisition of puts to those under which the Fund will be treated
for federal income tax purposes as the owner of the Municipal Securities
acquired subject to the put and the interest on the Municipal Securities will be
tax-exempt to the Fund. Although the Internal Revenue Service has issued a
published ruling that provides some guidance regarding the tax consequences of
the purchase of puts, there is currently no guidance available from the Internal
Revenue Service that definitively establishes the tax consequences of many of
the types of puts that the Funds could acquire under the 1940 Act. Therefore,
although a Tax-Advantaged Fund will only acquire a put after concluding that it
will have the tax consequences described above, the Internal Revenue Service
could reach a different conclusion from that of the Fund.
Following is a brief discussion of treatment of exempt-interest
dividends by certain states.
ARIZONA TAXES. Shareholders of the Arizona Municipal Bond Fund will not
be subject to Arizona income tax on exempt-interest dividends received from the
Fund to the extent that such dividends are attributable to interest on
tax-exempt obligations of the state of Arizona and its political subdivisions
("Local Obligations"). Interest from Local Obligations however, may be
includable in Federal gross income.
44
<PAGE>
KENTUCKY TAXES. Fund shares are currently exempt from the Kentucky tax
on intangible property. The Kentucky Supreme Court recently held that corporate
shares are not subject to the Kentucky intangible property tax because of an
exemption for shares of certain corporations with in-state activities which the
Court held to violate the Commerce Clause of the U.S. Constitution. The Kentucky
Revenue Cabinet has announced that, in light of the ruling, it will not, as a
matter of policy, require that the Kentucky intangible property tax be paid on
any portion of the value of shares of any mutual fund. Previously the Cabinet
had required owners of shares of mutual funds to pay tax on the portion of their
share value representing underlying fund assets not exempt from the tax.
The Cabinet could change this policy in the future. The Kentucky
General Assembly could re-enact the intangible tax on corporate shares and other
similar securities without the exemption found objectionable by the Court. There
is no assurance that the Fund shares will remain free from the Kentucky
intangible property tax.
WEST VIRGINIA TAXES. Shareholders may reduce their West Virginia
adjusted gross income ("AGI") for that portion of the interest or dividends they
receive which represents interest or dividends of the Fund on obligations or
securities of any authority, commission or instrumentality of West Virginia that
is exempt from the West Virginia personal income tax by Federal or West Virginia
law. Shareholders may also reduce their West Virginia AGI for that portion of
interest or dividends received from the Fund derived from obligations of the
United States and from obligations or securities of some authorities,
commissions or instrumentalities of the United States.
However, shareholders cannot reduce their West Virginia AGI for any
portion of interest or dividends received from the Fund derived from income on
obligations of any state, or political subdivision thereof, other than West
Virginia, regardless of any Federal law exemption, such as that accorded
"exempt-interest dividends;" and they must increase their West Virginia AGI by
the amount of such interest or dividend income. Also, a shareholder must
increase his West Virginia AGI by interest on indebtedness incurred (directly or
indirectly) to purchase or hold shares of the Fund to the extent such interest
was deductible in determining Federal AGI. The sale, exchange, or redemption of
Fund shares is subject to the West Virginia income tax to the extent the gain or
loss therefrom affects the determination of the shareholder's Federal AGI.
The foregoing is only a summary of some of the important tax
considerations generally affecting purchasers of Shares of a Tax-Advantaged
Fund. Additional tax information concerning all Funds of the Trust is contained
in the immediately preceding section of this Statement of Additional
Information. No attempt is made to present a complete explanation of the federal
income tax treatment of each Tax-Advantaged Fund or its Shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, prospective purchasers of Shares of a Tax-Advantaged Fund are urged
to consult their tax advisors with specific reference to their own tax
situation, including the potential application of state, local and foreign
taxes.
ADDITIONAL TAX INFORMATION CONCERNING THE INTERNATIONAL EQUITY INDEX FUND
Transactions of the International Equity Index Fund in foreign
currencies, foreign currency denominated debt securities and certain foreign
currency options, future contracts and forward contracts (and similar
instruments) may result in ordinary income or loss to the Fund for federal
income tax purposes which will be taxable to the Shareholders as such when it is
distributed to them.
Gains from foreign currencies (including foreign currency options,
foreign currency futures and foreign currency forward contracts) will constitute
qualifying income for purposes of the 90% test only to the extent that they are
directly related to the trust's business of investing in stock or securities.
Investment by the International Equity Index Fund in certain "passive
foreign investment companies" could subject the Fund to a U.S. federal income
tax or other charge on proceeds from the sale of its investment in such a
company or other distributions from such a company, which tax cannot be
eliminated by making distributions to International Equity Index Fund
Shareholders. If the International Equity Index Fund elects to treat a passive
foreign investment company as a "qualified electing fund," different rules would
apply, although the International Equity Index Fund does not expect to make such
an election. Rather, the Fund intends to avoid such tax or other charge by
making an election to mark gains (and to a limited extent, losses) from such
investments to market annually.
FOREIGN TAX CREDIT
If more than 50% of the International Equity Index Fund's total assets
at year end consist of the debt and equity securities of foreign corporations,
the Fund may elect to permit its Shareholders who are U.S. citizens to claim a
foreign tax credit or deduction on their U.S. income tax returns for their pro
rata share of foreign taxes paid by the Fund. In that case, Shareholders will be
required to include in gross income their pro rata share of foreign taxes paid
by the Fund. Each Shareholder may then claim a foreign tax credit or a tax
deduction that would offset some or all of the increased tax liability.
Generally, a credit for foreign taxes is subject to the limitation that it may
not exceed the Shareholder's U.S. tax attributable
45
<PAGE>
to his or her total foreign source taxable income. For this purpose, the source
of the income to the International Equity Index Fund flows through to the Fund's
Shareholders. In addition, no credit will be allowed for foreign taxes paid in
respect of any dividend on stock paid or accrued after September 4, 1997 unless
the stock was held (without protection from risk of loss) for at least 16 days
during the 30-day period beginning 15 days before the ex-dividend date. For
certain preferred stock the holding period is 46 days during a similar 90-day
period. This means that (i) Shareholders not satisfying this holding period
requirement may not claim foreign tax credits in respect of their shares, and
(ii) the Fund may not "flow through" tax credits to Shareholders in respect of
dividends on stock that the Fund has not held for the requisite period. If the
Fund makes this election with respect to foreign tax credits it will notify
Shareholders of their proportionate share of foreign taxes paid, the portion of
the distribution that represents foreign source income, and any amount of such
foreign taxes paid which are not creditable because the Fund did not meet the
holding period requirement. Gains to the International Equity Index Fund from
the sale of securities generally will be treated as derived from U.S. sources
and certain currency fluctuation gains, including fluctuation gains from foreign
currency denominated debt securities, receivables and payables, will be treated
as ordinary income derived from U.S. sources. With limited exceptions, the
foreign tax credit is allowed to offset only 90% of the alternative minimum tax
imposed on corporations and individuals. Because of these limitations,
Shareholders may be unable to claim a credit for the full amount of their
proportionate share of the foreign taxes paid by the International Equity Index
Fund.
The foregoing is only a general description of the treatment of foreign
source income or foreign taxes under the United States federal income tax laws.
Because the availability of a credit or deduction depends on the particular
circumstances of each Shareholder, Shareholders are advised to consult their own
tax advisors.
VALUATION
VALUATION OF THE MONEY MARKET AND INSTITUTIONAL MONEY MARKET FUNDS
The Money Market and Institutional Money Market Funds have elected to
use the amortized cost method of valuation pursuant to Rule 2a-7 under the 1940
Act. This involves valuing an instrument at its cost initially and thereafter
assuming a constant amortization to maturity of any discounts or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. This method may result in periods during which value, as
determined by amortized cost, is higher or lower than the price each Fund would
receive if it sold the instrument. The value of securities in the Funds can be
expected to vary inversely with changes in prevailing interest rates.
Pursuant to Rule 2a-7, the Money Market and Institutional Money Market
Funds will maintain a dollar-weighted average portfolio maturity appropriate to
their objective of maintaining a stable net asset value per Share, provided that
no Fund will purchase any security with a remaining maturity of more than 397
days (securities subject to repurchase agreements and certain variable or
floating rate instruments may bear longer maturities) nor maintain a
dollar-weighted, average portfolio maturity which exceeds 90 days. The Trust's
Board of Trustees has also undertaken to establish procedures reasonably
designed, taking into account current market conditions and a Fund's investment
objective, to stabilize the net asset value per Share of the Money Market Funds
for purposes of sales and redemptions at $1.00. These procedures include review
by the Trustees, at such intervals as they deem appropriate, to determine the
extent, if any, to which the net asset value per Share of each Fund calculated
by using available market quotations deviates from $1.00 per Share. In the event
such deviation exceeds one half of one percent, the Rule requires that the Board
promptly consider what action, if any, should be initiated. If the Trustees
believe that the extent of any deviation from a Fund's $1.00 amortized cost
price per Share may result in material dilution or other unfair results to new
or existing investors, they will take such steps as they consider appropriate to
eliminate or reduce to the extent reasonably practicable any such dilution or
unfair results. These steps may include selling portfolio instruments prior to
maturity, shortening the average portfolio maturity, withholding or reducing
dividends, reducing the number of a Fund's outstanding Shares without monetary
consideration, or utilizing a net asset value per Share determined by using
available market quotations.
VALUATION OF THE EQUITY FUNDS, THE BOND FUNDS AND THE MUNICIPAL BOND FUNDS
Except as noted below, investments of the Asset Allocation Fund, Equity
Funds, Bond Funds, and Municipal Bond Funds of the Trust in securities the
principal market for which is a securities exchange are valued at their market
values based upon the latest available sales price or, absent such a price, by
reference to the latest available bid and asked prices in the principal market
in which such securities are normally traded. Except as noted below, investments
of the International Equity Index Fund in securities the principal market for
which is a securities exchange are valued at the closing mid-market price on
that exchange on the day of computation.
With regard to each of the above-mentioned Funds, securities the
principal market for which is not a securities exchange are valued at the mean
of their latest bid and ask quotations in such principal market. Securities and
other assets for which quotations either (1) are not readily available or (2) in
the case of the International Equity Index Fund are determined by that Fund's
Advisor or Sub-Advisor to not accurately reflect their value are valued at their
fair value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Trustees of the Trust.
Short-term securities are valued at either amortized cost or original cost plus
accrued interest, which approximates current value. Mutual fund investments of
the Funds of Funds will be valued at the most recently calculated net asset
value.
46
<PAGE>
The value of a foreign security is determined in its national currency
as of the close of trading on the foreign exchange or other principal market on
which it is traded, which value is then converted into its U.S. dollar
equivalent at the foreign exchange closing mid-market rate reported in the
FINANCIAL TIMES as the closing rate for that date. When an occurrence subsequent
to the time a value of a foreign security was so established is likely to have
changed the value, then the fair value of those securities will be determined by
consideration of other factors by or under the direction of the Trustees of the
Trust or their delegates.
Securities for which market quotations are readily available will be
valued on the basis of quotations provided by dealers in such securities or
furnished by a pricing service. Securities for which market quotations are not
readily available and other assets will be valued at fair value using methods
determined in good faith by the Investment Advisor under the supervision of the
Trustees and may include yield equivalents or a pricing matrix.
ADDITIONAL INFORMATION REGARDING THE
CALCULATION OF PER SHARE NET ASSET VALUE
The net asset value of each Fund is determined and its Fiduciary Class,
Class A, Class B, Class C and Service Class Shares are priced as of the times
specified in each Fund's Prospectus. The net asset value per Share of each
Fund's Fiduciary Class, Class A, Class B, Class C and Service Class Shares is
calculated by determining the value of the respective Class's proportional
interest in the securities and other assets of the Fund, less (i) such Class's
proportional share of general liabilities and (ii) the liabilities allocable
only to such Class, and dividing such amount by the number of Shares of the
Class outstanding. The net asset value of a Fund's Fiduciary Class, Class A,
Class B, Class C and Service Class Shares may differ from each other due to the
expense of the Distribution and Shareholders Services Plan fee applicable to a
Fund's Class A, Class B, Class C and Service Class Shares.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
All of the classes of Shares in each Fund (other than Class A shares of
the Income Fund and Service Class shares in the U.S. Treasury Securities Money
Market Fund and the Prime Money Market Fund) are sold on a continuous basis by
The One Group Services Company (the "Distributor"), and the Distributor has
agreed to use appropriate efforts to solicit all purchase orders.
Fiduciary Class Shares in a Fund may be purchased, through procedures
established by the Distributor, by institutional investors, including affiliates
of BANC ONE CORPORATION and any bank, depository institution, insurance company,
pension plan or other organization authorized to act in fiduciary, advisory,
agency, custodial or similar capacities. Fiduciary Shares are not available to
Individual Retirement Accounts.
Class A, Class B and Class C Shares (except Class A shares of the
Income Fund) may be purchased by any investor that does not meet the purchase
eligibility criteria, described above, with respect to Fiduciary Shares. Class A
shares of the Income Fund may only be purchased in connection with investment
company consolidations and reorganizations. Class C Shares are available only to
investors in the Funds of Funds. In addition to purchasing Class A, Class B and
Class C Shares directly from the Distributor, an investor may purchase Class A,
Class B and Class C Shares through a financial institution, such as a bank,
savings and loan association, insurance company (each a "Shareholder Servicing
Agent") that has established a Shareholder servicing agreement with the
Distributor, or through a broker-dealer that has established a dealer agreement
with the Distributor. Questions concerning the eligibility requirements for each
class of the Trust's Shares may be directed to the Distributor at
1-800-480-4111.
Service Class Shares are available only in the Prime Money Market and
U.S. Treasury Securities Money Market Funds. This class of shares is available
to broker-dealers, other financial intermediaries, banks and other depository
institutions requiring special administrative and accounting services (E.G.,
sweep processing).
As described in each Prospectus for each of the Equity and Bond Funds
and the Funds of Funds, and in the Multiple Class Plan, under certain
circumstances, Class A Shares of a Fund may be purchased free of the sales
charge applicable to such Class A Shares. No sales charge is imposed on Class A
Shares of the Funds: (i) issued through reinvestment of dividends and capital
gains distributions; (ii) acquired through the exercise of exchange privileges
where a comparable sales charge has been paid for exchanged Shares; (iii)
purchased by officers, directors or trustees, retirees and employees (and their
spouses and immediate family members) of the Trust, of BANC ONE CORPORATION and
its subsidiaries and affiliates, of the Distributor and its subsidiaries and
affiliates, of broker-dealers who have entered into a dealer agreement with the
Trust and their subsidiaries and affiliates, or of an investment sub-Advisor of
a Fund of the Trust and such sub-Advisor's subsidiaries and affiliates; (iv)
sold to affiliates of BANC ONE CORPORATION and certain accounts (other than
Individual Retirement Accounts) for which financial organizations, including any
bank, depository institution, insurance company,
47
<PAGE>
pension plan or other organization are authorized to act in fiduciary, advisory,
agency, custodial or similar capacities, or purchased by investment Advisors,
financial planners or other intermediaries who have a dealer arrangement with
the Distributor, who place trades for their own accounts or for the accounts of
their clients and who charge a management, consulting or other fee for their
services, as well as clients of such investment Advisors, financial planners or
other intermediaries who place trades for their own accounts if the accounts are
linked to the master account of such investment Advisor, financial planner or
other intermediary; (v) purchased with proceeds from the recent redemption of
Fiduciary Class Shares of a Fund of the Trust or acquired in an exchange of
Fiduciary Class Shares of a Fund for Class A Shares of the same Fund; (vi)
purchased with proceeds from the recent redemption of Shares of a mutual fund
(other than a Fund of the Trust) for which a sales charge was paid; (vii)
purchased in an Individual Retirement Account with the proceeds of a
distribution from an employee benefit plan, provided that, at the time of
distribution, the employee benefit plan had plan assets invested in a Fund of
the Trust; (viii) purchased with Trust assets; (ix) purchased in accounts as to
which a bank or broker-dealer charges an asset allocation fee, provided the bank
or broker-dealer has an agreement with the Distributor; (x) purchased in
connection with plans of reorganization of a Fund, such as mergers, asset
acquisitions and exchange offers to which a Fund is a party.
An investor relying upon any of the categories of waivers of the sales
charge must qualify for such waiver in advance of the purchase with the
Distributor or the financial institution or intermediary through which Shares
are purchased by the investor.
The waiver of the sales charge under circumstances (v), (vi), and (vii)
above applies only if the purchase is made within 60 days of the redemption and
if conditions imposed by the Distributor are met. The waiver policy with respect
to the purchase of Shares through the use of proceeds from a recent redemption
or distribution as described in clauses (v), (vi), and (vii) above will not be
continued indefinitely and may be discontinued at any time without notice.
Investors should call the Distributor at 1-800-480-4111 to determine whether
they are eligible to purchase Shares without paying a sales charge through the
use of proceeds from a recent redemption or distribution as described above, and
to confirm continued availability of these waiver policies prior to initiating
the procedures described in clauses (v), (vi), and (vii).
Fiduciary Class Shareholders of a Fund may exchange their Shares for
Class A Shares of the same Fund or for Class A Shares or Fiduciary Class Shares
of another Fund of the Trust. Class A Shareholders may exchange their Shares for
Fiduciary Class Shares of a Fund or for Fiduciary Class or Class A Shares of
another Fund or the Trust, if the Shareholder is eligible to purchase such
Shares. If a Class A Shareholder of the Income Fund exchanges his or her Shares
within one year of receipt of the Shares, the Shareholder will be assessed a 2%
redemption fee. The exchange privilege may be exercised only in those states
where the Shares of the Fund or such other Fund may be legally sold. All
exchanges discussed herein are made at the net asset value of the exchanged
Shares, except as provided below. The Trust does not impose a charge for
processing exchanges of Shares. If a Shareholder seeks to exchange Class A
Shares of a Fund that does not impose a sales charge for Class A Shares of a
Fund that does, or the Fund being exchanged into has a higher sales charge, the
Shareholder will be required to pay a sales charge in the amount equal to the
difference between the sales charge applicable to the Fund into which the Shares
are being exchanged and any sales charge previously paid for the exchanged
Shares, including any sales charges incurred on any earlier exchanges of the
Shares (unless such sales charge is otherwise waived as provided above). The
exchange of Fiduciary Class Shares for Class A Shares also will require payment
of the sales charge unless the sales charge is waived, as provided above. If a
Shareholder (no longer eligible to purchase Fiduciary Shares) purchases Class A
Shares of a Fund, the Shareholder will be subject to Distribution and
Shareholder Services Plan Fees.
Class B Shareholders of a Fund may exchange their Shares for Class B
Shares of any other Fund of the Trust on the basis of the net asset value of the
exchanged Class B Shares, without the payment of any Contingent Deferred Sales
Charge that might otherwise be due upon redemption of the outstanding Class B
Shares. The newly acquired Class B Shares will be subject to the higher
Contingent Deferred Sales Charge of either the Fund from which the Shares were
exchanged or the Fund into which the Shares were exchanged. With respect to
outstanding Class B Shares as to which previous exchanges have taken place,
"higher Contingent Deferred Sales Charge" shall mean the higher of the
Contingent Deferred Sales Charge applicable to either the Fund the Shares are
exchanging into or any other Fund from which the Shares previously have been
exchanged. For purposes of computing the Contingent Deferred Sales Charge that
may be payable upon a disposition of the newly acquired Class B Shares, the
holding period for outstanding Class B Shares of the Fund from which the
exchange was made is "tacked" to the holding period of the newly acquired Class
B Shares. For purposes of calculating the holding period applicable to the newly
acquired Class B Shares, the newly acquired Class B Shares shall be deemed to
have been issued on the date of receipt of the Shareholder's order to purchase
the outstanding Class B Shares of the Fund from which the initial exchange was
made.
Class C Shareholders may not exchange their Class C Shares for shares
of any other class nor may shares of any other class be exchanged for Class C
Shares.
Service Class Shareholders may not exchange their Service Class Shares
for Shares of any other class, nor may Shares of any other class be exchanged
for Service Class Shares.
48
<PAGE>
Shares of the Institutional Money Market Funds may be purchased by
commercial and retail institutional investors, including affiliates of BANC ONE
CORPORATION, that have opened an account with the Transfer Agent either directly
or through a Shareholder Servicing Agent, by persons whose individual net worth,
or joint net worth with that person's spouse, at the time of his or her purchase
exceeds $1,000,000, or by persons whose individual annual income, or joint
annual income with that person's spouse, at the time of his or her purchase
exceeds $200,000.
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission, (b) the Exchange is closed for other
than customary weekend and holiday closings, (c) the Securities and Exchange
Commission has by order permitted such suspension, or (d) an emergency exists as
determined by the Securities and Exchange Commission.
The Trust may redeem Shares involuntarily if redemption appears
appropriate in light of the Trust's responsibilities under the 1940 Act. (See
"Valuation of the Money Market and Institutional Money Market Funds and the
Municipal Money Market Fund" above.)
49
<PAGE>
MANAGEMENT OF THE TRUST
TRUSTEES & OFFICERS
Overall responsibility for management of the Trust rests with the Board
of Trustees of the Trust, who are elected by the Shareholders of the Trust.
There are currently four Trustees, all of whom are not "interested persons" of
the Trust within the meaning of that term under the 1940 Act. The Trustees, in
turn, elect the officers of the Trust to supervise actively its day-to-day
operations.
The Trustees of the Trust, their addresses, and principal occupations
during the past five years are set forth below.
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- -------------- -------------------
<S> <C> <C>
Peter C. Marshall Trustee From November, 1993 to present,
DCI Marketing, Inc. President, DCI Marketing, Inc.;
2727 W. Good Hope Road from 1992 to November, 1993, Vice
Milwaukee, WI 53209 President-Finance and Treasurer,
DCI Marketing, Inc.; from 1987
to August, 1992, has served as
an officer in the corporate finance
group of Blunt, Ellis & Loewi and
its successor corporation, Kemper
Securities, Inc.
Charles I. Post Trustee From July, 1986 to present, has
7615 4th Avenue West been self-employed as a consultant.
Bradenton, FL 34209
John S. Randall Trustee Since 1972, has been self-employed
1840 North Prospect Ave. as a management consultant.
Apt. 419
Milwaukee, WI 53202
Frederick W. Ruebeck Trustee From June, 1988 to present, has
Eli Lilly & Company been Director of Investments, Eli
Lilly Corporate Center Lilly and Company.
307 East McCarty
Indianapolis, IN 46285
Robert A. Oden, Jr. Trustee From 1995 to present, President
Office of the President Kenyon College; from 1989 to
Ransom Hall 1995, Headmaster, The Hotchkiss
Kenyon College School.
Gambier, OH 43022
</TABLE>
The Trustees of the Trust receive fees and expenses for each meeting of
the Board of Trustees attended. No officer or employee of the Distributor
currently acts as a Trustee of the Trust.
The Compensation Table below sets forth the estimated total
compensation to the Trustees from the Trust and the operational funds of The One
Group for the Trust's fiscal year ended June 30, 1997.
50
<PAGE>
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS ESTIMATED TOTAL
AGGREGATE ACCRUED ANNUAL COMPENSATION
COMPENSATION AS PART BENEFITS FROM
NAME OF FROM THE OF FUND UPON THE FUND
PERSON, POSITION TRUST EXPENSES RETIREMENT COMPLEX(2)
---------------- ----- -------- ---------- ----------
<S> <C> <C> <C> <C>
Peter C. Marshall, $36,000 N/A N/A $39,000
Chairman
Charles I. Post, $33,500 N/A N/A $36,500
Trustee
John S. Randall, $33,500 N/A N/A $36,500
Trustee
Frederick W. Ruebeck, $33,500 N/A N/A $36,500
Trustee
</TABLE>
1 Figures are for the Trust's fiscal year ended June 30, 1997.
2 "Fund Complex" comprises the 33 operational funds of The One Group as
well as the 4 funds of The One Group(R) Investment Trust at June 30,
1997.
51
<PAGE>
The officers of the Trust receive no compensation directly from the
Trust for performing the duties of their offices. The officers of the Trust,
their addresses, and principal occupations during the past five years are shown
below.
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING PAST 5 YEARS
- ---------------- -------------- -------------------
<S> <C> <C>
Mark Dillon President From 1993 to present, Vice-
The One Group Services President of BISYS Fund
Company Services, Inc. and President of
3435 Stelzer Road The One Group Services
Columbus, Ohio 43219 Company; from 1986 to 1993,
Vice-President of the Winsbury
Company
Mark Redman Vice President, From June, 1995 to present,
The One Group Services Co. Assistant Secretary Vice President, The One Group
3435 Stelzer Road & Treasurer Services Company; from
Columbus, Ohio 43219 February 1989 to present,
employee of the Winsbury
Company
George O. Martinez Secretary From March 1995 to present,
BISYS Fund Services, Inc. Senior Vice President and
3435 Stelzer Road Director of Legal and
Columbus, OH 43219 Compliance Services, BISYS
Fund Services, Inc.; from June
1989 - March 1995, Vice
President and Associate
General Counsel, Alliance
Capital Management
Alaina J. Metz Assistant Secretary From June 1995 to present,
BISYS Fund Services, Inc. Chief Administrator,
3435 Stelzer Road Administration and Regulatory
Columbus, Ohio 43219 Services, BISYS Fund Services,
Inc.; from May 1989 - June 1995,
Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
</TABLE>
52
<PAGE>
INVESTMENT ADVISOR
Banc One Investment Advisors Corporation
Investment advisory services to each of the Trust's Funds are provided
by Banc One Advisors. Banc One Advisors makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program, subject to the supervision of, and policies
established by, the Trustees of the Trust. The Trust's Shares are not sponsored,
endorsed or guaranteed by, and do not constitute obligations or deposits of any
bank affiliate of Banc One Advisors and are not insured by the FDIC or issued or
guaranteed by the U.S. government or any of its agencies.
Banc One Advisors is an indirect, wholly-owned subsidiary of BANC ONE
CORPORATION, a bank holding company incorporated in the state of Ohio. BANC ONE
CORPORATION has affiliate banking organizations in Arizona, Colorado, Illinois,
Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West Virginia and
Wisconsin. In addition, BANC ONE CORPORATION has several affiliates that engage
in data processing, venture capital, investment and merchant banking, and other
diversified services including trust management, investment management,
brokerage, equipment leasing, mortgage banking, consumer finance, and insurance.
On a consolidated basis, BANC ONE CORPORATION had assets of over $101 billion as
of June 30, 1997.
Banc One Advisors represents a consolidation of the investment advisory
staffs of a number of bank affiliates of BANC ONE CORPORATION, which have
considerable experience in the management of open-end management investment
company portfolios, including The One Group (formerly, the Helmsman Fund) since
1985.
Prior to January 11, 1993, investment advisory services were provided
to the Income Equity, Disciplined Value, Growth Opportunities, and Large Company
Value Funds by Bank One, Milwaukee, NA ("Bank One, Milwaukee"). Prior to January
11, 1993, investment advisory services were provided to the Money Market Funds,
the Institutional Money Market Funds, the Bond Funds, and the Intermediate
Tax-Free Bond Fund by Bank One, Indianapolis, NA ("Bank One, Indianapolis").
Prior to January 11, 1993, investment advisory services were provided to the
International Equity Index, Equity Index, and the Ohio Municipal Bond Funds by
Bank One, Columbus, NA ("Bank One, Columbus"). Prior to January 11, 1993,
investment sub-advisory services were also provided to the Large Company Value
Fund by Bank One, Columbus. Prior to January, 1994, investment advisory services
were provided to the predecessor funds of Intermediate Bond Fund and Large
Company Growth Fund, Sun Eagle Intermediate Fixed Income Fund and Sun Eagle
Equity Growth Fund, respectively, by Bank One, Arizona, NA. Prior to January 20,
1995, investment advisory services were provided to the predecessor Fund of the
Kentucky Municipal Bond Fund, the Trademark Kentucky Municipal Bond Fund, by
Liberty National Bank and Trust Company of Kentucky. Prior to January 2, 1996,
investment advisory services were provided to the predecessor Funds of the
Louisiana Municipal Bond Fund, the Value Growth Fund, and the Small
Capitalization Fund (formerly the Gulf South Growth Fund), formerly Paragon
Louisiana Tax-Free Fund, Paragon Value Growth Fund and Paragon Gulf South Growth
Fund, respectively, by Premier Investment Advisors, LLP.
During the fiscal years ended June 30, 1997, 1996, and 1995, the Funds
of the Trust paid the following investment advisory fees to Banc One Advisors
(except as noted above) and Banc One Advisors voluntarily waived investment
advisory fees as follows:
53
<PAGE>
THE ONE GROUP ADVISORY--NET
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1997 1996 1995
---- ---- ----
FUND NET WAIVED NET WAIVED NET WAIVED
- ---- --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities
Money Market $5,992,323 $2,742,727 $3,335,123 $2,120,534 $2,258,214 $1,956,704
Prime Money Market $7,824,731 $1,899,772 $5,939,373 $2,662,726 $3,991,856 $2,887,240
Municipal Money Market $1,241,937 $ 593,593 $1,111,463 $ 930,328 $ 964,943 $ 834,690
Ohio Municipal Money Market $ 231,786 $ 36,034 $ 171,609 $ 114,565 $ 163,752 $ 112,517
Income Equity $4,104,562 $ 0 $1,809,128 $ 70,594 $1,466,342 $ 7,338
Disciplined Value $4,129,523 $ 0 $3,934,183 $ 61,237 $3,306,317 $ 0
Growth Opportunities $4,511,169 $ 0 $3,688,445 $ 54,262 $3,024,214 $ 6,973
Equity Index $ 547,238 $1,094,476 $ 238,008 $ 638,315 $ 167,195 $ 396,281
Large Company Value $4,726,413 $ 0 $3,763,553 $ 0 $1,730,555 $ 0
Asset Allocation $ 684,481 $ 142,861 $ 306,083 $ 92,023 $ 214,418 $ 68,226
International Equity Index $2,201,616 $ 837 $1,279,277 $ 91,958 $1,036,935 $ 0
Large Company Growth $7,948,260 $ 0 $5,235,736 $ 245,284 2,515,585 $ 0
Income Bond $2,581,863 $1,290,933 $1,918,010 $1,135,461 $1,662,030 $1,317,284
Limited Volatility Bond $1,830,204 $1,830.204 $1,330,873 $1,450,516 $1,155,274 $1,393,194
Intermediate Tax-Free Bond $1,235,203 $ 776,825 $ 629,789 $ 769,809 $ 499,312 $ 699,036
Municipal Income $1,314,694 $ 387,974 $ 714,573 $ 387,167 $ 572,498 $ 246,244
Ohio Municipal Bond $ 389,001 $ 391,781 $ 257,158 $ 328,794 $ 299,400 $ 302,235
Government Bond $3,098,420 $ 194,800 $2,182,543 $ 70,159 $1,251,932 $ 38,861
Ultra Short-Term Income $ 117,314 $ 342,966 $ 29,293 $ 227,497 $ 277,435 $ 208,134
Intermediate Bond $1,273,126 $1,092,194 $ 612,348 $ 747,012 $ 239,603 $ 597,220
Treasury Only Money Market $ 385,087 $ 0 $ 287,729 $ 0 $ 181,522 $ 16,794
Government Money Market $ 848,690 $ 0 $ 612,362 $ 5,166 $ 478,342 $ 101,302
Kentucky Municipal Bond
(Trademark Kentucky
Municipal Bond)** $ 270,459 $ 78,137 $ 108,684 $ 132,964 $ 53,481 $ 59,433
Institutional Prime
Money Market NA # NA # NA* NA* NA* NA*
Treasury Money Market NA # NA # NA* NA* NA* NA*
Tax-Exempt Money Market NA # NA # NA* NA* NA* NA*
Arizona Municipal Bond+++ $ 390,737 $ 126,415 NA* NA* NA* NA*
Texas Tax-Free Bond NA # NA # NA* NA* NA* NA*
W. Virginia Municipal Bond+++ $ 121,278 $ 66,525 NA* NA* NA* NA*
Louisiana Municipal Bond $ 683,535 $ 394,121 $ 207,766++ $ 103,883++ $ 992,485+ $ 198,495+
Value Growth $2,309,475 $ 69,333 $ 400,112++ $ 51,948++ $1,281,345+ NA+
Small Capitalization $ 699,896 $ 30,410 $ 184,391++ $ 25,531++ $ 582,482+ NA+
Income Fund NA # NA # NA* NA* NA* NA*
Investor Growth++++ $ 1,552 $ 6,244 NA* NA* NA* NA*
Investor Growth & Income++++ $ 2,046 $ 8,237 NA* NA* NA* NA*
Investor Aggressive Growth NA # NA # NA* NA* NA* NA*
Investor Conservative Growth++++ $ 683 $ 2,750 NA* NA* NA* NA*
Investor Balanced++++ $ 3,107 $ 12,503 NA* NA* NA* NA*
Investor Fixed Income NA # NA # NA* NA* NA* NA*
Treasury & Agency Fund+++ $ 99,224 $ 99,225 NA* NA* NA* NA*
</TABLE>
# As of June 30, 1997, the Fund had not commenced operations.
* As of June 30, 1996, the Fund had not commenced operations.
** In the fiscal year ended June 30, 1994, and from July 1, 1994 through
January 19, 1995, the Advisor was Liberty National Bank and Trust
Company of Kentucky.
+ For fiscal years ended November 30, 1994 and 1995, the Advisor was
Premier Investment Advisors, LLC.
++ Fees for the period from December 31, 1995 to June 30, 1996.
+++ Fees for the period from January 20, 1997 to June 30, 1997.
++++ Fees for the period from December 10, 1996 to June 30, 1997.
54
<PAGE>
All investment advisory services are provided to the Funds by Banc One
Advisors pursuant to an investment advisory agreement dated January 11, 1993
(the "Investment Advisory Agreement"). The Investment Advisory Agreement (and
the Sub-Investment Advisory Agreement described immediately following,
collectively, the "Advisory and Sub-Advisory Agreements") will continue in
effect as to a particular Fund from year to year, if such continuance is
approved at least annually by the Trust's Board of Trustees or by vote of a
majority of the outstanding Shares of such Fund (as defined under "ADDITIONAL
INFORMATION--Miscellaneous" in this Statement of Additional Information), and a
majority of the Trustees who are not parties to the respective investment
advisory agreements or interested persons (as defined in the Investment Company
Act of 1940) of any party to the respective investment advisory agreements by
votes cast in person at a meeting called for such purpose. The Advisory and
Sub-Advisory Agreements were renewed by the Trust's Board of Trustees at their
quarterly meeting on August 17, 1995. The Advisory and Sub-Advisory Agreements
are terminable as to a particular Fund at any time on 60 days' written notice
without penalty by the Trustees, by vote of a majority of the outstanding Shares
of that Fund, or by the Fund's Advisor or Sub-Advisor as the case may be. The
Advisory and Sub-Advisory Agreements also terminate automatically in the event
of any assignment, as defined in the 1940 Act.
The Advisory and Sub-Advisory Agreements each provide that the
respective Advisor or Sub-Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust in connection with the
performance of the respective investment advisory agreements, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of Banc One Advisors or Sub-Advisor in
the performance of its duties, or from reckless disregard by it of its duties
and obligations thereunder.
Goldman Sachs Asset Management, formerly the investment Sub-Advisor to
the Ultra Short-Term Income Fund, $176,570 in sub-advisory fees from Banc One
Advisors for the fiscal year ended June 30, 1995 and $26,251 in sub-advisory
fees from Banc One Advisors for the fiscal year ended June 30, 1996.
Independence International Associates, Inc.
Independence International Associates, Inc. ("Independence
International") serves as investment Sub-Advisor to the International Equity
Index Fund pursuant to an agreement with Banc One Advisors dated January 11,
1993. Independence International is a wholly-owned subsidiary of John Hancock
Asset Management, Inc. and an indirect, wholly-owned subsidiary of John Hancock
Mutual Life Insurance Company. Boston International Advisors, Inc., the
predecessor of Independence International, received $161,906 in sub-advisory
fees from Banc One Advisors for the fiscal year ended June 30, 1995, $212,352 in
sub-advisory fees from Banc One Advisors for the fiscal year ended June 30,
1996; and $315,098 in sub-advisory fees from Banc One Advisors for the fiscal
year ended June 30, 1997.
GLASS-STEAGALL ACT
In 1971 the United States Supreme Court held in INVESTMENT COMPANY
INSTITUTE V. CAMP that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a Fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its Shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment Advisor, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM V.
INVESTMENT COMPANY INSTITUTE that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment Advisors to registered closed-end investment companies. In the BOARD
OF GOVERNORS case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment Advisors to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act. In addition, state securities laws on this issue
may differ from the interpretations of federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
In the Investment Advisory Agreement with the Trust, Banc One Advisors
has represented to the Trust that it possesses the legal authority to perform
the investment advisory services contemplated by the agreement and described in
the Prospectuses and this Statement of Additional Information without violation
of applicable statutes and regulations. Future changes in either federal or
state statutes and regulations relating to the permissible activities of banks
or bank holding companies and the subsidiaries or affiliates of those entities,
as well as further judicial or administrative decisions or interpretations of
present and future statutes and regulations, could prevent or restrict Banc One
Advisors from continuing to perform such services for the Trust. Depending upon
the nature of any changes in the services which could be provided
55
<PAGE>
by Banc One Advisors, the Board of Trustees of the Trust would review the
Trust's relationship with Banc One Advisors and consider taking all action
necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of BANC ONE CORPORATION subsidiary banks or
their correspondent banks in connection with customer purchases of Shares of the
Trust, these banks might be required to alter materially or discontinue the
services offered by them to customers. It is not anticipated, however, that any
change in the Trust's method of operations would affect its net asset value per
Share or result in financial losses to any customer.
PORTFOLIO TRANSACTIONS
Pursuant to the Advisory and Sub-Advisory Agreements, Banc One Advisors
and the Sub-Advisor determine, subject to the general supervision of the Board
of Trustees of the Trust and in accordance with each Fund's investment objective
and restrictions, which securities are to be purchased and sold by each such
Fund and which brokers are to be eligible to execute its portfolio transactions.
Purchases and sales of portfolio securities with respect to the Money Market
Funds, the Bond Funds, the Funds of Funds and (to a varying degree) the Asset
Allocation Fund usually are principal transactions in which portfolio securities
are purchased directly from the issuer or from an underwriter or market maker
for the securities. Purchases from underwriters of portfolio securities
generally include (but not in the case of mutual fund shares purchased by the
Funds of Funds) a commission or concession paid by the issuer to the underwriter
and purchases from dealers serving as market makers may include the spread
between the bid and asked price. Transactions on stock exchanges (other than
certain foreign stock exchanges) involve the payment of negotiated brokerage
commissions. Transactions in the over-the-counter market are generally principal
transactions with dealers. With respect to the over-the-counter market, the
Trust, where possible, will deal directly with the dealers who make a market in
the securities involved except in those circumstances where better price and
execution are available elsewhere. While the Banc One Advisors generally seeks
competitive spreads or commissions, the Trust may not necessarily pay the lowest
spread or commission available on each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Banc One Advisors and the Sub-Advisor with respect to
the Funds each serves based on their best judgment and in a manner deemed fair
and reasonable to Shareholders. The primary consideration is prompt execution of
orders in an effective manner at the most favorable price. Subject to this
consideration, dealers who provide supplemental investment research to Banc One
Advisors or the Sub-Advisor may receive orders for transactions by the Trust,
even if such dealers charge commissions in excess of the lowest rates available,
provided such commissions are reasonable in light of the value of brokerage and
research services received. Such research services may include, but are not be
limited to, analysis and reports concerning economic factors and trends,
industries, specific securities, and portfolio strategies. Information so
received is in addition to and not in lieu of services required to be performed
by Banc One Advisors or the Sub-Advisor and does not reduce the advisory fees
payable to Banc One Advisors or the Sub-Advisor. Such information may be useful
to Banc One Advisors or the Sub-Advisor in serving both the Trust and other
clients and, conversely, supplemental information obtained by the placement of
business of other clients may be useful to Banc One Advisors or the Sub-Advisor
in carrying out their obligations to the Trust. In the last fiscal year, Banc
One Advisors directed brokerage commissions to brokers who provided research
services to Banc One Advisors. Total compensation paid to such brokers amounted
to $15,142,680.
The Trust will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with its Advisors or their
affiliates except as may be permitted under the 1940 Act, and will not give
preference to correspondents of BANC ONE CORPORATION subsidiary banks with
respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
During the Trust's fiscal year ended June 30, 1995, the Trust paid
brokerage commissions to Goldman for brokerage services provided as follows:
<TABLE>
<CAPTION>
FUND COMMISSIONS PAID
---- ----------------
<S> <C>
Income Equity $ 700
Disciplined Value $81,124
Small Company Growth $47,160
Large Company Value $47,640
Equity Index $ 6,741
Asset Allocation $ 6,677
Government ARM $ 531
Large Company Growth $ 3,381
</TABLE>
During the Trust's fiscal year ended June 30, 1996, the Trust paid
brokerage commissions to Goldman for brokerage services provided as follows:
<TABLE>
<CAPTION>
FUND COMMISSIONS PAID
---- ----------------
<S> <C>
Income Equity $ 5,750
Disciplined Value $ 1,810
Growth Opportunities $11,714
Equity Index $42,243
Large Company Value $10,650
Asset Allocation $ 9,602
Small Capitalization $ 2,265
Value Growth $ 1,647
</TABLE>
56
<PAGE>
During the Trust's fiscal year ended June 30, 1996, the percentage of
the Trust's aggregate brokerage commissions paid to Goldman was 1.26% and the
percentage of the Trust's aggregate dollar amount of transactions involving the
payment of commissions effected through Goldman was 1.47%.
In the fiscal years ended June 30, 1997, 1996, and 1995, each of the
Funds of the Trust that paid brokerage commissions and the amounts paid for each
year were as follows:
THE ONE GROUP BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
FUND 1997 1996 1995
- ---- ---- ---- ----
<S> <C> <C> <C>
Income Equity $ 395,450 $ 96,204 $ 102,275
Disciplined Value $1,570,859 $ 613,774 $2,572,895
Growth Opportunities $3,199,337 $2,798,442 $1,242,481
Equity Index $ 162,178 $ 56,155 $ 21,858
Large Company Value $1,378,450 $2,126,632 $1,783,768
Asset Allocation $ 194,187 $ 61,678 $ 42,796
International Equity Index $ 349,010 $ 176,140 $ 223,386
Large Company Growth $1,285,883 $ 596,397 $ 442,672
Ultra Short-Term Income $ 0 $ 0 $ 531
Small Capitalization $ 194,127 $ 43,039
Value Growth $1,005,409 $ 224,373
</TABLE>
Investment decisions for each Fund of the Trust are made independently
from those for the other Funds or any other investment company or account
managed by Banc One Advisors or the Sub-Advisor. Any such other investment
company or account may also invest in the same securities as the Trust. When a
purchase or sale of the same security is made at substantially the same time on
behalf of a given Fund and another Fund, investment company or account (or, in
the case of the International Equity Index Fund, another account), the
transaction will be averaged as to price, and available investments allocated as
to amount, in a manner which Banc One Advisors or the Sub-Advisor of the given
Fund believes to be equitable to the Fund(s) and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by a Fund or the size of the position obtained by a
Fund. To the extent permitted by law, Banc One Advisors and the Sub-Advisor may
aggregate the securities to be sold or purchased by it for a Fund with those to
be sold or purchased by it for other Funds or for other investment companies or
accounts in order to obtain best execution. As provided by the Investment
Advisory and Sub-Advisory Agreements, in making investment recommendations for
the Trust, Banc One Advisors and the Sub-Advisor will not inquire or take into
consideration whether an issuer of securities proposed for purchase or sale by
the Trust is a customer of Banc One Advisors or the Sub-Advisor or their parents
or subsidiaries or affiliates and, in dealing with its commercial customers,
Banc One Advisors and the Sub-Advisor and their respective parent, subsidiaries,
and affiliates will not inquire or take into consideration whether securities of
such customers are held by the Trust.
ADMINISTRATOR
The One Group Services Company serves as Administrator (the
"Administrator") to each Fund of the Trust pursuant to a Management and
Administration Agreement with the Trust (the "Administration Agreement"). The
Board of Trustees of the Trust approved The One Group Services Company as the
sole Administrator for each Fund beginning December 1, 1995. The Administrator
assists in supervising all operations of each Fund to which it serves as
Administrator (other than those performed under the respective investment
advisory agreements and Custodian and Transfer Agency Agreements for that Fund).
Under the Administration Agreement, the Administrator has agreed to
price the portfolio securities of each Fund it serves and to compute the net
asset value and net income of such Funds on a daily basis, to maintain office
facilities for the Trust, to maintain each such Fund's financial accounts and
records, and to furnish the Trust statistical and research data, data
processing, clerical, accounting, and bookkeeping services, and certain other
services required by the Trust with respect to each such Fund. The Administrator
prepares annual and semi-annual reports to the Securities and Exchange
Commission, prepares federal and State tax returns, prepares filings with State
securities commissions, and generally assists in all aspects of the Trust's
operations other than those performed under the investment advisory agreements,
and Custodian and Transfer Agency Agreements. Under the Administration
Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
Banc One Advisors also serves as Sub-Administrator to each Fund of the
Trust, pursuant to an agreement between the Administrator and Banc One Advisors.
Pursuant to this agreement, Banc One Advisors performs many of the
Administrator's duties, for which Banc One Advisors receives a fee paid by the
Administrator.
57
<PAGE>
The Trust paid fees for administrative services to 440 Financial and to
SEI Financial Management, previous Administrators of the Trust, to The Winsbury
Company, the prior Administrator to the predecessor funds of the Large Company
Growth and Intermediate Bond Funds, and to Federated Administrative Services,
the prior Administrator to the predecessor Fund of the Kentucky Municipal Bond
Fund, for the fiscal years ended June 30, 1997, 1996, and 1995 as follows:
58
<PAGE>
THE ONE GROUP ADMINISTRATOR--NET
<TABLE>
<CAPTION>
THE ONE GROUP FISCAL YEAR ENDED JUNE 30, 1997
SERVICES BANC ONE ADVISORS**
FUND COMPANY NET WAIVED NET WAIVED
<S> <C> <C> <C> <C>
U.S. Treasury Securities $4,041,160 $ 52,457 $ $ 0
Money Market
Prime Money Market $4,325,620 $ 268,513 $1,666,976 $ 0
Municipal Money Market $ 821,921 $ 45,236 $ 314,733 $ 0
Ohio Municipal Money Market $ 168,236 $ 79,377 $ 107,188 $ 0
Income Equity $ 916,621 $ 0 $ 332,802 $ 0
Disciplined Value $ 922,753 $ 0 $ 334,826 $ 0
Growth Opportunities $1,007,999 $ 0 $ 365,770 $ 0
Equity Index $ 329,854 $ 574,004 $ 328,342 $ 0
Large Company Value $1,056,104 $ 0 $ 383,222 $ 0
Asset Allocation $ 94,269 $ 116,194 $ 76,370 $ 0
International Equity Index $ 662,008 $ 0 $ 240,084 $ 0
Large Company Growth $1,775,503 $ 0 $ 644,453 $ 0
(Sun Eagle: Equity Growth)
Income Bond $1,067,153 $ 0 $ 387,285 $ 0
Limited Volatility Bond $1,008,923 $ 0 $ 366,010 $ 0
Intermediate Tax-Free Bond $ 554,163 $ 0 $ 201,205 $ 0
Municipal Income $ 609,095 $ 16,541 $ 227,031 $ 0
Ohio Municipal Bond $ 213,314 $ 1,857 $ 78,076 $ 0
Government Bond $ 990,039 $ 220,036 $ 439,098 $ 0
Ultra Short-Term Income $ 60,695 $ 95,720 $ 50,007 $ 0
Intermediate Bond (Sun Eagle) $ 651,480 $ 0 $ 236,534 $ 0
Intermediate Fixed Income)
Treasury Only Money Market $ 240,680 $ 0 $ 240,061 $ 0
Government Money Market $ 530,431 $ 0 $ 530,415 $ 0
Institutional Prime NA* NA* NA* $ 0
Money Market
Treasury Money Market NA* NA* NA* $ 0
Tax-Exempt Money Market NA* NA* NA* $ 0
Arizona Municipal Bond $ 140,206 $ 49,819 $ 69,221 $ 0
Kentucky Municipal Bond $ 127,957 $ 0 $ 46,478 $ 0
Texas Tax-Free Bond NA* NA* NA* NA*
W. Virginia Municipal Bond $ 58,427 $ 10,580 $ 25,040 $ 0
Louisiana Municipal Bond $ 297,050 $ 0 $ 107,762 $ 0
Value Growth $ 531,250 $ 0 $ 192,876 $ 0
Small Capitalization (Gulf South Growth) $ 92,752 $ 70,432 $ 59,214 $ 0
Income NA* NA* NA* NA*
Investor Growth $ 15,583 $ 0 $ 0 $ 0
Investor Growth & Income $ 0 $ 20,566 $ 0 $ 0
Investor Aggressive Growth NA* NA* NA* NA*
Investor Conservative Growth $ 0 $ 6,866 $ 0 $ 0
Investor Balanced $ 0 $ 31,220 $ 0 $ 0
Investor Fixed Income NA* NA* NA* NA*
Treasury & Agency $ 13,891 $ 68,143 $ 29,765 $ 0
</TABLE>
* As of June 30, 1997, the Fund had not commenced operations.
** These fees were paid by The One Group Services Company to Banc One
Advisors pursuant to the Sub-Administration Agreement.
59
<PAGE>
THE ONE GROUP ADMINISTRATOR--NET
<TABLE>
<CAPTION>
THE ONE GROUP FISCAL YEAR ENDED JUNE 30, 1996
SERVICES BANC ONE ADVISORS** 440***
FUND COMPANY NET WAIVED NET WAIVED NET WAIVED
- ---- ----------- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities
Money Market $1,675,933 $ 23,824 $ 928,127 0 $ 881,386 $ 19,060
Prime Money Market $2,490,499 $ 0 $1,463,271 0 $1,611,838 $ 0
Municipal Money Market $ 504,611 $ 58,625 $ 340,160 0 $ 328,817 $ 82,052
Ohio Municipal Money Market $ 9,933 $ 87,195 $ 53,819 0 $ 22,276 $ 39,800
Income Equity $ 286,663 $ 0 $ 151,456 0 $ 136,804 $ 0
Disciplined Value $ 543,544 $ 0 $ 321,420 0 $ 357,658 $ 0
Growth Opportunities $ 511,634 $ 0 $ 301,050 0 $ 332,353 $ 0
Equity Index $ 219,301 $ 96,276 $ 165,797 0 $ 52,623 $ 119,116
Large Company Value $ 532,314 $ 0 $ 300,440 0 $ 283,851 $ 32,509
Asset Allocation $ 19,184 $ 48,482 $ 33,779 0 $ 22,718 $ 11,794
International Equity Index $ 307,633 $ 0 $ 171,529 0 $ 172,763 $ 0
Large Company Growth $ 778,543 $ 0 $ 441,303 0 $ 457,430 $ 0
(Sun Eagle: Equity Growth)
Income Bond $ 505,703 $ 0 $ 302,920 0 $ 343,646 $ 186
Limited Volatility Bond $ 471,594 $ 0 $ 275,961 0 $ 301,887 $ 0
Intermediate Tax-Free Bond $ 222,203 $ 0 $ 138,734 0 $ 167,244 $ 0
Municipal Income $ 210,905 $ 43,781 $ 142,512 0 $ 110,442 $ 43,233
Ohio Municipal Bond $ 81,876 $ 15,630 $ 57,825 0 $ 55,179 $ 11,740
Government Bond $ 544,937 $ 6,947 $ 297,480 0 $ 270,620 $ 12,171
Ultra Short-Term Income $ 0 $ 50,706 $ 28,274 $ 0 $ 35,162
Intermediate Bond (Sun
Eagle:
Intermediate Fixed Income) $ 229,988 $ 0 $ 134,912 0 $ 148,161 $ 0
Treasury Only Money Market $ 113,945 $ 0 $ 179,830 0 $ 65,888 $ 0
Government Money Market $ 232,688 $ 0 $ 385,955 0 $ 153,141 $ 131
Institutional Prime
Money Market NA* NA* NA NA* NA*
Treasury Money Market NA* NA* NA NA* NA*
Tax-Exempt Money Market NA* NA* NA NA* NA*
Arizona Municipal Bond NA* NA* NA NA* NA*
Kentucky Municipal Bond 38,104 $ 1,196 23,883 0 $ 26,310 $ 2,256
Texas Tax-Free Bond NA* NA* NA NA* NA*
W. Virginia Municipal Bond NA* NA* NA NA* NA*
Louisiana Municipal Bond $ 86,078+ $ 0 $ 31,165+ 0 $ 0 $ 0
Value Growth $ 101,245+ $ 0 $ 36,656+ 0 $ 0 $ 0
Gulf South Growth $ 47,011+ $ 0 $ 17,021+ 0 $ 0 $ 0
Income NA* NA* NA* NA* NA* NA*
Investor Growth NA* NA* NA* NA* NA* NA*
Investor Growth & Income NA* NA* NA* NA* NA* NA*
Investor Aggressive Growth NA* NA* NA* NA* NA* NA*
Investor Conservative Growth NA* NA* NA* NA* NA* NA*
Investor Balanced NA* NA* NA* NA* NA* NA*
Investor Fixed Income NA* NA*
</TABLE>
* As of June 30, 1996, the Fund had not commenced operations.
** These were fees paid by The One Group Services Company to Banc One
Advisors pursuant to the Sub-Administration Agreement for the period
from December 1, 1995 through June 30, 1996, and by 440 for the period
June 30, 1995 to December 1, 1995.
*** These were fees paid from July 1, 1995 through early November 30, 1995.
+ These fees were paid from March 26, 1996 through June 30, 1996.
60
<PAGE>
THE ONE GROUP ADMINISTRATOR--NET
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1995
440 ADVISOR** FEDERATED
FUND NET WAIVED NET WAIVED NET WAIVED
- ---- --- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities
Money Market $1,731,370 $ 122,233 $ 176,604 $ 0 NA NA
Prime Money Market $2,897,503 $ 111,313 $ 304,170 $ 0 NA NA
Municipal Money Market $ 699,142 $ 92,641 $ 75,012 $ 0 NA NA
Ohio Municipal Money Market $ 82,050 $ 61,415 $ 11,806 $ 0 NA NA
Income Equity $ 308,619 $ 0 $ 27,163 $ 0 NA NA
Disciplined Value $ 687,537 $ 0 $ 65,713 $ 0 NA NA
Growth Opportunities $ 631,524 $ 0 $ 59,053 $ 0 NA NA
Equity Index $ 90,704 $ 195,567 $ 30,329 $ 0 NA NA
Large Company Value $ 317,839 $ 27,527 $ 48,604 $ 0 NA NA
Asset Allocation $ 62,570 $ 4,439 $ 6,304 $ 0 NA NA
International Equity Index $ 285,929 $ 0 $ 31,831 $ 0 NA NA
Large Company Growth $ 495,980 $ 0 $ 76,459 $ 0 NA NA
Income Bond $ 763,202 $ 6,504 $ 67,577 $ 0 NA NA
Limited Volatility Bond $ 653,915 $ 2,136 $ 60,084 $ 0 NA NA
Intermediate Tax-Free Bond $ 305,651 $ 0 $ 31,017 $ 0 NA NA
Municipal Income $ 198,808 $ 79,249 $ 28,635 $ 0 NA NA
Ohio Municipal Bond $ 124,734 $ 32,085 $ 13,946 $ 0 NA NA
Government Bond $ 414,276 $ 14,952 $ 53,984 $ 0 NA NA
Ultra Short-Term Income $ 68,313 $ 72,059 $ 8,546 $ 0 NA NA
Intermediate Bond $ 208,925 $ 0 $ 26,063 $ 0 NA NA
Treasury Only Money Market $ 86,438 $ 0 $ 33,470 $ 0 NA NA
Government Money Market $ 273,911 $ 23,414 $ 88,367 $ 0 NA NA
Kentucky Municipal Bond $ 24,352*** $ 1,554*** $ 6,155*** $ 0*** $ 77,852**** $ 0****
Institutional Prime
Money Market NA* NA* NA* NA* NA NA
Treasury Money Market NA* NA* NA* NA* NA NA
Tax-Exempt Money Market NA* NA* NA* NA* NA NA
Arizona Municipal Bond NA* NA* NA* NA* NA NA
Texas Tax-Free Bond NA* NA* NA* NA* NA NA
W. Virginia Municipal Bond NA* NA* NA* NA* NA NA
Louisiana Municipal Bond $ 297,746+ $ 99,248+ NA NA NA NA
Value Growth $ 295,695+ NA+ NA NA NA NA
Gulf South Growth $ 134,419+ NA+ NA NA NA NA
Income NA* NA* NA* NA* NA NA
Investor Growth NA* NA* NA* NA* NA NA
Investor Growth & Income NA* NA* NA* NA* NA NA
Investor Aggressive Growth NA* NA* NA* NA* NA NA
Investor Conservative
Growth NA* NA* NA* NA* NA NA
Investor Balanced NA* NA* NA* NA* NA NA
Investor Fixed Income NA* NA* NA* NA* NA NA
</TABLE>
* As of June 30, 1995, the Fund had not commenced operations.
** These were fees paid by 440 to Banc One Advisors pursuant to the
Sub-Administration Agreement for the period from April 1, 1995 through
June 30, 1995.
*** These fees were paid from January 20, 1995 through June 30, 1995.
**** These fees were paid from February 1, 1994 through January 19, 1995.
+ These fees were paid for fiscal year ended November 30, 1995 to Goldman
Sachs Asset Management, the Funds' prior administrator.
61
<PAGE>
Unless sooner terminated, the Administration Agreement between the
Trust and The One Group Services Company will continue in effect through
November 30, 1997. The Administration Agreement thereafter shall be renewed
automatically for successive one year terms, unless written notice not to renew
is given by the non-renewing party to the other party at least sixty days prior
to the expiration of the then-current term. The Administration Agreement will be
reviewed and ratified at least annually by the Trust's Board of Trustees,
provided that the Administration Agreement is also reviewed and ratified by the
majority of the Trust's Trustees who are not parties to the Administration
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Administration Agreement, by vote cast in person at a meeting called for the
purpose of reviewing and ratifying the Administration Agreement. The
Administration Agreement is terminable with respect to a particular Trust only
upon mutual agreement of the parties to the Administration Agreement and for
cause (as defined in the Administration Agreement) by the party alleging cause,
on not less than sixty days' notice by the Trust's Board of Trustees or by The
One Group Services Company.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered by
the Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
DISTRIBUTOR
The One Group Services Company serves as Distributor to each Fund of
the Trust pursuant to its Distribution Agreement with the Trust (the
"Distribution Agreement"). The Board of Trustees of the Trust approved The One
Group Services Company as the sole Distributor beginning November 1, 1995.
Unless otherwise terminated, the Distribution Agreement will continue in effect
until November 30, 1997 and will continue from year to year if approved at least
annually (i) by the Trust's Board of Trustees or by the vote of a majority of
the outstanding Shares of the Funds (see "ADDITIONAL INFORMATION--
Miscellaneous," in this Statement of Additional Information) that are parties to
the Distribution Agreement, and (ii) by the vote of a majority of the Trustees
of the Trust who are not parties to the Distribution Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. The agreement may be terminated in the event of its
assignment, as defined in the 1940 Act. The One Group Services Company is a
broker-dealer registered with the Securities and Exchange Commission, and is a
member of the National Association of Securities Dealers, Inc.
DISTRIBUTION PLAN
The operation and fees with respect to Class A Shares, Class B Shares,
Class C Shares, and Service Class Shares of the Trust payable under the Trust's
Distribution and Shareholder Services Plans, to which Class A Shares, Class B
Shares, Class C Shares, and Service Class Shares of each Fund of the Trust are
subject, are described in each such Fund's Prospectuses and in the Multiple
Class Plan.
The Distribution and Shareholder Services Plan with respect to Class A
Shares (the "Distribution Plan") was initially approved on July 28, 1989 by the
Trust's Board of Trustees, including a majority of the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the Distribution Plan (the "Independent
Trustees"). The Distribution Plan originally applied to the single class of
Shares of each Fund of the Trust that existed prior to the offering of the
Funds' Shares as five separate classes. An amendment to the Distribution Plan
was approved by the Independent Trustees on October 21, 1991, and became
effective on February 7, 1992. Such amendment limited fees under the
Distribution Plan only to the Class A Shares of each Fund. The Distribution Plan
was amended again on February 11, 1993 in order to make Retirement Class Shares
(now the Service Class Shares) subject to distribution fees. The Distribution
Plan was further amended on February 29, 1996, to eliminate certain "defensive"
provisions of the Distribution Plan. A Distribution and Shareholder Services
Plan (the "CDSC Plan") for Class B and Class C Shares was initially approved on
August 12, 1993 by the Independent Trustees. The CDSC Distribution Plan was
re-executed on December 13, 1995 and amended on February 20, 1997. Prior to
February 7, 1992, distribution fees were waived with respect to every Fund of
the Trust except the U.S. Treasury Securities Money Market Fund and the Prime
Money Market Fund.
During the fiscal year ending June 30, 1997, the distribution fees paid
by the Class A, Class B and Service Class Shares (formerly Retirement Class
Shares) of the Trust to The One Group Services Company were as follows:
62
<PAGE>
THE ONE GROUP DISTRIBUTION FEES PAID FOR THE FISCAL YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
SERVICE
FUND DISTRIBUTOR CLASS A CLASS B CLASS
<S> <C> <C> <C> <C>
U.S. Treasury Securities Money Market One Group Ser. $ 850,746 $ 375 $ 0
Prime Money Market One Group Ser. $ 840,900 $ 2,280 $ 0
Municipal Money Market One Group Ser. $ 105,745 NA $ 0
Ohio Municipal Money Market One Group Ser. $ 92,006 NA $ 0
Income Equity One Group Ser. $ 104,017 $ 483,517 NA
Disciplined Value One Group Ser. $ 54,778 $ 179,949 NA
Growth Opportunities One Group Ser. $ 80,764 $ 226,269 NA
Equity Index One Group Ser. $ 145,478 $ 901,878 NA
Large Company Value One Group Ser. $ 30,071 $ 60,403 NA
Asset Allocation One Group Ser. $ 57,839 $ 283,235 NA
International Equity Index One Group Ser. $ 27,165 $ 73,443 NA
Large Company Growth One Group Ser. $ 237,595 $ 865,711 NA
Income Bond One Group Ser. $ 31,402 $ 79,320 NA
Limited Volatility Bond One Group Ser. $ 43,944 $ 42,962 NA
Intermediate Tax-Free Bond One Group Ser. $ 16,954 $ 23,312 NA
Municipal Income One Group Ser. $ 78,506 $ 264,557 NA
Ohio Municipal Bond One Group Ser. $ 40,806 $ 107,071 NA
Government Bond One Group Ser. $ 92,225 $ 101,562 NA
Ultra Short-Term Income One Group Ser. $ 31,166 $ 14,247 NA
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
SERVICE
FUND DISTRIBUTOR CLASS A CLASS B CLASS
<S> <C> <C> <C> <C>
Intermediate Bond One Group Ser. $ 37,030 $ 71,731 NA
Treasury Only Money Market One Group Ser. NA NA NA
Government Money Market One Group Ser. NA NA NA
Kentucky Municipal Bond One Group Ser. $ 18,364 $ 17,792 NA
Treasury Money Market One Group Ser. NA* NA* NA*
Tax-Exempt Money Market One Group Ser. NA* NA* NA*
Arizona Municipal Bond One Group Ser. $ 556+ 0 NA
Texas Tax-Free Bond One Group Ser. $ 0* $ 0* NA*
W. Virginia Municipal Bond One Group Ser. $ 553+ $ 1,097+ NA
Louisiana Municipal Bond One Group Ser. $125,917 $ 32,207 NA
Value Growth One Group Ser. $ 98,729 $ 69,685 NA
Small Capitalization One Group Ser. $ 43,358 $ 32,113 NA
Income One Group Ser. NA* NA* NA*
Investor Growth ** One Group Ser. $ 1,739 $ 13,821 NA
Investor Growth & Income ** One Group Ser. $ 2,040 $ 17,155 NA
Investor Aggressive Growth One Group Ser. NA* NA* NA*
Investor Conservative Growth ** One Group Ser. $ 653 $ 4,800 NA
Investor Balanced ** One Group Ser. $ 846 $ 11,720 NA
Investor Fixed Income One Group Ser. NA* NA* NA*
Treasury & Agency One Group Ser. $ 13+ $ 17+ NA
</TABLE>
* These funds had not commenced operations as of June 30, 1997.
** These fees were paid from December 10, 1996 to June 30, 1997.
+ The fees were paid from January 20, 1997 to June 30, 1997.
In accordance with Rule 12b-1 under the 1940 Act, the Distribution Plan
and CDSC Plan may be terminated with respect to the Class A Shares, Class B
Shares, Class C Shares or Service Class Shares of any Fund by a vote of a
majority of the Independent Trustees, or by a vote of a majority of the
outstanding Class A Shares, Class B Shares, Class C Shares or Service Class
Shares, respectively, of that Fund. The Distribution Plan and CDSC Plan may be
amended by vote of the Trust's Board of Trustees, including a majority of the
Independent Trustees, cast in person at a meeting called for such purpose,
except that any change in the Distribution Plan or Class B Distribution Plan
that would materially increase the distribution fee with respect to the Class A
Shares, Class B Shares, Class C Shares or Service Class Shares of a Fund
requires the approval of that Fund's Class A, Class B, Class C or Service Class
Shareholders, respectively. The Trust's Board of Trustees will review on a
quarterly and annual basis written reports of the amounts received and expended
under the Distribution Plan (including amounts expended by the Distributor to
Participating Organizations pursuant to the Servicing Agreements entered into
under the Distribution Plan) indicating the purposes for which such expenditures
were made.
64
<PAGE>
CUSTODIAN AND TRANSFER AGENT
Cash and securities owned by the Funds of the Trust are held by State
Street Bank and Trust Company ("State Street") as Custodian. State Street serves
the respective Funds as Custodian pursuant to a Custodian Agreement with the
Trust (the "Custodian Agreement"). Under the Custodian Agreement, State Street
(i) maintains a separate account or accounts in the name of each Fund; (ii)
makes receipts and disbursements of money on behalf of each Fund; (iii) collects
and receives all income and other payments and distributions on account of the
Funds' portfolio securities; (iv) responds to correspondence from security
brokers and others relating to its duties; and (v) makes periodic reports to the
Trust's Board of Trustees concerning the Trust's operations. State Street may,
at its own expense, open and maintain a sub-custody account or accounts on
behalf of the Trust, provided that State Street shall remain liable for the
performance of all of its duties under the Custodian Agreement.
Bank One Trust Company, N.A. serves as Sub-Custodian in connection with
the Trust's securities lending activities, pursuant to an agreement between
State Street and Bank One Trust Company. Bank One Trust Company receives a fee
paid by the Trust.
Rules adopted under the 1940 Act permit the Trust to maintain its
securities and cash in the custody of certain eligible banks and securities
depositories. The Trust intends to select foreign custodians or sub-custodians
to maintain foreign securities of the International Equity Index Fund pursuant
to such rules, following a consideration of a number of factors, including, but
not limited to, the reliability and financial stability of the institution; the
ability of the institution to perform custodial services for the Trust; the
reputation of the institution in its national market; the political and economic
stability of the country in which the institution is located; and the risks of
potential nationalization or expropriation of Trust assets. In addition, the
1940 Act requires that foreign bank sub-custodians, among other things have
Shareholder equity in excess of $200 million, have no lien on the Trust's assets
and maintain adequate and accessible records.
State Street Bank & Trust ("State Street") serves as Transfer Agent and
Dividend Disbursing Agent for each Fund pursuant to Transfer Agency Agreements
with the Trust (the "Transfer Agency Agreement"). Under the Transfer Agency
Agreements, State Street has agreed (i) to issue and redeem Shares of the Trust;
(ii) to address and mail all communications by the Trust to its Shareholders,
including reports to Shareholders, dividend and distribution notices, and proxy
material for its meetings of Shareholders; (iii) to respond to correspondence or
inquiries by Shareholders and others relating to its duties; (iv) to maintain
Shareholder accounts and certain sub-accounts; and (v) to make periodic reports
to the Trust's Board of Trustees concerning the Trust's operations.
EXPERTS
The financial statements of the Trust for the fiscal year ended June
30, 1997 are incorporated by reference in this Statement of Additional
Information, have been audited by Coopers & Lybrand L.L.P., independent
accountants, as set forth in their reports appearing elsewhere herein, and are
included in reliance upon such reports and on the authority of such firm as
experts in auditing and accounting.
The financial statements for the predecessor funds of the Intermediate
Bond Fund and Large Company Growth Fund, Sun Eagle Intermediate Fixed Income
Fund and Sun Eagle Equity Growth Fund, respectively, for the fiscal year ended
June 30, 1993 and for the period from February 28, 1992 (commencement of
operations of each Fund) to June 30, 1992 are incorporated by reference in this
Statement of Additional Information, have been audited by KPMG Peat Marwick LLP,
independent accountants, and are included in reliance upon the authority of such
firm as experts in auditing and accounting.
The financial statements for the predecessor Fund of the Kentucky
Municipal Bond Fund, the Trademark Kentucky Municipal Bond Fund, for the period
from February 1, 1994 to January 19, 1995, and for the period from March 12,
1993 (commencement of operations) to January 31, 1994 are incorporated by
reference in this Statement of Additional Information, have been audited by KPMG
Peat Marwick LLP, independent accountants, and are included in reliance upon the
authority of such firm as experts in auditing and accounting.
The financial statements for the predecessor funds of the Louisiana
Municipal Bond Fund, the Value Growth Fund, and the Gulf South Growth Fund, the
Paragon Louisiana Tax-Free Fund, the Paragon Value Growth Fund and the Paragon
Gulf South Growth Fund, for the fiscal year ended November 30, 1995 are
incorporated by reference in this Statement of Additional Information, have been
audited by Price Waterhouse LLP, independent accountants, and are included in
reliance upon such reports and on the authority of such firm as experts in
auditing and accounting.
The law firm of Ropes & Gray, One Franklin Square, 1301 K Street, N.W.,
Suite 800 East, Washington, D.C. 20005 is counsel to the Trust. From time to
time, Ropes & Gray have rendered legal services to Bank One, Milwaukee and Bank
One, Wisconsin Trust Company, NA.
65
<PAGE>
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES
The Trust is a Massachusetts Business Trust. The Trust's Declaration of
Trust was filed with the Secretary of State of the Commonwealth of Massachusetts
on May 23, 1985 and authorizes the Board of Trustees to issue an unlimited
number of Shares, which are units of beneficial interest, without par value. The
Trust's Declaration of Trust authorizes the Board of Trustees to establish one
or more series of Shares of the Trust, and to classify or reclassify any series
into one or more classes by setting or changing in any one or more respects the
preferences, designations, conversion, or other rights, restrictions, or
limitations as to dividends, conditions of redemption, qualifications, or other
terms applicable to the Shares of such class, subject to those matters expressly
provided for in the Declaration of Trust, as amended, with respect to the Shares
of each series of the Trust. The Trust presently includes 40 series of Shares,
which represent interests in the Prime Money Market Fund, the U.S. Treasury
Securities Money Market Fund, the Municipal Money Market Fund, the Ohio
Municipal Money Market Fund, the Income Equity Fund, the Disciplined Value Fund,
the Growth Opportunities Fund, the Value Growth Fund, the Small Capitalization
Fund, the Large Company Value Fund, the Large Company Growth Fund, the
International Equity Index Fund, the Equity Index Fund, the Asset Allocation
Fund, the Income Bond Fund, the Limited Volatility Bond Fund, the Intermediate
Bond Fund, the Government Bond Fund, the Ultra Short-Term Income Fund, the
Income Fund, the Investor Growth Fund, the Investor Growth & Income Fund, the
Investor Aggressive Growth Fund, the Investor Fixed Income Fund, the Investor
Conservative Growth Fund, the Investor Balanced Fund, the Municipal Income Fund,
the Intermediate Tax-Free Bond Fund, the Ohio Municipal Bond Fund, the Texas
Tax-Free Bond Fund, the West Virginia Municipal Bond Fund, the Kentucky
Municipal Bond Fund, the Louisiana Municipal Bond Fund, the Arizona Municipal
Bond Fund, the Treasury Money Market Fund, the Treasury Only Money Market Fund,
the Government Money Market Fund, the Tax Exempt Money Market Fund, the
Institutional Prime Money Market Fund and the Treasury and Agency Fund. The
Funds of the Trust (other than the Institutional Money Market Funds, the U.S.
Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund) offer
Shares in four separate classes: Fiduciary Shares, Class A Shares, Class B and
Class C Shares. The U.S. Treasury Securities Money Market Fund and the Prime
Money Market Fund offer Fiduciary Class Shares, Class A Shares, Class B Shares,
Class C Shares, Fiduciary Class Shares and Service Class Shares. The
Institutional Money Market Funds offer only Fiduciary Class Shares. The
Municipal Money Market Fund and the Ohio Municipal Money Market Funds offer
Fiduciary Class, Class A and Class C Shares. See the relevant Prospectus for
those Funds for more details.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Trust's Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
Shares of a Fund are entitled to receive the assets available for distribution
belonging to the Fund, and a proportionate distribution, based upon the relative
asset values of the respective Funds, of any general assets not belonging to any
particular Fund which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding Shares of
each Fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding Shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding Shares of such Fund. However, Rule 18f-2 also
provides that the ratification of independent public accountants, the approval
of principal underwriting contracts, and the election of Trustees may be
effectively acted upon by Shareholders of the Trust voting without regard to
series.
Class A Shares, Class B Shares, Class C Shares and Service Class Shares
of a Fund have exclusive voting rights with respect to matters pertaining to the
Fund's Distribution Plan.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, holders of units of beneficial interest in a
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. However, the Trust's Declaration of
Trust provides that Shareholders shall not be subject to any personal liability
for the obligations of the Trust, and that every written agreement, obligation,
instrument, or undertaking made by the Trust shall contain a provision to the
effect that the Shareholders are not personally liable thereunder. The
Declaration of Trust provides for indemnification out of the trust property of
any Shareholder held personally liable solely by reason of his being or having
been a Shareholder. The Declaration of Trust also provides that the Trust shall,
upon request, assume the defense of any claim made against any Shareholder for
any act or obligation of the Trust, and shall satisfy any judgment thereon.
Thus, the risk of a Shareholder incurring financial loss on account of
Shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
66
<PAGE>
The Declaration of Trust states further that no Trustee, officer, or
agent of the Trust shall be personally liable in connection with the
administration or preservation of the assets of the trust or the conduct of the
Trust's business; nor shall any Trustee, officer, or agent be personally liable
to any person for any action or failure to act except for his own bad faith,
willful misfeasance, gross negligence, or reckless disregard of his duties. The
Declaration of Trust also provides that all persons having any claim against the
Trustees or the Trust shall look solely to the assets of the trust for payment.
PERFORMANCE
From time to time, the Funds may advertise yield, total return and/or
distribution rate. These figures will be based on historical earnings and are
not intended to indicate future performance. The yield of a Fund refers to the
annualized income generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated over a one-year period and is shown
as a percentage of the investment.
Total return is the change in value of an investment in a Fund over a
given period, assuming reinvestment of any dividends and capital gains. A
cumulative total return reflects an actual rate of return over a stated period
of time. An average annual total return is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
returns smooth out variations in performance; they are not the same as actual
year-by-year results.
The distribution rate is computed by dividing the total amount of the
dividends per share paid out during the past period by the maximum offering
price or month-end net asset value depending on the class of a Fund. This figure
is then "annualized" (multiplied by 365 days and divided by the applicable
number of days in the period). Funds with a front-end sales charge would
incorporate the offering price into the distribution yield in place of month-end
net asset value.
Distribution rate is a measure of the level of income paid out in cash
to Shareholders over a specified period. It differs from yield and total return
and is not intended to be a complete measure of performance. Furthermore, the
distribution rate may include return of principal and/or capital gains. Total
return is the change in value of a hypothetical investment over a given period
assuming reinvestment of dividends and capital gain distributions. The yield
refers to the cumulative 30-day rolling net investment income, divided by
maximum offering price and multiplied by average shares outstanding during this
period.
Further information about the performance of each class of the Funds is
contained in the Trust's Annual Report to Shareholders for The One Group, which
may be obtained without charge by calling 1-800-480-4111.
CALCULATION OF PERFORMANCE DATA
The yield for each Money Market Funds, and the Institutional Money
Market Funds was computed with respect to each class of Shares by determining
the percentage net change, excluding capital changes, in the value of an
investment in one Share of the particular class of the Fund over the base
period, and multiplying the net change by 365/7 (or approximately 52 weeks). The
effective yield of each class of each Fund represents a compounding of the yield
by adding 1 to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power equal to 365/7,
and subtracting 1 from the result. No performance data is available with respect
to the Tax Exempt Money Market, Treasury Money Market and Institutional Prime
Money Market Fund because those Funds had not commenced operations as of June
30, 1997.
MONEY MARKET FUNDS
Fiduciary Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
U.S. Treasury Securities 09/09/85(2) 5.03%
Prime 08/01/85(2) 5.25%
Municipal 06/04/87 3.63%
Ohio Municipal(1) 06/09/93 3.73%
</TABLE>
Class A Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
U.S. Treasury Securities 02/18/92 4.78%
Prime 02/18/92 5.00%
Municipal 02/18/92 3.38%
Ohio Municipal(1) 01/26/93 3.48%
</TABLE>
67
<PAGE>
Institutional Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
Treasury Only Money 04/16/93 5.12%
Market
Government Money Market 06/14/93 5.30%
</TABLE>
Class B Shares
<TABLE>
<CAPTION>
INCEPTION 7-DAY YIELD
DATE 6/30/97
<S> <C> <C>
U.S. Treasury Securities 11/01/96 4.03%
Prime 11/01/96 4.25%
</TABLE>
(1) A portion of the income may be subject to alternative minimum tax.
(2) Data for performance purposes begins 1/1/87 (Fiduciary Class).
The tax equivalent yields for the classes of the Municipal Money
Market, Ohio Municipal Money Market, and Tax Exempt Money Market Funds are
computed by dividing that portion of the Fund's yield (with respect to a
particular class) which is tax-exempt by 1 minus a stated income tax rate and
adding the product to that portion, if any, of the yield of the Fund (with
respect to a particular class) that is not tax-exempt. The tax equivalent yields
for the classes of the Municipal Money Market Fund contained in the following
paragraph were computed based on an assumed effective federal income tax rate of
39.6%. No such data was provided for the Tax Exempt Money Market Fund because it
had not commenced operations as of June 30, 1997. The tax equivalent effective
yield for the classes of the Municipal Money Market Fund, Ohio Municipal Money
Market Fund, and Tax Exempt Money Market Funds are computed by dividing that
portion of the effective yield of the Fund (with respect to a particular class)
which is tax-exempt by 1 minus a stated income tax rate and adding the product
to that portion, if any, of the effective yield of the Fund (with respect to a
particular class) that is not tax-exempt.
TAX-EQUIVALENT YIELD
<TABLE>
<CAPTION>
FIDUCIARY CLASS A
7 DAY 7 DAY
YIELD 28% TAX 39.6% TAX YIELD 28% TAX 39.6% TAX
----- ------- --------- ----- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Municipal Money Market 3.63% 5.04% 6.01% 3.38% 4.69% 5.60%
Ohio Municipal 3.73% 5.18% 6.18% 3.48% 4.83% 5.76%
Money Market
</TABLE>
The performance of the funds may be compared in publications to the
performance of various indices and investments (such as other mutual funds) for
which reliable performance data is available, as well as averages, performance
rankings or other information prepared by recognized mutual fund statistical
services, as set forth below.
Performance information showing a Fund's total return and/or 30-day
yield with respect to a particular class may be presented from time to time in
advertising and sales literature regarding the Equity Funds, the Bond Funds, the
Funds of Funds, and the Municipal Bond Funds. A 30-day yield is calculated by
dividing the net investment income per-share earned during the 30-day base
period by the maximum offering price per share on the last day of the period,
according to the following formula:
a-b
------
30-Day Yield = 2[(cd +1)6-1]
In the above formula, "a" represents dividends and interest earned by a
particular class during the 30-day base period; "b" represents expenses accrued
to a particular class for the 30-day base period (net of reimbursements); "c"
represents the average daily number of Shares of a particular class outstanding
during the 30-day base period that were entitled to receive dividends; and "d"
represents the maximum offering price per share of a particular class on the
last day of the 30-day base period.
From time to time the tax equivalent 30-day yield of a particular class
of a Municipal Bond Fund may be presented in advertising and sales literature.
The tax equivalent 30-day yield will be computed by dividing that portion of a
Fund's yield (respecting a particular class) which is tax-exempt by 1 minus a
stated income tax rate and adding the product to that portion, if any, of the
yield of the Fund (respecting a particular class) that is not tax-exempt. The
tax equivalent 30-day yields for a Municipal Bond Fund (respecting a particular
class) will, unless otherwise noted, be computed based on an assumed effective
federal income tax rate of 31%. No tax equivalent 30-day yield information is
available for the Texas Tax-Free Bond Fund.
68
<PAGE>
A Fund's respective cumulative total return and average annual total
return was determined by calculating the change in the value of a hypothetical
$1,000 investment in a particular class of the Fund for each of the periods
shown. Cumulative total return for a particular class of a Fund is computed by
determining the rate of return over the applicable period that would equate the
initial amount invested to the ending redeemable value of the investment. The
cumulative return is calculated as the total dollar increase or decrease in the
value of an account assuming reinvestment of all distributions divided by the
original initial investment. The average annual return for a particular class of
a Fund is computed by determining the average annual compounded rate of return
over the applicable period that would equate the initial amount invested to the
ending redeemable value of the investment. The ending redeemable value includes
dividends and capital gain distributions reinvested at net asset value. The
resulting percentages indicated the positive or negative investment results that
an investor would have experienced from changes in share price and reinvestment
of dividends and capital gains distributions.
69
<PAGE>
FIDUCIARY SHARES
FIXED INCOME FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
30-DAY
INCEPTION LIFE OF SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Income Bond(2) 07/02/87 8.10% 7.97% 6.37% 7.24% 7.23% 6.70%
Limited Volatility Bond 09/04/90 6.75% 6.61% 5.75% NA 7.09% 6.18%
Intermediate Tax-Free(2) 09/04/90 7.76% 6.63% 5.86% NA 6.83% 4.57%
Ohio Municipal Bond(2) 07/02/91 7.22% 6.32% 6.03% NA 6.78% 4.31%
Municipal Income(2) 02/09/93 7.49% 6.49% NA NA 5.43% 5.20%
Government Bond 02/08/93 8.10% 7.93% NA NA 5.52% 6.24%
Ultra Short-Term Income 02/02/93 7.14% 5.96% NA NA 5.00% 6.08%
Intermediate Bond 02/28/92 7.68% 7.57% 6.46% NA 6.63% 6.35%
Kentucky Municipal Bond(2) 03/12/93 6.74% 6.59% NA NA 5.15% 4.34%
Louisiana Municipal Bond(2) 12/29/89 6.81% 6.27% 5.96% NA 6.83% 4.16%
West Virginia Municipal 6.60% 7.39% 4.33%
Bond(1),(2) 01/21/97 7.37% 5.86% 5.76%
Arizona Municipal Bond1,(2) 01/21/97 7.27% 6.09% 5.88% 6.92% 7.38% 4.36%
Treasury & Agency(1) 01/21/97 6.94% 7.37% 6.05% NA 7.33% 6.04%
</TABLE>
EQUITY FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 03/02/89 20.56% 18.88% 14.70% NA 12.51% 1.10%
Income Equity 07/02/87 30.90% 25.43% 17.85% 13.11% 13.10% 1.49%
Equity Index 07/02/91 34.30% 28.46% 19.25% NA 18.03% 1.56%
Large Company Value 03/01/91 27.10% 20.92% 13.90% NA 13.63% 1.61%
Growth Opportunities 03/02/89 22.75% 22.36% 17.29% NA 16.89% %
International Equity Index(3) 10/28/92 14.64% 9.93% NA NA 13.57% NA
Asset Allocation 04/05/93 20.16% 16.97% NA NA 11.81% %
Large Company Growth 02/28/92 33.11% 23.93% 18.57% NA 17.11% 0.40%
Gulf South Growth 07/01/91 13.44% 15.48% 15.06% NA 16.06% -.034%
Value Growth 12/29/89 31.97% 22.97% 17.24% NA 16.10% 0.81%
</TABLE>
THE ONE GROUP INVESTOR FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Investor Conservative Growth 12/10/96 NA NA NA NA 6.00% NA
Investor Balanced 12/10/96 NA NA NA NA 8.48% NA
Investor Growth & Income 12/10/96 NA NA NA NA 10.87% NA
Investor Growth 12/10/96 NA NA NA NA 13.50% NA
</TABLE>
70
<PAGE>
CLASS A SHARES
FIXED INCOME FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Income Bond(2) 02/18/92 7.85% 7.64% 6.14% NA 6.42% 6.16%
With Sales Charge 2.99% 5.98% 5.16% NA 5.51%
Limited Volatility Bond 02/18/92 6.47% 6.33% 5.47% NA 5.77% 5.75%
With Sales Charge 3.29% 5.25% 4.83% NA 5.17%
Intermediate Tax-Free(2) 02/18/92 7.39% 6.38% 5.61% NA 5.82% 4.13%
With Sales Charge 2.56% 4.76% 4.64% NA 4.91%
Ohio Municipal Bond(2) 02/18/93 6.95% 6.06% 5.84% NA 6.19% 3.88%
With Sales Charge 2.09% 4.44% 4.88% NA 5.28%
Municipal Income(2) 02/23/93 7.24% 6.26% NA NA 5.17% 4.73%
With Sales Charge 2.38% 4.63% NA NA 4.06%
Government Bond 03/05/93 7.83% 7.70% NA NA 4.91% 5.72%
With Sales Charge 2.98% 6.06% NA NA 3.80%
Ultra Short-Term Income 03/10/93 7.00% 5.75% NA NA 4.79% 5.66%
With Sales Charge 3.82% 4.70% NA NA 4.05%
Intermediate Bond 11/30/94 7.40% NA NA NA 8.72% 5.82%
With Sales Charge 2.52% NA NA NA 6.80%
Kentucky Municipal Bond(2) 01/20/95 6.46% 6.28% NA NA 4.94% 3.90%
With Sales Charge 1.70% 4.66% NA NA 3.82%
Louisiana Municipal Bond(2) 12/29/89 6.55% 6.15% 5.89% NA 6.79% 3.73%
With Sales Charge 1.73% 4.54% 4.93% NA 6.13%
West Virginia Municipal Bond(1,2) 01/21/97 7.47% 5.72% 5.57% 6.37% 7.15% 3.89%
With Sales Charge 2.65% 4.11% 4.60% 5.89% 6.79%
Arizona Municipal Bond(1,2) 01/21/97 5.56% 5.35% 5.33% 6.51% 7.03% 3.93%
With Sales Charge 0.79% 3.75% 4.36% 6.02% 6.75%
Treasury & Agency(1) 01/21/97 6.79% 7.14% 5.81% NA 7.08% 5.63%
With Sales Charge 3.60% 6.08% 5.16% NA 6.73%
</TABLE>
EQUITY FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 02/18/92 20.21% 18.46% 14.45% NA 13.65% 0.81%
With Sales Charge 14.82% 16.66% 13.40% NA 12.68
Income Equity 02/18/92 30.39% 25.10% 17.55% NA 16.43% 1.19%
With Sales Charge 24.52% 23.19% 16.46% NA 15.43%
Equity Index 02/18/92 33.94% 28.11% 18.98% NA 17.67% 1.26%
With Sales Charge 27.87% 26.14% 17.89% NA 16.66
Large Company Value 02/18/92 26.90% 20.49% 13.72% NA 12.70% 1.29%
With Sales Charge 21.15% 18.64% 12.68% NA 11.73%
Growth Opportunities 02/18/92 22.52% 22.10% 17.12% NA 13.24% -0.53%
With Sales Charge 17.03% 20.24% 16.05% NA 12.28%
International Equity Index(3) 04/23/93 14.31% 9.71% NA NA 10.43% NA
With Sales Charge 9.18% 7.99% NA NA 9.18%
Asset Allocation 04/02/93 19.85% 16.67% NA NA 11.52% 2.80%
With Sales Charge 14.46% 14.90% NA NA 10.31%
Large Company Growth 01/01/94 32.57% 23.47% NA NA 20.39% 0.15%
With Sales Charge 26.57% 21.58% NA NA 18.74%
Gulf South Growth 07/01/91 13.52% 15.36% 14.99% NA 16.00% -0.55%
With Sales Charge 8.38% 13.60% 13.93% NA 15.11%
Value Growth 12/29/89 31.53% 22.80% 17.15% NA 16.04% 0.54%
With Sales Charge 25.61% 20.92% 16.06% NA 15.33%
</TABLE>
71
<PAGE>
THE ONE GROUP INVESTOR FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Investor Conservative Growth 12/10/96 NA NA NA NA 5.46% NA
With Sales Charge 0.72%
Investor Balanced 12/10/96 NA NA NA NA 8.41% NA
With Sales Charge 3.53%
Investor Growth & Income 12/10/96 NA NA NA NA 11.50% NA
With Sales Charge 6.48%
Investor Growth 12/10/96 NA NA NA NA 12.84% NA
With Sales Charge 7.76%
</TABLE>
CLASS B SHARES
FIXED INCOME FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Income Bond(2) 01/14/94 7.15% 7.11% NA NA 4.48% 5.79%
With Sales Charge 3.15% 6.24% NA NA 3.73%
Limited Volatility Bond 01/14/94 5.74% 5.73% NA NA 4.39% 5.42%
With Sales Charge 2.74% 5.43% NA NA 4.14%
Intermediate Tax-Free(2) 01/14/94 6.82% 5.73% NA NA 3.56% 3.67%
With Sales Charge 2.82% 4.84% NA NA 2.78%
Ohio Municipal Bond(2) 01/14/94 6.26% 5.41% NA NA 3.44% 3.41%
With Sales Charge 2.26% 4.51% NA NA 2.66%
Municipal Income(2) 01/14/94 6.55% 5.59% NA NA 4.22% 4.30%
With Sales Charge 2.55% 4.71% NA NA 3.45%
Government Bond 01/14/94 7.14% 7.04% NA NA 4.52% 5.34%
With Sales Charge 3.14% 6.18% NA NA 3.77%
Ultra Short-Term Income 01/14/94 6.22% 5.21% NA NA 4.47% 5.33%
With Sales Charge 3.22% 4.91% NA NA 4.22%
Intermediate Bond 11/30/94 6.83% NA NA NA 7.51% 5.44%
With Sales Charge 2.83% NA NA NA 6.47%
Kentucky Municipal Bond(2) 03/16/95 5.81% NA NA NA 5.96% 3.44%
With Sales Charge 1.81% NA NA NA 4.32%
Louisiana Municipal Bond(2) 09/16/94 5.87% NA NA NA 5.51% 3.26%
With Sales Charge 1.87% NA NA NA 4.51%
West Virginia Municipal Bond(1,2) 01/21/97 6.63% 4.99% 4.86% 5.68% 6.46% 3.43%
With Sales Charge 2.63% 4.07% 4.69% 5.68% 6.46%
Arizona Municipal Bond(1,2) 01/21/97 4.68% 4.60% 4.61% 5.81% 6.33% 0.00%
With Sales Charge 0.68% 3.68% 4.44% 5.81% 6.33%
Treasury & Agency(1) 01/21/97 6.30% 6.62% 5.29% NA 6.55% 5.36%
With Sales Charge 2.30% 5.74% 5.12% NA 6.55%
</TABLE>
72
<PAGE>
EQUITY FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Disciplined Value 01/14/94 19.19% 17.66% 14.45% NA 13.45% 0.11%
With Sales Charge 15.19% 16.94% 13.40% NA 12.81%
Income Equity 01/14/94 29.48% 24.20% 17.55% NA 19.49% 0.52%
With Sales Charge 25.48% 23.56% 16.46% NA 18.92%
Equity Index 01/14/94 32.93% 27.12% 18.98% NA 21.11% 0.59%
With Sales Charge 28.93% 26.50% 17.89% NA 20.56%
Large Company Value 01/14/94 25.86% 19.88% 13.72% NA 15.83% 0.63%
With Sales Charge 21.86% 19.19% 12.68% NA 15.23%
Growth Opportunities 01/14/94 21.73% 21.22% 17.12% NA 14.96% -1.28%
With Sales Charge 17.73% 20.54% 16.05% NA 14.34%
International Equity Index(3) 01/14/94 13.37% 8.75% NA NA 8.54% NA
With Sales Charge 9.37% 7.90% NA NA 7.84%
Asset Allocation 01/14/94 18.90% 15.84% NA NA 11.59 2.20%
With Sales Charge 14.90% 15.10% NA NA 10.93%
Large Company Growth 01/14/94 31.74% 22.77% NA NA 10.23% -0.58%
With Sales Charge 27.74% 22.10% NA NA 18.67%
Gulf South Growth 09/09/94 12.74% NA NA NA 13.68% -1.30%
With Sales Charge 8.74% NA NA NA 12.83%
Value Growth 12/29/89 30.52% NA NA NA 20.65% -0.16%
With Sales Charge 26.52% NA NA NA 19.89%
</TABLE>
THE ONE GROUP INVESTOR FUNDS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN AS OF 6/30/97
INCEPTION LIFE OF 30-DAY SEC
DATE 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Investor Conservative Growth 5.30%
With Sales Charge 12/10/96 NA NA NA NA 0.30% NA
Investor Balanced 8.22%
With Sales Charge 12/10/96 NA NA NA NA 3.22% NA
Investor Growth & Income 11.02%
With Sales Charge 12/10/96 NA NA NA NA 6.02% NA
Investor Growth 12/10/96 NA NA NA NA 13.88%
With Sales Charge 8.88% NA
</TABLE>
(1)The quoted performance of these funds ("Mutual Funds") advised by Banc
One Investment Advisors Corporation includes performance of certain
collective trust fund ("Commingled") accounts for periods dating back to
12/31/83 for the West Virginia Municipal Bond Fund, 11/30/79 the Arizona
Municipal Bond Fund and 4/30/88 for the Treasury & Agency Fund. Prior to the
Mutual Funds commencement of for operations on 1/21/97, the Commingled
accounts were adjusted to reflect the expenses associated with the Mutual
Funds. The Commingled accounts were not registered with the Securities and
Exchange Commission and, therefore, were not subject to the investment
restrictions imposed by law on registered mutual funds. If the Commingled
accounts had been registered, the Commingled accounts' performance may have
been adversely affected.
(2)A portion of the income may be subject to the federal alternative minimum
tax.
(3)Foreign investing involves a greater degree of risk and volatility.
Performance information showing a Fund's and/or particular Class's
distribution rate may be presented from time to time in advertising and sales
literature regarding the Bond Funds and Equity Funds. The distribution rate is
calculated as follows:
distribution yield = a/(b) x 365
-----------
c
In the formula, "a" represents dividends distributed by a particular
class during that period; "b" represents month end offer price or net asset
value for a particular class; "c" represents the number of days in the period
being calculated. "365" is the number of days in a year, used to annualize the
distribution yield.
Performance will fluctuate from time to time and is not necessarily
representative of future results. Accordingly, a Fund's performance may not
provide for comparison with bank deposits or other investments that pay a fixed
return for a stated period of time. Performance is a function of a Fund's
quality, composition, and maturity, as well as expenses allocated to the Fund.
Fees imposed upon customer accounts at a bank, with regard to Fiduciary Class
Shares and Service Class Shares, or a Participating Organization, with regard to
Class A and Class B Shares, will reduce a Fund's effective yield to customers.
Performance data for the Funds through June 30, 1997 (calculated as described
above) is as follows:
73
<PAGE>
The above quoted performance for the Arizona Municipal Bond Fund, the West
Virginia Municipal Bond Fund, and the Treasury & Agency Fund, respectively,
includes the performance for the Arizona Municipal Bond Investment Fund, the
West Virginia Municipal Bond Investment Fund and the Treasury Only Government
Based Investment Trust, common trust funds managed by Banc One Advisors
(collectively the "CIFs"). The quoted performance of these Funds include
performance of the corresponding CIFs for periods dating back to December 31,
1983 for the West Virginia Municipal Bond Fund, November 30, 1979 for the
Arizona Municipal Bond Fund and April 30, 1988 for the Treasury & Agency Fund.
Because the management of the Funds is substantially the same as the CIFs, the
quoted performance of the Funds will include the performance of the CIFs for the
periods prior to January 20, 1997, the effectiveness of the Trust's registration
statement as it relates to the Funds. The quoted performance will be adjusted to
reflect the deduction of estimated current fees of the Funds on a class by class
basis absent any waivers. The CIFs were not registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), and therefore were not subject
to certain investment restrictions, limitations, and diversification
requirements that are imposed by the 1940 Act and the Code. If the CIFs had been
so registered, their performance might have been adversely affected.
In addition, the performance of each class of a Fund may from time to
time be compared to that of other mutual funds tracked by mutual fund rating
services, to that of broad groups of comparable mutual funds or to that of
unmanaged indices that may assume investment of dividends but do not reflect
deductions for administrative and management costs. Further, the performance of
each class of a Fund may be compared to other funds or to relevant indices that
may calculate total return without reflecting sales charges; in which case, a
Fund may advertise its total return in the same manner. If reflected, sales
charges would reduce these total return calculations.
The Money Market and Institutional Money Market Funds may quote actual
total return performance in advertising and other types of literature compared
to indices or averages of alternative financial products available to
prospective investors. The performance comparisons may include the average
return of various bank instruments, some of which may carry certain return
guarantees offered by leading banks and thrifts, as monitored by the BANK RATE
MONITOR, and those of corporate and government security price indices of various
durations prepared by Shearson Lehman Brothers, Salomon Brothers, Inc. and the
IBC/Donoghue organization. These indices are not managed for any investment
goals.
The Money Market and Institutional Money Market Funds may also use
comparative performance information computed by and available from certain
industry and general market research and publications, such as Lipper Analytical
Services, Inc.
Statistical and performance information compiled and maintained by CDA
Technologies, Inc. and Interactive Data Corporation may also be used. CDA is a
performance evaluation service that maintains a statistical data base of
performance, as reported by a diverse universe of independently-managed mutual
funds. Interactive Data Corporation is a statistical access service that
maintains a data base of various industry indicators, such as historical and
current price/earning information and individual stock and fixed income price
and return information.
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H. 15), may also be used. Also current rate information on municipal
debt obligations of various durations, as reported daily by the Bond Buyer, may
also be used. The BOND BUYER is published daily and is an industry-accepted
source for current municipal bond market information.
Comparative information on the Consumer Price Index may also be
included. This Index, as prepared by the U.S. Bureau of Labor Statistics, is the
most commonly used measure of inflation. It indicates the cost fluctuations of a
representative group of consumer goods. It does not represent a return on
investment.
THE EQUITY, BOND AND MUNICIPAL BOND FUNDS AND THE FUNDS OF FUNDS may
quote actual total return performance from time to time in advertising and other
types of literature compared to results reported by the Dow Jones Industrial
Average.
The Dow Jones Industrial Average is an industry-accepted unmanaged
index of generally conservative securities used for measuring general market
performance. The performance reported will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The index does
not take into account any brokerage commissions or other fees. Comparative
information on the Consumer Price Index may also be included.
The Equity Funds, the Bond Funds, the Municipal Bond Funds and the
Funds of Funds may also promote the yield and/or total return performance and
use comparative performance information computed by and available from certain
industry and general market research and publications, such as Lipper Analytical
Services, Inc.; they may also use indices such as the Standard & Poor's 400
Composite Stock Index, the Standard & Poor's 500 Composite Stock Index, the
Standard & Poor's 600 Composite Stock Index, the Russell 2000, or the Morgan
Stanley International European, Asian and Far East Gross Domestic Product Index
for performance comparison. Statistical and performance information compiled and
maintained by CDA Technologies, Inc. and Interactive Data Corporation may also
be used.
THE BOND FUNDS, THE FUNDS OF FUNDS AND THE ASSET ALLOCATION FUND may
quote actual yield and/or total return performance in advertising and other
types of literature compared to indices or averages of alternative financial
products available to prospective investors. The performance comparisons may
include the average return of various bank instruments, some of which may carry
certain return guarantees offered by leading banks and thrifts as monitored by
BANK RATE MONITOR, and those of corporate bond and government security price
indices of various durations. Comparative information on the Consumer Price
Index may also be included.
74
<PAGE>
The Bond Funds, the Funds of Funds and the Asset Allocation Fund may
also use comparative performance information computed by and available from
certain industry and general market research and publications, as well as
statistical and performance information, compiled and maintained by CDA
Technologies, Inc. and Interactive Data Corporation.
The Bond Funds, the Funds of Funds and the Asset Allocation Fund may
also use current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H. 15). In addition, current rate information on municipal debt
obligations of various durations, as reported daily by the Bond Buyer, may also
be used.
MISCELLANEOUS
The Trust is not required to hold a meeting of Shareholders for the
purpose of electing Trustees except that (i) the Trust is required to hold a
Shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by Shareholders and
(ii) if, as a result of a vacancy on the Board of Trustees, less than two-thirds
of the Trustees holding office have been elected by the Shareholders, that
vacancy may only be filled by a vote of the Shareholders. In addition, Trustees
may be removed from office by a written consent signed by the holders of Shares
representing two-thirds of the outstanding Shares of the Trust at a meeting duly
called for the purpose, which meeting shall be held upon the written request of
the holders of Shares representing not less than 20% of the outstanding Shares
of the Trust. Except as set forth above, the Trustees may continue to hold
office and may appoint successor Trustees.
As used in the Trust's Prospectuses and in this Statement of
Additional Information, "assets belonging to a Fund" means the consideration
received by the Trust upon the issuance or sale of Shares in that Fund, together
with all income, earnings, profits, and proceeds derived from the investment
thereof, including any proceeds from the sale, exchange, or liquidation of such
investments, and any funds or payments derived from any reinvestment of such
proceeds, and any general assets of the Trust not readily identified as
belonging to a particular Fund that are allocated to that Fund by the Trust's
Board of Trustees. The Board of Trustees may allocate such general assets in any
manner it deems fair and equitable. It is anticipated that the factor that will
be used by the Board of Trustees in making allocations of general assets to
particular Funds will be the relative net asset values of the respective Funds
at the time of allocation. Assets belonging to a particular Fund are charged
with the direct liabilities and expenses in respect of that Fund, and with a
share of the general liabilities and expenses of the Trust not readily
identified as belonging to a particular Fund that are allocated to that Fund in
proportion to the relative net asset values of the respective Funds at the time
of allocation. The timing of allocations of general assets and general
liabilities and expenses of the Trust to particular Funds will be determined by
the Board of Trustees of the Trust and will be in accordance with generally
accepted accounting principles. Determinations by the Board of Trustees of the
Trust as to the timing of the allocation of general liabilities and expenses and
as to the timing and allocable portion of any general assets with respect to a
particular Fund are conclusive. For information regarding the allocations of
Class Expenses to particular classes of a Fund, see the respective Prospectus of
the Fund under "MANAGEMENT-Expenses."
As used in the Trust's Prospectuses and in this Statement of
Additional Information, a "vote of a majority of the outstanding Shares" of the
Trust, a particular Fund, or a particular class of Shares of a Fund, means the
affirmative vote of the lesser of (a) more than 50% of the outstanding Shares of
the Trust, such Fund, or such class of Shares of such Fund, or (b) 67% or more
of the Shares of the Trust, such Fund, or such class of Shares of such Fund
present at a meeting at which the holders of more than 50% of the outstanding
Shares of the Trust, such Fund, or such class of Shares of such Fund are
represented in person or by proxy.
The Trust is registered with the Securities and Exchange Commission
as a management investment company. Such registration does not involve
supervision by the Commission of the management or policies of the Trust.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Securities and Exchange Commission. Copies of such information may be
obtained from the Commission upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not
an offering of the securities herein described in any State in which such
offering may not lawfully be made. No salesman, dealer, or other person is
authorized to give any information or make any representation other than those
contained in the Prospectus and Statement of Additional Information.
As of August 5, 1997, BANC ONE CORPORATION, 100 East Broad Street,
Columbus, Ohio 43271-0152 (an Ohio Corporation) through Bank Subsidiaries,
acting on behalf of their underlying accounts, held of record substantially all
of the Fiduciary Class Shares of the Trust, and possessed voting or investment
power as follows:
PERCENT OF
BENEFICIAL
FUND OWNERSHIP
- ---- ----------
Large Company Growth Fund 91.80%
Disciplined Value Fund 90.47%
Growth Opportunities Fund 86.08%
Income Bond Fund 91.22%
Intermediate Tax-Free Bond Fund 97.01%
75
<PAGE>
Prime Money Market Fund 55.71%
U.S. Treasury Securities Money Market Fund 19.57%
Municipal Money Market Fund 78.69%
Income Equity Fund 93.49%
Equity Index Fund 83.02%
Large Company Value Fund 90.00%
Ohio Municipal Bond Fund 91.94%
Limited Volatility Bond Fund 90.87%
International Equity Index Fund 92.25%
Asset Allocation Fund 81.42%
Ohio Municipal Money Market Fund 68.07%
Municipal Income 96.07%
Kentucky Municipal Bond Fund 97.28%
Government Bond Fund 91.50%
Ultra Short-Term Income Fund 85.44%
Louisiana Municipal Bond Fund 97.60%
Value Growth Fund 90.05%
Small Capitalization Fund 94.79%
Intermediate Bond Fund 91.21%
Arizona Municipal Bond Fund 91.25%
West Virginia Municipal Bond Fund 98.88%
Investor Growth Fund 72.86%
Investor Growth & Income Fund 90.48%
Investor Balanced Fund 91.79%
Investor Conservative Growth Fund 87.31%
Treasury Only Money Market Fund 24.60%
Government Money Market Fund 27.06%
Treasury & Agency Fund 99.59%
As a result, Banc One Corporation may be deemed to be a "controlling person" of
the Fiduciary Class Shares of each of the aforementioned Funds other than the
Treasury Only Money Market Fund and the U.S. Treasury Securities Money Market
Fund, under the Investment Company Act of 1940.
In addition, as of August 5, 1997, the following persons were the beneficial
owners of more than 25% of the outstanding Shares of the following class of
Shares of the following Funds:
25% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter Reynolds Arizona Municipal 32.61% Record
FBO Theodore Cesarano Bond Fund
4617 E. Bernell Drive Class A
Phoenix, AZ 85028-5520
The One Group Services Company Arizona Municipal 50.00% Record
Fund Administration Bond Fund
3435 Stelzer Road Class B
Columbus, Ohio 43219-6004
Dean Witter Funds Processing Arizona Municipal 50.00% Record
Account Bond Fund
5 World Trade Center 6th Floor Class C
New York, NY 10048-0205
Clark & Co. Arizona Municipal 98.80% Record
Database 2-One Group/Cash Mgmt. Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. Asset Allocation 49.27% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Asset Allocation 35.74% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Disciplined Value 53.71% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Disciplined Value 39.18% Record
Database 2 - Attn: One Group/Cash Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Equity Index Fund 73.74% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Banc One Securities Savings Plan Equity Index Fund 30.25% Beneficial
235 West Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Government Bond 65.29% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Government Bond 28.33% Record
Database 2 - Attn: One Group/Cash Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Government 32.31% Record
Bank One Trust Co. Money Market Fund
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Government Money 31.98% Record
Database 2 - Attn: One Group/Cash Market Fund
Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co./Cash Div. Growth 52.20% Record
Bank One Trust Co. Opportunities Fund
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Growth 36.68% Record
Database 2 - Attn: One Group/Cash Opportunities Fund
Mgmt. Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Gulf South Growth 88.56% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Income Bond Fund 63.14% Record
Bank One Trust Co. Fiduciary
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Bond Fund 30.24% Record
Database 2 - Attn: One Group/Cash Fiduciary
Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Income Equity Fund 57.28% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Equity Fund 37.34% Record
Database 2 - Attn: One Group/Cash Fiduciary
Mgmt
235 W. Schrock Road
Westerville, Ohio 43081-2874
Clark & Co. Intermediate Bond 46.65% Record
Database 2 - Attn: One Group/Cash Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Bond 48.26% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
Clark & Co. Intermediate Tax- 53.50% Record
Database 2-Attn: One Group/Cash Free Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Tax- 46.10% Record
Attn: Mutual Funds 0393 Free Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. International Equity 59.57% Record
Attn: Mutual Funds 0393 Index Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. International Equity 34.75% Record
Database 2 - Attn: One Group/Cash Index Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO David H Behm & Investor Balanced 39.79% Record
Christine A Behm JT TEN Class C
Church St Station - P.O. Box 250
New York, NY 10277
Dean Witter FBO Alexis B Newell Investor Balanced 34.55% Record
7812 Meadow Park Drive #228 Class C
Church St Station - P.O. Box 250
New York, NY 10013-0250
Strafe & Co. Investor Balanced 57.80% Record
Bank One Trust Co. Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, OH 43215-3607
Clark & Co. Investor Balanced 36.70% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, OH 43081-2874
Dean Witter FBO Ninfa D Cayayan Investor Growth 27.59% Record
MD PFT SHR PL Class C
Ninfa A Cayayan MD TTEE
Church St Station - P.O. Box 250
New York, NY 10277
Strafe & Co. Investor Growth 60.29% Record
Bank One Trust Co. Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Investor Growth 28.88% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Dean Witter Reynolds Cust For Investor Growth & 59.70% Record
Merle E Clucas Income Fund
IRA Rollover/SEP DTD 05/06/97 Class C
Church St Station - P.O. Box 250
New York, NY 10277
Strafe & Co. Investor Growth & 76.30% Record
Bank One Trust Co. Income Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Revco D.S., Inc. SERP-Trust A Investor Growth & 28.52% Beneficial
Strafe & Co. Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Kentucky Municipal 99.22% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Large Company 60.13% Record
Attn: Mutual Funds 0393 Growth Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Large Company 33.74% Record
Database 2 - Attn: One Group/Cash Growth Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Large Company 66.40% Record
Attn: Mutual Funds 0393 Value Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Large Company 25.64% Record
Database 2 - Attn: One Group/Cash Value Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Limited Volatility 58.45% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Limited Volatility 35.68% Record
Database 2 - Attn: One Group/Cash Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Louisiana Municipal 99.74% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Municipal Income 49.81% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Municipal Income 48.70% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
BISYS Fund Services, Inc. Municipal Money 35.79% Record
FBO Bank One Corporate Sweep Market Fund
Attn: Linda Zerbe Class A
First and Market Building Suite 300
Pittsburgh, PA 15222
Strafe & Co. (D) Municipal Money 57.60% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F Fiduciary
Columbus, Ohio 43271
Clark & Co. Municipal Money 38.87% Record
Database 2 - Attn: One Group/Cash Market Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Ohio Municipal 98.69% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Strafe & Co. Ohio Municipal 94.35% Record
Bank One Trust Co. Money Market Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Strafe & Co. Prime Money 57.44% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F. Fiduciary
Columbus, Ohio 43271
Clark & Co. Prime Money 33.23% Record
Database 2 - Attn: One Group/Cash Market Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Dean Witter FBO City of Treasury & Agency 83.57% Record
Montgomery Fund
10101 Montgomery Road Class A
Church St Station - P.O. Box 250
New York, NY 10013-0250
Dean Witter FBO Helen D Johnson Treasury & Agency 31.02% Record
Rt 2 Box 118 Fund
Church St Station- P.O. Box 250 Class B
New York, NY 10277-0001
Strafe & Co. Treasury & Agency 94.57% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Treasury Only 57.02% Record
Bank One Trust Co. Money Market Fund
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
BISYS Fund Services, Inc. U.S. Treasury 39.89% Record
FBO Bank One Corporate Sweep Securities Money
Attn: Linda Zerbe Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. U.S. Treasury 47.03% Record
Cust for the IRA of Securities
Edward Hillman III Money Market
121 S. Walnut Street Class B
Troy, OH 45373-3530
Strafe & Co. (N) U.S. Treasury 56.05% Record
Bank One Ohio Trust Co., NA Securities
Department 0393 S.T.I.F. Money Market
Columbus, Ohio 43271 Fiduciary
Dean Witter for the Benefit of Ultra Short-Term 25.34% Record
St. Joseph Hospital Income Fund
Attn: Rick West Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Strafe & Co. Ultra Short-Term 54.55% Record
Attn: Mutual Funds 0393 Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Ultra Short-Term 40.93% Record
Database 2 - Attn: One Group/Cash Income Fund
Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Strafe & Co. Value Growth Fund 68.56% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Dean Witter for the Benefit of West Virginia 61.58% Record
Stephen A. Lewis Municipal Bond
3720 Noves Ave. Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Strafe & Co. West Virginia 98.70% Record
Attn: Mutual Funds 0393 Municipal Bond
100 E. Broad Street Fund
Columbus, OH 43215-3607 Fiduciary
</TABLE>
As a result, the aforementioned persons may be deemed to be "controlling
persons' of the class of Shares of the Fund in which they own such Shares under
the Investment Company Act of 1940.
The table below indicates record and beneficial owners of over 5% of any class
of Shares of any Fund of the Trust.
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter for the Benefit of Kentucky 11.54% Record
Roger J. Shott and Municipal
Diane J. Shott JT TEN Bond Fund
P.O. Box 23403 Class A
Anchorage, KY 40223-0403
Yong K. Liu Kentucky 5.82% Record
Rui Bo Liu JT WROS Municipal
6304 Shadow Wood Drive Bond Fund
Prospect, KY 40059-9626 Class A
Dean Witter for the Benefit of Kentucky 7.75% Record
Floyd Logan Municipal
201 Country Ln. Bond Fund
Frankfort, KY 40601-3841 Class B
Dean Witter FBO Vivian S Lucas Kentucky 7.55% Record
787 Robin Road Municipal
5 World Trade Center 6th Floor Bond Fund
New York, NY 10048-0205 Class B
Strafe & Co. Kentucky 99.22% Record
Attn: Mutual Funds 0393 Municipal
100 E. Broad Street Bond Fund
Westerville, Ohio 43215-3607 Fiduciary
Strafe & Co. Large Company 60.13% Record
Attn: Mutual Funds 0393 Growth Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
82
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Large Company 33.74% Record
Database 2 - Attn: One Group/Cash Mgmt Growth Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Large Company 11.11% Beneficial
235 West Schrock Road Growth Fund
Westerville, Ohio 43081-2874 Fiduciary
Banc One Securities Savings Plan Large Company 9.31% Beneficial
235 West Schrock Road Growth Fund
Westerville, Ohio 43081-2874 Fiduciary
Strafe & Co. Disciplined Value 53.71% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Disciplined Value 39.18% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Disciplined Value 14.92% Beneficial
235 West Schrock Road Fund
Westerville, Ohio 43081-2874 Fiduciary
Strafe & Co. Gulf South Growth 88.56% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Premier Bancorp Retirement Plan Gulf South Growth 7.12% Beneficial
P.O. Box 91210 Fund
Baton Rouge, LA 70821 Fiduciary
Strafe & Co./Cash Div. Growth 52.20% Record
Bank One Trust Co. Opportunities Fund
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Growth 36.68% Record
Database 2 - Attn: One Group/Cash Mgmt. Opportunities Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Growth 10.53% Beneficial
235 West Schrock Road Opportunities Fund
Westerville, Ohio 43081-2874 Fiduciary
Strafe & Co. Value Growth 68.56% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Value Growth 23.70% Record
Database 2-One Group/Cash Mgmt. Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
</TABLE>
83
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter for the Benefit of Income Bond Fund 8.74% Record
Alpert Corp. Money Purchase Plan Class A
Steven Kurtz TTEE
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter for the Benefit of Income Bond Fund 6.57% Record
Signalsoft Corp. Class A
2045 Broadway
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Strafe & Co. Income Bond Fund 63.14% Record
Bank One Trust Co. Fiduciary
Attn: Mutual Funds
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Income Bond Fund 30.24% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Banc One Securities Savings Plan Income Bond Fund 5.45% Beneficial
235 West Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Louisiana 99.74% Record
Attn: Mutual Funds 0393 Municipal Bond
100 E. Broad Street Fund
Columbus, Ohio 43215-3607 Fiduciary
Strafe & Co. International 59.57% Record
Attn: Mutual Funds 0393 Equity Index Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. International 34.75% Record
Database 2 - Attn: One Group/Cash Mgmt Equity Index Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation International 17.10% Beneficial
235 West Schrock Road Equity
Westerville, Ohio 43081-2874 Index Fund
Fiduciary
Strafe & Co. Equity Index 6.45% Beneficial
Indianapolis Power & Light Co. Fund
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Dean Witter FBO Emma Lou Lancaster Intermediate Tax- 13.47% Record
Box 354 Free Bond Fund
Frisco, TX 75034-0354 Class A
J. Noland Singletary Intermediate Tax- 10.68% Record
7350 Bocage Blvd. Free Bond Fund
Baton Rouge, LA 70809-1138 Class A
</TABLE>
84
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO The Rose Family Living Intermediate Tax- 5.56% Record
Trust - Stephen Rose TTEE Free Bond Fund
Church St Station - P.O. Box 250 Class B
New York, NY 10277
Dean Witter FBO Katherine Poe Intermediate Tax- 5.31% Record
606 River Lane Free Bond Fund
5 World Trade Center, 6th Floor Class B
New York, NY 10048-0205
Clark & Co. Intermediate Tax- 53.50% Record
Database 2-Attn: One Group/Cash Free Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Tax- 46.10% Record
Attn: Mutual Funds 0393 Free Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Wallace & Co. Limited Volatility 5.50% Record
P.O. Box 21119 Bond Fund
Shreveport, LA 71152-0001 Class A
Strafe & Co. Limited Volatility 58.45% Record
Attn: Mutual Funds 0393 Bond Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Limited Volatility 35.68% Record
Database 2 - Attn: One Group/Cash Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
BISYS Fund Services, Inc. Prime Money 22.64% Record
FBO Bank One Corporate Sweep Market
Attn: Linda Zerbe Fund
First & Market Building Suite 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. Prime Money 11.18% Record
Cust for the IRA of Market
Edward Hillman III Fund
121 S. Walnut Street Class B
Troy, OH 45373-3530
Dean Witter for the Benefit of Prime Money 10.64% Record
Ronald L. Bottoms Market
4106 Garland Avenue Fund
5 World Trade Center, 6th Floor Class B
New York, NY 10048-0205
State Street Bank & Trust Co Prime Money 9.68% Record
Cust for the Rollover IRA of Market Fund
Ronald F Aebly Class B
3625 Mountain Drive
Brookfield, WI 53045-1409
</TABLE>
85
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
State Street Bank & Trust Co. Prime Money 7.41% Record
Cust for the Rollover IRA of Market Fund
Kenneth S. Leighton Class B
10423 W. Reade Avenue
Glendale, AZ 85307-4225
State Street Bank & Trust Co. Prime Money 6.48% Record
Cust for the IRA of Richard Miller Market Fund
3929 Tanglewilde Street Class B
Houston, TX 77063-5170
State Street Bank & Trust Co Prime Money 6.30% Record
Cust for the IRA of Mary Rita Pike Market Fund
9301 Watterson Trail Class B
Louisville, KY 40299-3409
State Street Bank & Trust Co Prime Money 5.07% Record
Cust for the IRA of Lee V McNulty Market Fund
9725 E Pershing Ave Class B
Scottsdale, AZ 85260-4440
State Street Bank & Trust Co Prime Money 5.01% Record
Cust for the Rollover IRA of Market Fund
Dorothy L Satchel Class B
4319 Brandemere Way Street
Houston, TX 77066-3616
Strafe & Co. Prime Money 57.44% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F. Fiduciary
Columbus, Ohio 43271
Clark & Co. Prime Money 33.23% Record
Database 2 - Attn: One Group/Cash Mgmt Market Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Bank One Trust Company NA Prime Money 7.13% Record
Omnibus - Corporate Cash Sweep Acct. Market Fund
Attn: Cash Management DB3 Fiduciary
235 W Schrock Road
Westerville, Ohio 43081-2874
Dean Witter for the Benefit of Ohio Municipal 7.54% Record
James E. Sauls and Bond Fund
Vivian R. Sauls JT TN Class A
519 Chapel Road
Amelia, Ohio 45102-9738
Strafe & Co. Ohio Municipal 98.69% Record
Attn: Mutual Funds 0393 Bond
100 E. Broad Street Fund
Columbus, Ohio 43215-3607 Fiduciary
NES Group, Inc. Ohio Municipal 7.64% Beneficial
Corp. Invest Account Bond Fund
Strafe & Co. Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
BISYS Fund Services, Inc. U.S. Treasury 39.89% Record
FBO Bank One Corporate Sweep Securities Money
Attn: Linda Zerbe Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
</TABLE>
86
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
BISYS Fund Services Pittsburgh U.S. Treasury 16.12% Record
FBO Bank One TX Sweep Customers Securities Money
Attn: Linda Zerbe Market
First and Market Bldg., Ste. 300 Class A
Pittsburgh, PA 15222
State Street Bank & Trust Co. U.S. Treasury 47.03% Record
Cust for the IRA of Securities
Edward Hillman III Money Market
121 S. Walnut Street Class B
Troy, OH 45373-3530
State Street Bank & Trust Co. U.S. Treasury 19.12% Record
Cust for the Rollover IRA of Securities
Corrine R. Berg Money Market
1020 E. Northern Ave. Class B
Phoenix, AZ 85020-4118
State Street Bank & Trust Co U.S. Treasury 15.13% Record
Cust for the IRA of Securities
Joe D Bolding Money Market
803 Holly Circle Class B
Allen, TX 75002-5216
State Street Bank & Trust Co. U.S. Treasury 7.51% Record
Cust for the IRA of Securities
Deborah K Ludwick Money Market
9508 Cedar Creek Road Class B
Louisville, KY 40228-1905
State Street Bank & Trust Co. U.S. Treasury 5.84% Record
Cust for the Rollover IRA of Securities Money
Glenda B. Osborn Market Fund
25 Forest Drive Class B
Jeffersonville, IN 47130-6864
Strafe & Co. (N) U.S. Treasury 56.05% Record
Bank One Ohio Trust Co., NA Securities
Department 0393 S.T.I.F. Money Market
Columbus, Ohio 43271 Fiduciary
Bank One Trust Company NA U.S. Treasury 22.08% Record
Omnibus-Corporate Cash Sweep Acct. Securities Money
Attn: Cash Management DB3 Market
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. U.S. Treasury 21.12% Record
Database 2 - Attn: One Group/Cash Mgmt Securities
235 W. Schrock Road Money Market
Westerville, Ohio 43081-2874 Fiduciary
Bank One TTEE Large Company 6.50% Record
Harrison Holding Corp. 401k Value Fund
BISYS Qualified Plan Services Class A
Springhouse Corp. Center II-Invest A/C
323 Norristown Road Attn: S. Loch
Amber, PA 19002-2756
Strafe & Co. Large Company 66.40% Record
Attn: Mutual Funds 0393 Value Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
87
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Large Company 25.64% Record
Database 2 - Attn: One Group/Cash Mgmt Value Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Corporation Large Company 22.85% Beneficial
235 West Schrock Road Value Fund
Westerville, Ohio 43081-2874 Fiduciary
Municipal Money 35.79% Record
BISYS Fund Services, Inc. Market Fund
FBO Bank One Corporate Sweep Class A
Attn: Linda Zerbe
First & Market Building Suite 300
Pittsburgh, PA 15222
Municipal Money 6.73% Record
Kitty Hawk Group, Inc. Market Fund
Attn: Rick Wadsworth Class A
P.O. Box 612787
DFW Airport, TX 75261-2787
Robert Weitz Municipal Money 5.28% Record
Elsie Weitz Market Fund
402 Keystone Loop Class A
Houma, LA 70360-6009
Strafe & Co. (D) Municipal Money 57.60% Record
Bank One Ohio Trust Co., NA Market Fund
Department 0393 S.T.I.F Fiduciary
Columbus, Ohio 43271
Clark & Co. Municipal Money 38.87% Record
Database 2 - Attn: One Group/Cash Mgmt Market Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Securities Corp FBO Equity Index Fund 9.92% Record
The One Investment Solution Class A
733 Greencrest Dr.
Westerville, Ohio 43081-4903
Strafe & Co. Equity Index Fund 73.74% Record
Attn: Mutual Funds 0393 Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Banc One Securities Savings Plan Equity Index Fund 30.25% Beneficial
235 West Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. Equity Index Fund 13.53% Record
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
NCR Benefit Acct - Trust #1 Equity Index Fund 5.60% Beneficial
Strafe & Co. Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Strafe & Co. Income Equity 57.28% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
</TABLE>
88
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Income Equity 37.34% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Government Bond 65.29% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Government Bond 28.33% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Clark & Co. Asset Allocation 49.27% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Asset Allocation 35.74% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Asset Allocation 5.83% Beneficial
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Banc One Securities Corp. Intermediate Bond 24.95% Record
FBO The One Investment Solution Fund
733 Greencrest Drive Class A
Westerville, Ohio 43081-4903
Clark & Co. Intermediate Bond 46.65% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Intermediate Bond 48.26% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
Dean Witter for the Benefit of Ultra Short-Term 25.34% Record
St. Joseph Hospital Income Fund
Attn: Rick West Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter FBO Bank One Collateral Acct Ultra Short- Term 11.30% Record
FBO Thermex Energy Corporation Income Fund
Church St Station - P.O. Box 250 Class A
New York, NY 10277
Dean Witter for the Benefit of
Thermex Energy Corporation Ultra Short-Term 7.63% Record
P.O. Box 701746 Income Fund
5 World Trade Center, 6th Floor Class A
New York, NY 10048-0205
</TABLE>
89
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter for the Benefit of Ultra Short-Term 9.41% Record
Daniel M. Galbreath Revoc Trust Income Fund
Lizanne Galbreath Megrue TTEE Class A
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter FBO Paul Pogue, Inc. Ultra Short Term 5.39% Record
P.O. Box 3359 Income Fund
Sherman, TX 75091-3359 Class A
Dean Witter for the Benefit of Ultra Short-Term 9.18% Record
Jeanette P. Reilly Income Fund
3777 Bay Road North Drive Class B
5 World Trade Center, 6th Floor
New York, NY 10048-0205
Dean Witter FBO First Presbyterian Church Ultra Short-Term 5.76% Record
of Dallas TX Community Ministries Fund Income Fund
5 World trade Center 6th Floor Class B
New York, NY 10048-0205
Strafe & Co. Ultra Short-Term 54.55% Record
Attn: Mutual Funds 0393 Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Ultra Short-Term 40.93% Record
Database 2 - Attn: One Group/Cash Mgmt Income Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Rio Verde Services, Inc. Agy Ultra Short-Term 6.25% Beneficial
Clarke & Co. Income Fund
Database 2 - Attn: One Group/Cash Mgmt Fiduciary
235 W. Schrock Road
Westerville, Ohio 43081-2874
Dean Witter Ohio Municipal 9.16% Record
FBO John M. Mills Money
810 Pipestone Market Fund
Church Street Station Class A
P.O. Box 250
New York, NY 10277-0001
Strafe & Co. Ohio Municipal 94.35% Record
Bank One Trust Co. Money
Attn: Mutual Funds Market Fund
100 E. Broad Street Fiduciary
Columbus, Ohio
Strafe & Co. Ohio Municipal 9.56% Beneficial
Ruth R. Miller Tr. DTD 7/5/85 Money
Attn: Mutual Funds Market Fund
100 E. Broad Street Fiduciary
Columbus, Ohio
</TABLE>
90
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Henny Penny Corp. Money Market Account Ohio Municipal 9.14% Beneficial
Strafe & Co. Money Market
100 E. Broad Street Fund
Columbus, Ohio 43215-3607 Fiduciary
Strafe & Co.
Wallick Properties, Inc Ohio Municipal 6.20% Beneficial
Attn: Mutual Funds Money Market
100 E. Broad Street Fund
Columbus, Ohio Fiduciary
Sandman & Co. Ohio Municipal 5.65% Record
State Street Bank & Trust Money
P.O. Box 1713 Market Fund
Boston, MA 02105-1713 Fiduciary
Banc One Securities Corp FBO Municipal Income 18.49% Record
The One Investment Solution Fund
733 Greencrest Dr. Class A
Westerville, Ohio 43081-4903
Clark & Co. Municipal Income 49.81% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Strafe & Co. Municipal Income 48.70% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Strafe & Co. Treasury Only 57.02% Record
Bank One Trust Co. Money Market
Attn: Mutual Funds Fund
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Treasury Only 15.77% Record
Database 2 - Attn: One Group/Cash Mgmt Money Market
235 W. Schrock Road Fund
Westerville, Ohio 43081-2874
Bank One Texas NA Treasury Only 9.32% Record
1717 Main Street Money Market
Dallas, TX 75201-4605 Fund
BISYS Fund Services, Inc. 15.25% Record
FBO Bank One Corporate Sweep Treasury Only
Attn: Linda Zerbe Money
First and Market Bldg-Suite 300 Market Fund
Pittsburgh, PA 15222
Strafe & Co. Government 32.31% Record
Bank One Trust Co. Money Market
Attn: Mutual Funds Fund
100 E. Broad Street
Columbus, Ohio 43215-3607
Clark & Co. Government 31.98% Record
Database 2 - Attn: One Group/Cash Mgmt Money Market
235 W. Schrock Road Fund
Westerville, Ohio 43081-2874
</TABLE>
91
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Bank One Texas NA Government 17.06% Record
1717 Main Street Money Market
Dallas, TX 75201-4605 Fund
Bank One Trust Company NA Government 11.53% Record
Corporate Cash Sweep Account Money Market
Attn: Cash Management DB3 Fund
235 West Schrock Road
Westerville, Ohio 43081-2874
Syben Treasury & Agency 16.40% Record
FBO Cletus Ratterman Fund
PO Box 32890 Class A
Louisville, KY 40232-2890
Dean Witter FBO Jessie H Scruggs & Treasury & Agency 20.79% Record
Beulah L Scruggs Jtten Fund
Church St Station - P.O. Box 250 Class B
New York, NY 10013-0250
Treasury & Agency
Dean Witter FBO Highlawn United Fund 16.85% Record
Methodist Church Class B
620 30th Street
5 World Trade Center 6th Floor
New York, NY 10048-025
Strafe & Co. Treasury & Agency 94.57% Record
Attn: Mutual Funds 0393 Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Clark & Co. Treasury & Agency 5.31% Record
Database 2 - Attn: One Group/Cash Mgmt Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Dean Witter Reynolds Arizona Municipal 32.61% Record
FBO Theodore Cesarano Bond Fund
4617 E. Bernell Drive Class A
Phoenix, AZ 85028-5520
Dean Witter Reynolds Arizona Municipal 14.13% Record
FBO Elizabeth Ryan Miller Bond Fund
P.O. Box 2443 Class A
5 World Trade Center
New York, NY 10048-0205
Dean Witter Reynolds Arizona Municipal 14.13% Record
FBO Sally Ryan Stults Bond Fund
P.O. Box 2443 Class A
5 World Trade Center
New York, NY 10048-0205
</TABLE>
92
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO Nanette Beeson Arizona Municipal 6.72% Record
2550 E Fairmount Ave Bond Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
The One Group Services Company Arizona Municipal 50.00% Record
Fund Administration Bond Fund
3435 Stelzer Road Class B
Columbus, Ohio 43219-6004
Dean Witter FBO Funds Processing Arizona Municipal 50.00% Record
Account Bond Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
Clark & Co. Arizona Municipal 98.80% Record
Database 2-One Group/Cash Mgmt. Bond Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Dean Witter for the Benefit of West Virginia 61.58% Record
Stephen A. Lewis Municipal Bond
3720 Noves Ave. Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Dean Witter FBO C. Carl Tully West Virginia 23.36% Record
4530 Spring Hill Municipal Bond
5 World Trade Center, 6th Floor Fund
New York, NY 10048-0205 Class A
Dean Witter for the Benefit of West Virginia 15.04% Record
Ruth A. Harper Municipal Bond
P.O. Box 196 Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Dean Witter for the Benefit of West Virginia 13.70% Record
Erma G. Shafer Municipal Bond
142 Spencer Road Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
Dean Witter for the Benefit of West Virginia 9.78% Record
Mary G. Coleman Municipal Bond
3607 Virginia Avenue SE Fund
5 World Trade Center 6th Floor Class B
New York, NY 10048-0205
Dean Witter FBO Helen H. Hall West Virginia 9.78% Record
59 Meade Street Municipal Bond
5 World Trade Center 6th Floor Fund
New York, NY 10048-0205 Class B
Dean Witter FBO Ann S. Jackson West Virginia 6.99% Record
2317 Jefferson Avenue Municipal Bond
5 World Trade Center 6th Floor Fund
New York, NY 10048-0205 Class B
Dean Witter FBO William R. Butler and West Virginia 5.49% Record
Prible D. Butler JT TEN Municipal Bond
5 World Trade Center 6th Floor Fund
New York, NY 10048-0205 Class B
</TABLE>
93
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Dean Witter FBO Billie J. Zegger West Virginia 5.03% Record
P.O. Box 2 Municipal Bond
5 World Trade Center, 6th Floor Fund
New York, NY 10048-0205 Class B
Strafe & Co. West Virginia 98.70% Record
Attn: Mutual Funds 0393 Municipal Bond
100 E. Broad Street Fund
Columbus, OH 43215-3607 Fiduciary
Clark & Co. Investor Growth 28.88% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Virginia R. Corrin Investor Growth 22.37% Beneficial
Strafe & Co. Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Banc One Securities Savings Plan Investor Growth 16.63% Beneficial
235 West Schrock Road Fund
Westerville, Ohio 43081-2874 Fiduciary
Bank One TTEE Investor Growth 5.18% Record
Therm-O-Disc Inc. 401K Fund
BISYS Qualified Plan Services Fiduciary
Springhouse Corp. Ctr. II-Invest A/C
323 Norristown Road Attn: S. Loch
Ambler, PA 19002-2756
Dean Witter Reynolds for Investor Growth & 19.54% Record
Robert E. Carlovsky IRA Income Fund
5 World Trade Center 6th Floor Class A
New York, NY 10048-0205
Bank One TTEE Investor Growth & 9.72% Record
The Brown Publishing Co. Income Fund
C/O/ Bank One Investment Management Class A
Retirement Services- Daily R/K
190 Heatherdown Drive
Westerville, Ohio 43081-2868
Dean Witter Reynolds Cust For Investor Growth & 59.70% Record
Merle E Clucas Income Fund
IRA Rollover/SEP DTD 05/06/97 Class C
Church St Station - P.O. Box 250
New York, NY 10277
Dean Witter FBO Kathleen Ann Maxwell Investor Growth & 18.65% Record
61 Waltham Ave # Income Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10013-0250
Dean Witter Reynolds Cust for Eva I Bolz Investor Growth & 18.15% Record
IRA Rollover Dated 09/23/96 Income Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10013-0250
Strafe & Co. Investor Growth & 76.30% Record
Bank One Trust Co. Income Fund
Attn: Mutual Funds Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
</TABLE>
94
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Investor Growth & 16.84% Record
Database 2-Attn: One Group/Cash Income Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Revco D.S., Inc. SERP-Trust A Investor Growth & 28.52% Beneficial
Strafe & Co. Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Banc One Securities Savings Investor Growth & 9.44% Beneficial
Strafe & Co. Income Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Dean Witter for the Benefit of Investor Balanced 9.04% Record
Sara Lee Youngs Fund
10832 Linwood Road Class A
5 World Trade Center 6th Floor
New York, NY 10048-0205
State Street Bank & Trust Co. Investor Balanced 7.31% Record
Cust for the Rollover IRA of Granville L Fund
Crothers Class A
2133 E. Ranch Rd
Tempe, AZ 85284- 3547
Dean Witter FBO John R. Wood and Investor Balanced 6.88% Record
Terressa M Wood JT TEN Fund
Church St Station - P.O. Box 250 Class A
New York, NY 10013-0250
Dean Witter FBO Worley Douglas Warfe Investor Balanced 6.80% Record
806 Harrison Street Fund
Church St Station - P.O. Box 250 Class A
New York, NY 10277
Dean Witter FBO David H Behm & Investor Balanced 39.79% Record
Christine A Behm JT TEN Class C
Church St Station P.O. Box 250
New York, NY 10277
Dean Witter FBO Alexis B Newell Investor Balanced 34.55% Record
7812 Meadow Park Drive #228 Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10013-0250
Dean Witter Reynolds Cust for Investor Balanced 19.21% Record
Anne H Shiner Fund
IRA Standard Dated 06/09/97 Class C
Church St Station - P.O. Box 250
New York, NY 10277
Dean Witter FBO Mary Joy Jensen Investor Balanced 5.51% Record
2574 N 124th Apt 445 Fund
Church St Station - P.O. Box 250 Class C
New York, NY 10277
Strafe & Co.
Bank One Trust Co. Investor Balanced 57.80% Record
Attn: Mutual Funds Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
</TABLE>
95
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Investor Balanced 36.70% Record
Database 2-Attn: One Group/Cash Fund
235 W. Schrock Road Fiduciary
Westerville, OH 43081-2874
Black Clawson Co. Investor Balanced 17.48% Beneficial
Member Pension Plan Fund
Strafe & Co. Fiduciary
100 E. Broad Street
Columbus, Ohio 43215-3607
Centennial Liquor Retirement Plan Investor Balanced 7.52% Beneficial
Strafe & Co. Fund
100 E. Broad Street Fiduciary
Columbus, Ohio 43215-3607
Bank One TTEE Investor 12.58% Record
The Brown Publishing Co. Conservative
C/O Banc One Investment Mgmt Growth Fund
Retirement Services - Daily R/K Class A
190 Heatherdown Drive
Westerville, Ohio 43081-2868
Dean Witter FBO Carolyn A Hill Investor 7.22% Record
231 Highland Avenue Conservative
Oak Hill, WV 25901-3443 Growth Fund
Class A
Dean Witter for the Benefit of Investor 5.58% Record
James W. Blair Conservative
95 Elizabeth Street Growth Fund
5 World Trade Center, 6th Floor Class A
New York, NY 10048-0205
State Street Bank & Trust Co Investor 60.74% Record
Cust For the IRA of Ruben Hernandez Conservative
914 Jennings Growth
San Antonio, TX 78225-1328 Class C
Dean Witter Reynolds Cust For Investor 20.10% Record
Shirley M Brewer Conservative
IRA Standard Dated 11/18/96 Growth
Church St Station - P.O. Box 250 Class C
New York, NY 10277
Dean Witter FBO Mary Cimino Investor 14.15% Record
Tod Melba M Cimino Conservative
Church St Station - P.O. Box 250 Growth
New York, NY 10277 Class C
Strafe & Co. Investor 56.67% Record
Bank One Trust Co. Conservative
Attn: Mutual Funds Growth Fund
100 E. Broad Street Fiduciary
Columbus, OH 43215-3607
</TABLE>
96
<PAGE>
5% SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND PERCENTAGE OF TYPE OF
ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP
- ------- ---------- --------- ---------
<S> <C> <C> <C>
Clark & Co. Investor 29.97% Record
Database 2-Attn: One Group/Cash Conservative
235 W. Schrock Road Growth Fund
Westerville, Ohio 43081-2874 Fiduciary
Clark & Co. Investor 19.25% Beneficial
Kenosha Carpenters Conservative
Database 2-Attn: One Group/Cash Growth Fund
235 W. Schrock Road Fiduciary
Westerville, Ohio 43081-2874
Banc One Securities Savings Plan Investor 10.80% Beneficial
Strafe & Co. Conservative
100 E. Broad Street Growth Fund
Columbus, Ohio 43215-3607 Fiduciary
Ermco, Inc. Pension Plan Investor 7.44% Beneficial
Strafe & Co. Conservative
100 E. Broad Street Growth Fund
Columbus, Ohio 43215-3607 Fiduciary
Bank One TTEE Investor 7.27% Record
Therm-O-Disk Inc. 401K Conservative
BISYS Qualified Plan Services Growth Fund
Springhouse Corp. Ctr. II-Invest A/C Fiduciary
323 Norristown Road, Attn: S. Loch
Ambler, PA 19002-2756
</TABLE>
As a group, the Trustee and Officers of the Trust owned less than 1% of the
Shares of each class of the Trust.
97
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<S> <C> <C>
ASSET BACKED SECURITIES (2.2%):
140 Advanta Credit Card Master Trust,
5.95%, 8/31/99..................... $ 140
513 Advanta Mortgage Loan Trust, Series
1994-3, Class A2, 7.60%, 7/25/10... 516
250 Case Equipment Loan Trust, Series
1996-B, Class A3, 6.65%, 9/15/03... 251
480 Green Tree Financial Corp., Series
1996-3, Class A3, 6.70%, 5/15/27... 481
98 Honda Auto Receivables Grantor Trust,
Series 1994-A, 4.80%, 8/15/99...... 98
106 KeyCorp Auto Grantor Trust, Series
1995-A A, 5.80%, 7/15/00........... 106
500 Nationsbank Auto Owner Trust, Series
1996-A A3, 6.38%, 7/15/00.......... 504
325 Olympic Automobile Receivables Trust,
6.05%, 8/15/02..................... 322
1,025 Olympic Automobile Receivables Trust,
Series 1996-B, Class A4, 6.70%,
3/15/02............................ 1,033
259 The Money Store Home Equity Trust,
Series 1994-B, Class A2, 6.80%,
2/15/13............................ 259
102 Union Federal Savings Bank Trust,
Series 1994 A A, 5.08%, 5/15/00.... 101
--------
Total Asset Backed Securities 3,811
--------
COMMON STOCKS (54.1%):
Capital Goods (3.9%):
13 BW/IP Holdings, Inc.................. 254
6 Case Corp............................ 427
11 Cooper Industries, Inc............... 537
16 Emerson Electric Co.................. 887
40 General Electric Co.................. 2,621
13 Ingersoll Rand Co.................... 772
21 Teleflex, Inc........................ 644
15 Thermo Electron Corp. (b)............ 524
--------
6,666
--------
Consumer Durable (1.4%):
25 Autozone, Inc. (b)................... 591
28 Chrysler Corp........................ 910
13 Lear Corp. (b)....................... 568
7 Whirlpool Corp....................... 398
--------
2,467
--------
Consumer Non-Durable (6.1%):
29 Archer-Daniels-Midland Co............ 672
12 Coca Cola Co......................... 844
10 Dole Food, Inc. (c).................. 415
14 McCormick & Co., Inc................. 348
34 PepsiCo, Inc......................... 1,285
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
42 Philip Morris Co., Inc............... $ 1,872
6 Proctor & Gamble Co.................. 890
13 Quaker Oats Co....................... 570
17 Revlon, Inc. (b)..................... 902
21 RJR Nabisco Holdings Corp............ 703
21 Supervalu, Inc....................... 735
23 Sysco Corp........................... 850
7 Universal Corp....................... 229
--------
10,315
--------
Consumer Services (3.2%):
10 Belo (A.H.) Corp., Series A.......... 404
16 Callaway Golf Co. (c)................ 557
30 CUC International, Inc. (b)(c)....... 769
23 Hasbro, Inc. (c)..................... 660
23 Hilton Hotels Corp................... 598
12 Mattel, Inc. (c)..................... 420
10 MGM Grand, Inc. (b)(c)............... 374
22 Time Warner, Inc. (c)................ 1,080
6 Walt Disney Co....................... 506
--------
5,368
--------
Energy (4.0%):
9 Ashland, Inc......................... 408
10 Atlantic Richfield Co................ 733
8 Devon Energy Corp.................... 290
7 Dresser Industries, Inc. (c)......... 276
29 Exxon Corp........................... 1,783
15 Mapco, Inc........................... 457
19 Mobil Corp........................... 1,314
20 Tosco Corp........................... 587
20 USX-Marathon Group................... 566
10 Weatherford Enterra, Inc. (b)........ 389
--------
6,803
--------
Financial Services (8.1%):
1 American International Group, Inc.... 194
14 BankAmerica Corp..................... 917
5 Cigna Corp........................... 941
20 Equitable Co., Inc. (c).............. 658
31 Federal National Mortgage Assoc...... 1,351
11 First Union Corp..................... 971
5 First Virginia Banks, Inc............ 302
13 Fleet Financial Group, Inc........... 797
11 Hartford Financial Services Group.... 935
15 Mellon Bank Corp. (c)................ 659
15 Morgan Stanley Dean Witter
Discover........................... 659
15 National City Corp................... 809
11 Pacific Century Financial Corp....... 495
5 Provident Co., Inc................... 262
12 Regions Financial Corp............... 386
16 Southtrust Corp...................... 641
</TABLE>
Continued
25
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
14 SunTrust Banks, Inc.................. $ 793
6 TransAmerica Corp.................... 589
20 Travelers Group, Inc................. 1,274
6 Washington Mutual, Inc. (c).......... 370
--------
14,003
--------
Health Care (6.7%):
17 Abbott Labs.......................... 1,128
9 Amgen, Inc. (b)...................... 517
13 Baxter International, Inc............ 695
9 Boston Scientific Corp. (b).......... 571
20 Bristol Myers Squibb Co.............. 1,604
7 Cardinal Health, Inc. (c)............ 384
7 Centocor, Inc. (b)................... 205
13 Columbia/HCA Healthcare Corp. (c).... 491
12 Eli Lilly & Co....................... 1,268
7 Guidant Corp......................... 561
4 HBO & Co............................. 269
20 Merck & Co., Inc..................... 2,080
9 Phycor, Inc. (b)(c).................. 300
20 Schering Plough Corp................. 967
10 Vencor, Inc. (b)..................... 441
--------
11,481
--------
Raw Materials (2.9%):
13 B. F. Goodrich Co.................... 576
9 Betzdearborn, Inc. (c)............... 581
11 Du Pont (EI) de Nemours & Co......... 666
11 Ferro Corp........................... 411
11 Lubrizol Corp........................ 440
13 Monsanto Co.......................... 560
14 Morton International, Inc............ 426
13 Nalco Chemical Co.................... 483
9 Praxair, Inc......................... 521
20 Wellman, Inc......................... 339
--------
5,003
--------
Retail (3.1%):
17 Dollar General Corp.................. 632
27 Just For Feet, Inc. (b)(c)........... 469
22 Kroger Co. (b)....................... 650
34 Officemax, Inc. (b).................. 497
9 Outback Steakhouse, Inc. (b)......... 220
13 TJX Co., Inc. (c).................... 332
20 Toys R Us, Inc. (b)(c)............... 707
51 Wal-Mart Stores, Inc................. 1,731
--------
5,238
--------
Shelter (1.1%):
25 Kaufman & Broad Home Corp............ 434
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter, continued:
12 Masco Corp. (c)...................... $ 484
12 Pentair, Inc......................... 388
9 Weyerhaeuser Co...................... 489
--------
1,795
--------
Technology (8.1%):
5 Altera Corp. (b)(c).................. 273
17 Analog Devices, Inc. (b)(c).......... 454
9 Applied Materials, Inc. (b).......... 630
9 BMC Software, Inc. (b)............... 509
11 Cadence Design Systems, Inc. (b)..... 355
16 Cisco Systems, Inc. (b).............. 1,081
6 Compaq Computer Corp. (b)............ 615
7 Dell Computer Corp. (b).............. 787
4 General Motors Corp., Class H........ 254
18 Hewlett Packard Co................... 1,008
14 Intel Corp........................... 1,914
17 International Business Machines...... 1,524
6 Lockheed Martin Corp................. 601
8 Lucent Technologies, Inc............. 548
20 Microsoft Corp. (b).................. 2,465
15 Orbital Sciences Corp. (b)(c)........ 241
12 Rohr Industries, Inc. (b)............ 272
7 Teradyne, Inc. (b)................... 287
--------
13,818
--------
Utilities (5.5%):
8 AES Corp. (b)(c)..................... 580
10 Century Telephone Enterprises........ 327
35 Edison International................. 858
19 Enron Corp. (c)...................... 771
18 General Public Utilities Corp........ 646
30 GTE Corp............................. 1,307
17 MCI Communications Corp.............. 651
12 MCN Corp............................. 377
10 National Fuel Gas Co................. 428
25 New York State Electric & Gas........ 530
22 SBC Communications, Inc.............. 1,361
18 Sprint Corp. (c)..................... 942
16 Texas Utilities...................... 544
--------
9,322
--------
Total Common Stocks 92,279
--------
CORPORATE BONDS (12.0%):
Banking, Finance & Insurance (7.6%):
$ 1,000 Association Corp., 8.27%, 11/8/01.... $ 1,055
1,000 Bankamerica Corp., 8.13%, 2/1/02..... 1,049
500 Chrysler Financial Corp., 5.88%,
2/7/01............................. 488
420 Circuit City Credit Card Master
Trust, 6.38%, 8/15/05.............. 419
1,000 First Hawaiian, Inc., 6.25%,
8/15/00............................ 985
</TABLE>
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Banking, Finance & Insurance, continued:
$ 610 Ford Credit Auto Loan Master Trust,
5.50%, 2/15/03..................... $ 588
500 Ford Motor Credit Corp., 8.38%,
1/15/00............................ 521
250 General Motors Acceptance Corp.,
7.00%, 3/1/00...................... 253
1,000 General Motors Acceptance Corp.,
8.25%, 2/24/04..................... 1,057
1,000 Goldman Sachs Group, 7.20%, 3/1/07,
144 A.............................. 1,004
750 Huntington National Bank, 6.75%,
6/15/03............................ 740
250 Lehman Brothers Holdings, Inc.,
6.38%, 6/1/98...................... 251
300 Lehman Brothers Holdings, Inc.,
8.88%, 11/1/98..................... 310
500 Lehman Brothers, Inc., 9.88%,
10/15/00........................... 544
550 MBNA Master Credit Card, 5.40%,
3/15/99............................ 546
800 McDonnell Douglas Corp., 9.30%,
9/11/02............................ 842
500 Midland Bank PLC, 6.95%, 3/15/11..... 483
250 Nationsbank Texas, 6.75%, 8/15/00.... 251
1,000 Society National Bank, 6.75%,
6/15/03............................ 991
500 Suntrust Banks, 7.38%, 7/1/02........ 511
--------
12,888
--------
Industrials (2.5%):
250 Anheuser Busch Co., 8.75%, 12/1/99... 263
500 Campbell Soup Co., 5.63%, 9/15/03.... 471
250 Coca-Cola Co., 7.88%, 9/15/98........ 255
500 Dayton Hudson Corp., 7.25%, 9/1/04... 502
200 Du Pont (EI) de Nemours & Co., 8.70%,
2/7/01............................. 213
250 Ford Motor Co., 9.00%, 9/15/01....... 269
200 Illinois Tool Works, 7.50%,
12/1/98............................ 203
500 J C Penney & Co., 5.38%, 11/15/98.... 494
250 Johnson & Johnson, 7.38%, 6/29/02.... 257
500 Occidental Petroleum, 9.25%,
8/1/19............................. 581
750 Sears Roebuck Acceptance, 7.13%,
5/2/03............................. 758
--------
4,266
--------
Transportation (0.3%):
500 Union Pacific Co., 7.60%, 5/1/05..... 513
--------
Utilities (1.6%):
500 AT&T Corp., 6.00%, 8/1/00............ 492
500 AT&T Corp., 7.50%, 6/1/06............ 516
250 Duke Power Co., 7.00%, 7/1/00........ 253
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Utilities, continued:
$ 250 Southern California Edison, 7.50%,
4/15/99............................ $ 255
500 Virginia Electric & Power, 6.63%,
4/1/03............................. 494
675 Virginia Electric & Power MTN, 9.15%,
6/10/99............................ 707
--------
2,717
--------
Total Corporate Bonds 20,384
--------
FEDERAL AGENCY DEBENTURES (1.2%):
Federal National Mortgage Assoc. (1.2%):
1,000 5.55%, 9/8/98........................ 997
1,000 5.53%, 2/10/99....................... 988
--------
Total Federal Agency Debentures 1,985
--------
U.S. GOVERNMENT AGENCY MORTGAGES (14.8%):
Federal Home Loan Mortgage Corp. (5.2%):
182 10.00%, 9/1/03, Pool #E30407......... 192
308 8.00%, 3/1/08, Pool #E45796.......... 317
983 7.00%, 1/1/12, Pool #E66116.......... 984
331 10.50%, 10/1/20, Pool #D24679........ 367
828 8.00%, 4/1/25, Pool #C00401.......... 850
925 8.00%, 5/1/25, Pool #D60455.......... 949
482 7.00%, 2/1/26, Pool #D69343.......... 474
705 6.50%, 2/1/26, Pool #D68616.......... 677
975 6.50%, 2/1/26, Pool #D68124.......... 936
491 7.00%, 3/1/26, Pool #D69430.......... 482
951 7.50%, 5/1/26, Pool #C00460.......... 956
890 8.50%, 7/1/26, Pool #C00472.......... 926
991 7.00%, 10/1/26, Pool #D75494......... 974
--------
9,084
--------
Federal National Conventional Loan (0.7%):
667 8.00%, 6/1/24, Pool #270402.......... 684
417 8.00%, 6/1/24, Pool #250085.......... 428
--------
1,112
--------
Federal National Mortgage Assoc. (3.8%):
275 6.40%, 3/25/03....................... 268
250 6.40%, 1/13/04....................... 243
300 8.05%, 7/14/04....................... 300
929 6.50%, 5/1/11, Pool #337195.......... 912
924 7.00%, 7/1/25, Pool #317252.......... 908
914 6.50%, 2/1/26, Pool #337115.......... 875
936 7.50%, 5/1/26, Pool #344916.......... 939
979 7.00%, 5/1/26, Pool #346269.......... 960
983 7.50%, 11/1/26, Pool #363626......... 986
--------
6,391
--------
Government National Mortgage Assoc. (5.1%):
772 5.50%, 4/20/11, Pool #2222........... 722
118 8.00%, 4/15/17, Pool # 192100........ 122
</TABLE>
Continued
27
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 77 8.00%, 5/15/22, Pool #329176......... $ 79
90 6.50%, 1/15/24, Pool #376656......... 87
236 8.00%, 4/15/24, Pool #376038......... 242
1,231 8.00%, 8/15/24, Pool #394024......... 1,266
1,428 7.00%, 8/15/25, Pool #413007......... 1,407
990 6.50%, 4/15/26, Pool #424185......... 947
994 6.50%, 4/15/26, Pool #416192......... 951
929 7.50%, 5/15/26, Pool #375345......... 933
990 7.00%, 5/15/26, Pool #375344......... 973
925 8.50%, 1/15/27, Pool #432266......... 962
--------
8,691
--------
Total U.S. Government Agency Mortgages 25,278
--------
U.S. TREASURY OBLIGATIONS (14.3%):
U.S. Treasury Bills (0.1%):
110 7/10/97 (d).......................... 110
35 7/17/97 (d).......................... 35
90 8/21/97 (d).......................... 89
--------
234
--------
U.S. Treasury Bonds (4.7%):
750 11.25%, 2/15/15...................... 1,089
900 7.50%, 11/15/16...................... 962
4,700 8.13%, 8/15/19 (c)................... 5,362
500 7.88%, 2/15/21 (c)................... 557
--------
7,970
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes (9.5%):
$ 3,500 7.25%, 2/15/98 (c)................... $ 3,532
600 9.00%, 5/15/98....................... 616
200 8.88%, 2/15/99....................... 209
300 5.88%, 3/31/99....................... 299
3,250 7.00%, 4/15/99 (c)................... 3,301
300 6.00%, 10/15/99 (c).................. 299
250 7.75%, 11/30/99...................... 259
2,500 7.75%, 1/31/00 (c)................... 2,590
3,000 6.50%, 5/31/01....................... 3,015
300 6.50%, 8/31/01....................... 301
150 6.25%, 2/15/03 (c)................... 149
1,500 6.50%, 5/15/05 (c)................... 1,496
--------
16,066
--------
Total U.S. Treasury Obligations 24,270
--------
REPURCHASE AGREEMENTS (1.6%):
2,640 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $2,640
U.S. Treasury Notes, 6.25%,
1/31/02, market value-$2,761) 2,640
--------
Total Repurchase Agreements 2,640
--------
Total (Cost--$153,456) (a) $170,647
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $170,250.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $77. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $18,134
Unrealized depreciation.................................................. (1,020)
-------
Net unrealized appreciation.............................................. $17,114
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Serves as collateral for futures contracts.
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- --------------------------------- --------- -------
<C> <S> <C> <C>
Long S&P 500 September 1997
1 Futures $428 $445
</TABLE>
See notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INCOME EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (88.6%):
Business Equipment & Services (3.2%):
85 Automatic Data Processing, Inc.
(b)............................... $ 3,995
210 Browning-Ferris Industries, Inc.
(b)............................... 6,983
225 Dun & Bradstreet Corp............... 5,906
180 National Service Industries, Inc.... 8,764
--------
25,648
--------
Capital Goods (5.1%):
215 Cooper Industries, Inc.............. 10,696
80 Deere & Co.......................... 4,390
300 General Electric Co................. 19,614
70 Johnson Controls, Inc. (b).......... 2,874
155 Westinghouse Electric Corp.......... 3,581
--------
41,155
--------
Consumer Durable (1.9%):
70 Briggs & Stratton Corp.............. 3,500
320 Ford Motor Co....................... 12,080
--------
15,580
--------
Consumer Non-Durable (15.7%):
110 American Greetings Corp., Class A... 4,084
240 Campbell Soup Co.................... 12,000
75 Clorox Co........................... 9,900
230 Coca Cola Co........................ 16,041
235 ConAgra, Inc........................ 15,069
145 Eastman Kodak Co.................... 11,129
160 H.J. Heinz Co....................... 7,380
125 International Flavors & Fragrances,
Inc............................... 6,313
60 McCormick & Co., Inc................ 1,515
80 PepsiCo, Inc........................ 3,005
360 Philip Morris Co., Inc.............. 15,975
95 Proctor & Gamble Co. (b)............ 13,419
55 Quaker Oats Co...................... 2,468
100 RJR Nabisco Holdings Corp........... 3,300
60 V.F. Corp........................... 5,108
--------
126,706
--------
Consumer Services (1.1%):
150 McGraw-Hill Co., Inc................ 8,822
--------
Energy (10.9%):
160 Amoco Corp.......................... 13,910
100 Atlantic Richfield Co............... 7,050
150 Dresser Industries, Inc............. 5,588
300 Exxon Corp.......................... 18,450
85 Halliburton Co...................... 6,736
240 Mobil Corp.......................... 16,770
360 Royal Dutch Petroleum Co............ 19,575
--------
88,079
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (16.2%):
160 Allstate Corp....................... $ 11,680
250 American Express Co. (b)............ 18,625
300 BankAmerica Corp.................... 19,367
60 Chase Manhattan Corp................ 5,824
50 Citicorp............................ 6,028
180 Federal National Mortgage Assoc..... 7,853
130 First Tennessee National Corp.
(b)............................... 6,240
145 J.P. Morgan & Co., Inc.............. 15,134
190 Lincoln National Corp............... 12,231
85 National City Corp.................. 4,463
100 Reliastar Financial Corp............ 7,313
100 TransAmerica Corp................... 9,356
115 U.S. Bancorp (b).................... 7,374
--------
131,488
--------
Health Care (11.7%):
185 American Home Products Co........... 14,153
260 Baxter International, Inc........... 13,585
285 Bristol Myers Squibb Co............. 23,083
50 Merck & Co., Inc.................... 5,175
75 Pfizer, Inc......................... 8,963
220 Schering Plough Corp................ 10,533
150 Warner Lambert Co................... 18,638
--------
94,130
--------
Multi-Industry (1.1%):
85 Minnesota Mining & Manufacturing
Co................................ 8,670
--------
Raw Materials (4.2%):
170 Dow Chemical Co..................... 14,811
140 Du Pont (EI) de Nemours & Co........ 8,803
170 Nalco Chemical Co................... 6,566
150 Pall Corp. (b)...................... 3,488
--------
33,668
--------
Retail (2.5%):
120 Albertsons, Inc..................... 4,380
115 May Department Stores Co............ 5,434
185 Wal-Mart Stores, Inc................ 6,255
80 Walgreen Co......................... 4,290
--------
20,359
--------
Shelter (0.4%):
60 Weyerhaeuser Co..................... 3,120
--------
Technology (6.8%):
100 AMP, Inc. (b)....................... 4,175
100 Boeing Co. (b)...................... 5,306
110 Hewlett Packard Co.................. 6,160
30 Intel Corp.......................... 4,254
60 International Business Machines..... 5,411
65 Lockheed Martin Corp................ 6,732
</TABLE>
Continued
29
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INCOME EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
90 United Technologies Corp............ $ 7,470
200 Xerox Corp.......................... 15,775
--------
55,283
--------
Transportation (0.8%):
95 Union Pacific Corp. (b)............. 6,698
--------
Utilities (7.0%):
170 AT&T Corp. (b)...................... 5,961
175 BellSouth Corp...................... 8,116
175 Central & South West Corp........... 3,719
160 Entergy Corp. (b)................... 4,380
210 GTE Corp............................ 9,214
120 Ku Energy Cop. (b).................. 4,095
110 Questar Corp........................ 4,441
200 SBC Communications, Inc............. 12,374
80 Sprint Corp......................... 4,210
--------
56,510
--------
Total Common Stocks 715,916
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
CONVERTIBLE BONDS (5.0%):
$ 7,000 Alza Corp., 5.00%, 5/1/06........... $ 7,096
6,500 Hilton Hotels Corp., 5.00%,
5/15/06........................... 6,923
6,500 Home Depot, Inc., 3.25%, 10/1/01,
Callable 10/1/99 @ 100.81......... 7,425
7,000 Masco Corp., 5.25%, 2/15/12......... 7,368
5,500 Medical Care International, 6.75%,
10/1/06........................... 5,528
5,500 Pep Boys-Manny, Moe & Jack, 4.00%,
9/1/99............................ 5,665
--------
Total Convertible Bonds 40,005
--------
PREFERRED STOCKS (5.0%):
160 Corning Delaware.................... 13,920
120 Crown Cork & Seal Co................ 6,060
120 Cyprus Amax Minerals Co............. 6,660
45 Microsoft Corp...................... 3,915
155 Sonoco Products..................... 9,939
--------
Total Preferred Stocks 40,494
--------
REPURCHASE AGREEMENTS (1.2%):
9,787 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $10,031
U.S. Treasury Note, 5.75%,
10/31/00, market value $9,983).... 9,787
--------
Total Repurchase Agreements 9,787
--------
Total (Cost--$449,883) (a) $806,202
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $807,501.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $357,471
Unrealized depreciation.................................................. (1,152)
--------
Net unrealized appreciation.............................................. $356,319
========
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (95.4%):
Business Equipment & Services (1.9%):
31 Automatic Data Processing, Inc.
(c)............................... $ 1,454
22 Browning-Ferris Industries, Inc..... 741
9 Canadian Moore Corp., Ltd........... 181
8 Ceridian Corp. (b)(c)............... 336
18 Cognizant Corp...................... 725
8 Computer Sciences Corp. (b)......... 563
9 Deluxe Corp......................... 303
18 Dun & Bradstreet Corp............... 470
7 Ecolab, Inc......................... 327
16 Equifax, Inc........................ 584
47 First Data Corp. (c)................ 2,071
11 H & R Block......................... 344
13 Ikon Office Solutions............... 336
9 Interpublic Group Co., Inc.......... 521
3 John H. Harland Co.................. 65
31 Laidlaw Inc., Class B, Non-Voting... 432
5 National Service Industries, Inc.... 255
16 Pitney Bowes, Inc................... 1,124
16 R.R. Donnelley & Sons Co............ 596
9 Ryder Systems, Inc.................. 281
6 Safety-Kleen Corp................... 108
24 Service Corp. International (c)..... 783
48 WMX Technologies, Inc............... 1,526
--------
14,126
--------
Capital Goods (5.8%):
3 Aeroquip-Vickers, Inc............... 121
9 Black & Decker Corp................. 335
8 Case Corp........................... 517
20 Caterpillar, Inc.................... 2,170
4 Cincinnati Milacron, Inc............ 105
12 Cooper Industries, Inc.............. 619
4 Crane Co............................ 187
4 Cummins Engine, Inc................. 301
27 Deere & Co.......................... 1,471
12 Dover Corp.......................... 721
47 Emerson Electric Co................. 2,586
9 Fluor Corp.......................... 490
4 Foster Wheeler Corp................. 160
345 General Electric Co................. 22,547
5 General Signal Corp. (c)............ 237
3 Giddings & Lewis, Inc............... 69
6 Grainger W.W., Inc.................. 463
5 Harnischfeger Industries, Inc.
(c)............................... 217
13 Honeywell, Inc...................... 1,009
25 Illinois Tool Works (c)............. 1,249
11 Ingersoll Rand Co................... 669
9 Johnson Controls, Inc............... 353
0 Nacco Industries, Inc............... 22
8 Navistar International Corp. (b).... 142
5 Owens-Corning Fiberglass Corp....... 235
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Capital Goods, continued:
8 Paccar, Inc......................... $ 366
8 Parker-Hannifin Corp................ 481
19 PPG Industries, Inc................. 1,117
18 Sherwin-Williams Co................. 570
7 Snap-On, Inc........................ 270
9 Stanley Works....................... 367
16 Thermo Electron Corp. (b)........... 530
6 Timken Co........................... 201
17 Tyco International, Ltd. (c)........ 1,214
65 Westinghouse Electric Corp.......... 1,509
--------
43,620
--------
Consumer Durable (2.2%):
16 Autozone, Inc. (b).................. 375
2 Briggs & Stratton Corp.............. 99
74 Chrysler Corp....................... 2,425
9 Cooper Tire & Rubber Co............. 198
10 Dana Corp........................... 395
8 Eaton Corp.......................... 726
7 Echlin, Inc......................... 239
125 Ford Motor Co....................... 4,701
77 General Motors Corp................. 4,270
19 Genuine Parts Co.................... 650
16 Goodyear Tire & Rubber Co........... 1,008
12 ITT Industries, Inc................. 313
11 Maytag Corp......................... 281
8 Whirlpool Corp...................... 442
--------
16,122
--------
Consumer Non-Durable (12.4%):
5 Alberto Culver Co., Class B (c)..... 150
8 American Greetings Corp., Class A... 301
52 Anheuser Busch Co., Inc............. 2,182
58 Archer-Daniels-Midland Co........... 1,372
14 Avon Products, Inc.................. 1,016
3 Ball Corp........................... 79
6 Bemis Co............................ 261
7 Brown-Forman Corp., Class B......... 361
49 Campbell Soup Co.................... 2,461
6 Clorox Co........................... 743
260 Coca Cola Co........................ 18,155
31 Colgate Palmolive Co. (c)........... 1,998
25 ConAgra, Inc........................ 1,612
4 Coors Adolph Co., Class B........... 102
15 CPC International................... 1,412
13 Crown Cork & Seal Co. (c)........... 698
35 Eastman Kodak Co.................... 2,717
4 Fleming Co., Inc.................... 68
18 Fortune Brands, Inc................. 688
8 Fruit of the Loom, Inc., Class A
(b)............................... 257
17 General Mills, Inc. (c)............. 1,086
58 Gillette Co......................... 5,514
</TABLE>
Continued
31
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
39 H.J. Heinz Co....................... $ 1,776
16 Hershey Foods Corp.................. 893
12 International Flavors &
Fragrances, Inc................... 582
4 Jostens, Inc........................ 112
23 Kellogg Co. (c)..................... 1,948
8 Liz Claiborne, Inc. (c)............. 382
17 Newell Co........................... 667
30 Nike, Inc., Class B................. 1,769
162 PepsiCo, Inc........................ 6,096
255 Philip Morris Co., Inc.............. 11,331
9 Pioneer Hi-Bred International,
Inc............................... 736
5 Polaroid Corp....................... 277
71 Proctor & Gamble Co................. 10,034
14 Quaker Oats Co...................... 624
11 Ralston Purina Group................ 899
6 Reebok International Ltd. (b)....... 293
16 Rubbermaid, Inc..................... 487
4 Russell Corp........................ 120
51 Sara Lee, Corp...................... 2,105
39 Seagram Co., Ltd.................... 1,577
1 Springs Industries, Inc., Class A... 66
6 Stride Rite Corp.................... 73
8 Supervalu, Inc...................... 262
19 Sysco Corp.......................... 699
7 Tupperware Corp..................... 249
17 Unilever N V........................ 3,569
21 UST, Inc............................ 578
7 V.F. Corp........................... 589
12 Wrigley (Wm.) Junior Co. (c)........ 813
--------
92,839
--------
Consumer Services (3.3%):
10 Brunswick Corp...................... 315
34 Comcast Corp., Class A.............. 736
41 CUC International, Inc. (b)(c)...... 1,065
10 Dow Jones & Co., Inc................ 410
15 Gannett, Inc........................ 1,459
10 Harrah's Entertainment, Inc. (b).... 191
14 Hasbro, Inc. (c).................... 390
26 Hilton Hotels Corp.................. 696
16 Hospitality Franchise Systems, Inc.
(b)............................... 951
12 ITT Corp. (b)....................... 735
4 King World Productions, Inc. (b).... 131
10 Knight-Ridder, Inc.................. 513
13 Marriott International, Inc......... 813
29 Mattel, Inc. (c).................... 977
11 McGraw-Hill Co., Inc................ 627
5 Meredith Corp....................... 155
10 New York Times Co., Class A......... 525
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Services, continued:
69 Tele-Communications, Inc.,
Class A (b)(c).................... $ 1,019
60 Time Warner, Inc.................... 2,878
11 Times Mirror Co., Class A (c)....... 632
14 Tribune Co.......................... 669
49 U.S. West, Inc. (b)................. 1,856
38 Viacom, Inc., Class B (b)........... 1,131
71 Walt Disney Co...................... 5,705
--------
24,579
--------
Energy (8.5%):
10 Amerada Hess Corp................... 538
52 Amoco Corp.......................... 4,512
7 Ashland, Inc........................ 316
34 Atlantic Richfield Co............... 2,393
15 Baker Hughes, Inc................... 578
13 Burlington Northern................. 582
68 Chevron Corp. (c)................... 5,022
19 Dresser Industries, Inc............. 690
260 Exxon Corp.......................... 15,988
13 Halliburton Co...................... 1,043
2 Helmerich & Payne, Inc.............. 114
6 Kerr McGee Corp..................... 363
3 Louisiana Land & Exploration Co..... 187
6 McDermott International, Inc........ 182
82 Mobil Corp.......................... 5,764
33 Occidental Petroleums Corp. (c)..... 839
10 Oryx Energy Co. (b)................. 217
5 Pennzoil Co......................... 387
27 Phillips Petroleum Co............... 1,201
9 Rowan Cos., Inc. (b)(c)............. 251
224 Royal Dutch Petroleum Co............ 12,192
9 Santa Fe Energy Resources, Inc.
(b)............................... 137
25 Schlumberger Ltd.................... 3,184
8 Sun, Inc. (c)....................... 243
19 Tenneco, Inc........................ 837
27 Texaco, Inc......................... 2,984
26 Union Pacific Resources Group,
Inc............................... 648
26 Unocal Corp......................... 1,000
30 USX-Marathon Group.................. 875
6 Western Atlas, Inc. (b)............. 461
--------
63,728
--------
Financial Services (14.4%):
47 Allstate Corp....................... 3,411
50 American Express Co................. 3,711
25 American General Corp. (c).......... 1,209
49 American International Group,
Inc............................... 7,385
17 Aon Corp............................ 854
46 Banc One Corp. (c).................. 2,212
42 Bank of New York Co., Inc. (c)...... 1,805
75 BankAmerica Corp.................... 4,871
</TABLE>
Continued
32
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
16 Bankboston Corp..................... $ 1,122
9 Bankers Trust New York Corp. (c).... 764
22 Barnett Banks, Inc.................. 1,146
6 Beneficial Corp..................... 427
18 Charles Schwab Corp................. 749
46 Chase Manhattan Corp................ 4,432
18 Chubb Corp.......................... 1,229
8 Cigna Corp.......................... 1,438
49 Citicorp............................ 5,876
12 Comerica, Inc....................... 789
19 Conseco, Inc. (c)................... 692
22 Corestates Financial Corp........... 1,169
11 Country Wide Credit................. 337
74 Federal Home Loan Mortgage Corp..... 2,558
111 Federal National Mortgage Assoc..... 4,862
11 Fifth Third Bancorp................. 911
14 First Bank System, Inc.............. 1,195
33 First Chicago NBD Corp.............. 2,002
29 First Union Corp. (c)............... 2,712
27 Fleet Financial Group, Inc.......... 1,713
9 General Re Corp..................... 1,617
7 Golden West Financial Corp.......... 470
14 Great Western Financial Corp........ 754
14 Green Tree Financial Corp........... 509
12 H.F. Ahmanson & Co.................. 509
12 Hartford Financial Services Group... 997
11 Household International, Inc........ 1,314
19 J.P. Morgan & Co., Inc.............. 2,019
8 Jefferson Pilot Corp................ 543
24 KeyCorp............................. 1,341
11 Lincoln National Corp............... 694
17 Marsh & McLennan Co................. 1,228
4 MBIA, Inc........................... 496
35 MBNA Corp. (c)...................... 1,280
28 Mellon Bank Corp. (c)............... 1,263
35 Merrill Lynch & Co.................. 2,071
13 MGIC Investment Corp. (c)........... 604
60 Morgan Stanley Dean Witter
Discover.......................... 2,584
23 National City Corp.................. 1,223
77 NationsBank Corp.................... 4,937
39 Norwest Corp. (c)................... 2,169
34 PNC Bank Corp....................... 1,405
10 Providian Financial................. 324
6 Republic N Y Corp................... 645
13 SAFECO Corp......................... 599
11 Salomon, Inc. (c)................... 614
9 St. Paul Co., Inc. (c).............. 688
24 SunTrust Banks, Inc................. 1,325
8 Torchmark Corp...................... 552
7 TransAmerica Corp................... 646
67 Travelers Group, Inc................ 4,223
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
COMMON STOCKS, CONTINUED:
Financial Services, continued:
16 U.S. Bancorp........................ $ 1,047
16 UNUM Corp........................... 680
12 USF & G Corp. (c)................... 286
18 Wachovia Corp....................... 1,044
9 Wells Fargo & Co. (c)............... 2,548
--------
106,829
--------
Health Care (11.1%):
82 Abbott Labs......................... 5,445
15 Aetna............................... 1,578
7 Allergan, Inc....................... 220
9 Alza Corp. (b)...................... 258
68 American Home Products Co. (c)...... 5,167
28 Amgen, Inc. (b)..................... 1,616
6 Bard C.R., Inc...................... 223
6 Bausch & Lomb, Inc.................. 302
29 Baxter International, Inc........... 1,505
14 Becton Dickinson & Co. (c).......... 697
9 Beverly Enterprises, Inc. (b)....... 152
12 Biomet, Inc. (c).................... 226
20 Boston Scientific Corp. (b)......... 1,247
105 Bristol Myers Squibb Co............. 8,482
11 Cardinal Health, Inc. (c)........... 653
70 Columbia/HCA Healthcare Corp. (c)... 2,738
58 Eli Lilly & Co...................... 6,315
8 Guidant Corp........................ 646
36 Healthsouth Corp. (b)(c)............ 898
17 Humana, Inc. (b).................... 393
139 Johnson & Johnson................... 8,972
8 Mallinckrodt Group, Inc............. 320
7 Manor Care, Inc..................... 222
25 Medtronic, Inc...................... 2,046
126 Merck & Co., Inc.................... 13,078
5 Millipore Corp...................... 220
67 Pfizer, Inc......................... 8,052
53 Pharmacia & Upjohn, Inc. (c)........ 1,841
77 Schering Plough Corp................ 3,684
2 Shared Medical Systems Corp. (c).... 94
9 St. Jude Medical Center, Inc.
(b)(c)............................ 347
30 Tenet Healthcare Corp. (b).......... 884
7 U.S. Surgical, Corp................. 242
19 United Healthcare Corp.............. 987
28 Warner Lambert Co................... 3,532
--------
83,282
--------
Multi-Industry (1.7%):
29 Allied Signal, Inc.................. 2,472
24 Corning, Inc. (c)................... 1,337
4 FMC Corp. (b)....................... 283
8 Harcourt General, Inc............... 383
12 Loews Corp.......................... 1,232
44 Minnesota Mining & Manufacturing
Co................................ 4,487
</TABLE>
Continued
33
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Multi-Industry, continued:
17 Textron, Inc........................ $ 1,146
14 TRW, Inc............................ 769
11 Whittman Corp....................... 272
--------
12,381
--------
Raw Materials (3.8%):
12 Air Products & Chemical, Inc........ 955
23 Alcan Aluminum Ltd.................. 813
18 Allegheny Teledyne, Inc............. 491
18 Aluminum Co. of America (c)......... 1,385
11 Armco, Inc. (b)..................... 41
5 ASARCO, Inc......................... 139
12 Avery Dennison Corp................. 479
6 B. F. Goodrich Co................... 244
37 Barrick Gold Corp. (c).............. 821
24 Battle Mountain Gold Co............. 134
11 Bethlehem Steel Corp. (b)........... 118
10 Cyprus Amax Minerals Co............. 253
25 Dow Chemical Co..................... 2,141
118 Du Pont (EI) de Nemours & Co........ 7,440
9 Eastman Chemical Co................. 556
13 Echo Bay Mines Ltd. (b)............. 72
15 Engelhard Corp. (c)................. 317
21 Freeport-McMoran Copper & Gold,
Class B (c)....................... 660
7 Great Lakes Chemical Corp........... 367
11 Hercules, Inc. (c).................. 535
15 Homestake Mining Co................. 193
17 Inco Ltd............................ 525
5 Inland Steel Industries, Inc........ 135
61 Monsanto Co......................... 2,646
15 Morton International, Inc........... 464
7 Nalco Chemical Co................... 286
16 Newmont Mining Corp................. 629
9 Nucor Corp.......................... 524
12 Pall Corp. (c)...................... 282
7 Phelps Dodge Corp................... 580
25 Placer Dome, Inc.................... 408
16 Praxair, Inc........................ 881
7 Reynolds Metals Co.................. 485
7 Rohm & Haas Co...................... 603
11 Sigma-Aldrich Corp.................. 375
14 Union Carbide Corp.................. 674
9 USX-U.S. Steel Group, Inc........... 305
8 W.R. Grace & Co..................... 418
10 Worthington Industries, Inc......... 175
--------
28,549
--------
Retail (4.8%):
26 Albertsons, Inc..................... 965
15 American Stores Co.................. 752
11 Charming Shoppes (b)................ 55
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail, continued:
10 Circuit City Stores, Inc. (c)....... $ 359
21 Costco Companies, Inc. (b).......... 674
17 CVS Corp............................ 895
17 Darden Restaurants, Inc............. 153
23 Dayton Hudson Corp.................. 1,207
12 Dillard Department Stores, Inc.,
Class A........................... 406
21 Federated Department Stores, Inc.
(b)............................... 740
31 Gap, Inc............................ 1,186
6 Giant Food Inc., Class A............ 208
4 Great Atlantic & Pacific Tea,
Inc............................... 107
50 Home Depot, Inc..................... 3,451
27 J.C. Penney, Inc.................... 1,387
48 K Mart, Inc. (b)(c)................. 593
26 Kroger Co. (b)...................... 744
28 Limited, Inc........................ 577
3 Longs Drug Stores, Inc.............. 74
18 Lowe's Co........................... 663
26 May Department Stores Co............ 1,236
73 McDonald's Corp..................... 3,537
4 Mercantile Stores Co., Inc.......... 223
9 Nordstrom, Inc...................... 436
7 Pep Boys-Manny, Moe & Jack.......... 229
12 Rite Aid Corp....................... 603
41 Sears Roebuck & Co.................. 2,195
7 Tandy Corp.......................... 380
16 TJX Co., Inc. (c)................... 422
29 Toys R Us, Inc. (b)................. 1,027
240 Wal-Mart Stores, Inc................ 8,121
26 Walgreen Co......................... 1,397
13 Wendy's International, Inc.......... 343
16 Winn Dixie Stores, Inc.............. 588
14 Woolworth Corp. (b)................. 329
--------
36,262
--------
Shelter (1.5%):
4 Armstrong World Industries, Inc..... 276
5 Boise Cascade Corp. (c)............. 190
3 Centex Corp......................... 110
10 Champion International Co........... 540
3 Fleetwood Enterprises, Inc.......... 103
9 Georgia Pacific Corp................ 810
31 International Paper Co.............. 1,524
9 James River Corp. of Virginia (c)... 329
4 Kaufman & Broad Home Corp........... 70
59 Kimberly Clark Corp................. 2,916
11 Louisiana Pacific Corp.............. 236
17 Masco Corp. (c)..................... 693
6 Mead Corp........................... 387
3 Potlatch Corp....................... 116
2 Pulte Corp.......................... 79
</TABLE>
Continued
34
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter, continued:
10 Stone Container Corp. (b)........... $ 139
6 Temple Inland, Inc.................. 344
7 Union Camp Corp..................... 373
11 Westvaco Corp....................... 331
21 Weyerhaeuser Co..................... 1,104
6 Williamette Industries, Inc. (c).... 441
--------
11,111
--------
Technology (14.1%):
35 3Com Corp. (b)(c)................... 1,566
7 Adobe Systems, Inc.................. 259
14 Advanced Micro Devices, Inc. (b).... 510
12 Amdahl Corp. (b).................... 107
22 AMP, Inc............................ 936
9 Andrew Corp. (b).................... 265
13 Apple Computer, Inc. (b)............ 180
18 Applied Materials, Inc. (b)......... 1,303
5 Auto Desk, Inc...................... 201
20 Bay Networks, Inc. (b).............. 521
75 Boeing Co. (c)...................... 3,976
16 Cabletron Systems, Inc. (b)......... 447
69 Cisco Systems, Inc. (b)............. 4,645
29 Compaq Computer Corp. (b)(c)........ 2,864
38 Computer Associates International,
Inc............................... 2,126
3 Data General Corp. (b)(c)........... 90
18 Dell Computer Corp. (b)............. 2,067
16 Digital Equipment Corp. (b)......... 556
12 DSC Communications Corp. (b)........ 263
6 EG&G, Inc........................... 129
26 EMC Corp. (b)....................... 1,006
7 General Dynamics Corp............... 509
13 General Instrument Corp. (b)(c)..... 315
4 Harris Corp......................... 332
106 Hewlett Packard Co.................. 5,960
86 Intel Corp.......................... 12,179
5 Intergraph Corp. (b)................ 44
104 International Business Machines..... 9,399
20 Lockheed Martin Corp................ 2,092
13 LSI Logic Corp. (b)................. 429
66 Lucent Technologies, Inc............ 4,788
23 McDonnell Douglas Corp.............. 1,579
22 Micron Technology, Inc. (b)(c)...... 859
126 Microsoft Corp. (b)................. 15,885
62 Motorola, Inc....................... 4,686
13 National Semiconductor Corp. (b).... 409
27 Northern Telecom, Ltd............... 2,417
6 Northrop Grumman Corp. (c).......... 543
38 Novell, Inc. (b).................... 264
69 Oracle Corp. (b).................... 3,458
13 Parametric Technology Corp. (b)..... 566
5 Perkin-Elmer Corp................... 371
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
5 Raychem Corp........................ $ 346
26 Raytheon Co. (c).................... 1,308
23 Rockwell International Corp......... 1,349
8 Scientific-Atlanta, Inc............. 181
26 Seagate Technology, Inc. (b)........ 925
17 Silicon Graphics, Inc. (b).......... 261
39 Sun Microsystems, Inc. (b).......... 1,452
12 Tandem Computers (b)................ 246
3 Tektronix, Inc...................... 194
19 Tellabs, Inc. (b)................... 1,034
20 Texas Instruments, Inc.............. 1,655
5 Thomas & Betts Corp................. 281
18 Unisys, Corp. (b)(c)................ 136
25 United Technologies Corp............ 2,113
34 Xerox Corp.......................... 2,683
--------
105,265
--------
Transportation (1.2%):
9 AMR Corp. (b)....................... 870
16 Burlington Northern Santa Fe
Corp. (c)......................... 1,429
4 Caliber Systems, Inc................ 151
2 Consolidated Freightways Corp.
(b)............................... 30
22 CSX Corp. (c)....................... 1,216
8 Delta Air Lines, Inc................ 625
12 Federal Express Corp. (b)(c)........ 719
13 Norfolk Southern Corp............... 1,359
15 Southwest Airlines Co............... 393
26 Union Pacific Corp.................. 1,805
6 US Air Group (b)(c)................. 219
--------
8,816
--------
Utilities (8.7%):
52 Airtouch Communications, Inc. (b)... 1,425
20 Alltel Corp......................... 669
20 American Electric Power, Inc........ 825
58 Ameritech Corp...................... 3,951
169 AT&T Corp. (c)...................... 5,930
15 Baltimore Gas & Electric Co......... 412
46 Bell Atlantic Corp. (c)............. 3,487
104 BellSouth Corp...................... 4,816
16 Carolina Power & Light Co........... 587
22 Central & South West Corp........... 468
16 Cinergy Corp........................ 563
11 Coastal Corp........................ 562
6 Columbia Gas System, Inc............ 400
25 Consolidated Edison Co. of New York,
Inc............................... 724
10 Consolidated Natural Gas Co......... 521
15 Detroit Edison Co................... 423
18 Dominion Resources, Inc. of
Virginia.......................... 662
37 Duke Power Co., Inc................. 1,792
</TABLE>
Continued
35
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
1 Eastern Enterprises................. $ 44
43 Edison International................ 1,067
26 Enron Corp. (c)..................... 1,070
7 Enserch Corp........................ 163
24 Entergy Corp. (c)................... 658
20 Florida Power & Light Group, Inc.... 902
17 Frontier Corp....................... 339
12 General Public Utilities Corp....... 434
101 GTE Corp............................ 4,431
27 Houston Industries (c).............. 571
72 MCI Communications Corp............. 2,767
15 Niagara Mohawk Power Corp. (b)...... 129
6 NICOR, Inc.......................... 212
13 Noram Energy Corp................... 200
7 Northern States Power Co............ 379
46 NYNEX Corp.......................... 2,677
16 Ohio Edison Co...................... 349
2 Oneok, Inc.......................... 78
9 Pacific Enterprises................. 302
30 Pacificorp.......................... 663
23 Peco Energy Corp.................... 489
3 Peoples Energy Corp................. 126
44 PG & E Corp. (c).................... 1,077
17 PP&L Resources, Inc................. 331
26 Public Service Enterprise Group..... 640
96 SBC Communications, Inc............. 5,972
9 Sonat, Inc.......................... 466
70 Southern Co......................... 1,529
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
COMMON STOCKS, CONTINUED:
Utilities, continued:
45 Sprint Corp......................... $ 2,384
23 Texas Utilities..................... 806
65 U.S. West Media Group............... 1,323
22 Unicom Corp......................... 498
11 Union Electric Co................... 396
16 Williams Cos., Inc. (c)............. 721
94 WorldCom, Inc. (b)(c)............... 2,995
--------
65,405
--------
Total Common Stocks 712,914
--------
U.S. TREASURY OBLIGATIONS (0.1%):
U.S. Treasury Bills (0.1%):
$ 495 7/17/97 (d)......................... 493
175 8/14/97 (d)......................... 174
290 8/21/97 (d)......................... 288
30 8/28/97 (d)......................... 30
85 9/25/97 (d)......................... 84
--------
Total U.S. Treasury Obligations 1,069
--------
REPURCHASE AGREEMENTS (4.3%):
31,897 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $31,819
U.S. Treasury Notes, 6.13%,
8/31/98, market value-$33,181).... 31,896
--------
Total Repurchase Agreements 31,896
--------
Total (Cost--$518,526) (a) $745,879
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $747,856.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $616. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $231,704
Unrealized depreciation.................................................. (4,967)
--------
Net unrealized appreciation.............................................. $226,737
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Serves as collateral for futures contracts.
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- --------------------------------- --------- -------
<C> <S> <C> <C>
Long S&P 500 September 1997
68 Futures $30,649 $30,269
</TABLE>
See notes to financial statements.
36
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
VALUE GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (98.3%):
Capital Goods (7.0%):
64 BW/IP Holdings, Inc................. $ 1,302
32 Case Corp........................... 2,218
56 Cooper Industries, Inc.............. 2,796
83 Emerson Electric Co................. 4,592
202 General Electric Co................. 13,225
63 Ingersoll Rand Co................... 3,915
105 Teleflex, Inc....................... 3,266
79 Thermo Electron Corp. (b)(c)........ 2,669
--------
33,983
--------
Consumer Durable (2.6%):
131 Autozone, Inc. (b).................. 3,077
144 Chrysler Corp....................... 4,725
69 Lear Corp. (b)...................... 3,049
38 Whirlpool Corp...................... 2,068
--------
12,919
--------
Consumer Non-Durable (11.5%):
146 Archer-Daniels-Midland Co........... 3,419
97 Coca Cola Co........................ 6,759
49 Dole Food, Inc...................... 2,108
72 McCormick & Co., Inc................ 1,813
178 PepsiCo, Inc........................ 6,667
220 Philip Morris Co., Inc.............. 9,776
33 Proctor & Gamble Co. (c)............ 4,647
66 Quaker Oats Co...................... 2,966
91 Revlon, Inc. (b).................... 4,710
111 RJR Nabisco Holdings Corp........... 3,670
111 Supervalu, Inc...................... 3,833
121 Sysco Corp. (c)..................... 4,431
37 Universal Corp...................... 1,184
--------
55,983
--------
Consumer Services (5.6%):
49 Belo (A.H.) Corp., Series A......... 2,044
80 Callaway Golf Co. (c)............... 2,822
155 CUC International, Inc. (b)(c)...... 3,996
118 Hasbro, Inc. (c).................... 3,357
114 Hilton Hotels Corp.................. 3,031
65 Mattel, Inc. (c).................... 2,198
51 MGM Grand, Inc. (b)(c).............. 1,876
114 Time Warner, Inc.................... 5,486
33 Walt Disney Co...................... 2,616
--------
27,426
--------
Energy (7.2%):
46 Ashland, Inc........................ 2,133
55 Atlantic Richfield Co............... 3,863
41 Devon Energy Corp................... 1,507
38 Dresser Industries, Inc. (c)........ 1,430
151 Exxon Corp.......................... 9,274
74 Mapco, Inc.......................... 2,322
96 Mobil Corp.......................... 6,708
101 Tosco Corp.......................... 3,018
102 USX-Marathon Group.................. 2,942
53 Weatherford Enterra, Inc. (b)....... 2,033
--------
35,230
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (15.0%):
7 American International Group,
Inc............................... $ 986
101 BankAmerica Corp.................... 6,521
29 Cigna Corp.......................... 5,183
103 Equitable Co., Inc. (c)............. 3,435
158 Federal National Mortgage Assoc..... 6,869
53 First Union Corp. (c)............... 4,940
26 First Virginia Banks, Inc........... 1,568
66 Fleet Financial Group, Inc.......... 4,193
54 Hartford Financial Services Group... 4,444
77 Mellon Bank Corp.................... 3,452
81 Morgan Stanley Dean Witter
Discover.......................... 3,484
79 National City Corp.................. 4,121
51 Pacific Century Financial Corp...... 2,359
25 Provident Co., Inc. (c)............. 1,348
62 Regions Financial Corp.............. 1,961
79 Southtrust Corp..................... 3,269
75 SunTrust Banks, Inc................. 4,124
33 TransAmerica Corp................... 3,088
102 Travelers Group, Inc................ 6,458
31 Washington Mutual, Inc. (c)......... 1,876
--------
73,679
--------
Health Care (12.4%):
88 Abbott Labs......................... 5,861
46 Amgen, Inc. (b)..................... 2,685
69 Baxter International, Inc........... 3,605
49 Boston Scientific Corp. (b)......... 3,004
104 Bristol Myers Squibb Co............. 8,400
34 Cardinal Health, Inc. (c)........... 1,947
35 Centocor, Inc. (b).................. 1,072
85 Columbia/HCA Healthcare Corp. (c)... 3,334
61 Eli Lilly & Co...................... 6,635
35 Guidant Corp........................ 2,958
20 HBO & Co............................ 1,384
105 Merck & Co., Inc.................... 10,908
44 Phycor, Inc. (b)(c)................. 1,529
105 Schering Plough Corp................ 5,008
51 Vencor, Inc. (b).................... 2,219
--------
60,549
--------
Raw Materials (5.3%):
69 B. F. Goodrich Co................... 2,971
46 Betzdearborn, Inc. (c).............. 3,023
55 Du Pont (EI) de Nemours & Co........ 3,458
57 Ferro Corp.......................... 2,094
53 Lubrizol Corp....................... 2,227
67 Monsanto Co......................... 2,902
75 Morton International, Inc........... 2,249
64 Nalco Chemical Co................... 2,472
49 Praxair, Inc........................ 2,727
100 Wellman, Inc........................ 1,731
--------
25,854
--------
Retail (5.5%):
85 Dollar General Corp................. 3,193
139 Just For Feet, Inc. (b)(c).......... 2,429
117 Kroger Co. (b)...................... 3,384
179 Officemax, Inc. (b)................. 2,580
</TABLE>
Continued
37
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
VALUE GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail, continued:
48 Outback Steakhouse, Inc. (b)........ $ 1,154
65 TJX Co., Inc. (c)................... 1,709
106 Toys R Us, Inc. (b)(c).............. 3,700
260 Wal-Mart Stores, Inc................ 8,801
--------
26,950
--------
Shelter (1.9%):
125 Kaufman & Broad Home Corp........... 2,202
59 Masco Corp. (c)..................... 2,451
61 Pentair, Inc........................ 2,012
48 Weyerhaeuser Co..................... 2,480
--------
9,145
--------
Technology (14.7%):
27 Altera Corp. (b).................... 1,369
85 Analog Devices, Inc. (b)(c)......... 2,268
44 Applied Materials, Inc. (b)......... 3,144
46 BMC Software, Inc. (b).............. 2,558
53 Cadence Design Systems, Inc
(b)(c)............................ 1,782
95 Cisco Systems, Inc. (b)............. 6,404
45 Compaq Computer Corp. (b)(c)........ 4,446
34 Dell Computer Corp. (b)............. 3,946
23 General Motors Corp., Class H....... 1,299
90 Hewlett Packard Co.................. 5,034
67 Intel Corp.......................... 9,544
84 International Business Machines..... 7,612
30 Lockheed Martin Corp................ 3,107
40 Lucent Technologies, Inc............ 2,861
98 Microsoft Corp. (b)................. 12,361
77 Orbital Sciences Corp. (b)(c)....... 1,222
63 Rohr Industries, Inc. (b)........... 1,375
36 Teradyne, Inc. (b).................. 1,425
--------
71,757
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities (9.6%):
44 AES Corp. (b)(c).................... $ 3,141
49 Century Telephone Enterprises....... 1,661
162 Edison International................ 4,032
99 Enron Corp. (c)..................... 4,045
91 General Public Utilities Corp....... 3,279
151 GTE Corp............................ 6,638
82 MCI Communications Corp............. 3,147
64 MCN Corp. (c)....................... 1,957
51 National Fuel Gas Co................ 2,151
107 New York State Electric & Gas....... 2,240
112 SBC Communications, Inc............. 6,924
91 Sprint Corp......................... 4,794
80 Texas Utilities..................... 2,769
--------
46,778
--------
Total Common Stocks 480,253
--------
U.S. TREASURY OBLIGATIONS (0.2%):
U.S. Treasury Bills (0.2%):
$ 475 7/17/97 (d)......................... 474
445 8/14/97 (d)......................... 442
--------
Total U.S. Treasury Obligations 916
--------
REPURCHASE AGREEMENTS (1.6%):
7,683 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $7,674
U.S. Treasury Notes, 6.25%,
8/31/00, market value-$7,996)..... 7,683
--------
Total Repurchase Agreements 7,683
--------
Total (Cost--$412,230) (a) $488,852
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $488,660.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $8. Cost for federal income tax purposes differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $80,161
Unrealized depreciation.................................................. (3,547)
-------
Net unrealized appreciation.............................................. $76,614
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Serves as collateral for futures contracts.
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- --------------------------------- --------- -------
<C> <S> <C> <C>
Long S&P 500 September 1997
18 Futures $7,680 $8,012
</TABLE>
See notes to financial statements.
38
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<S> <C> <C>
COMMON STOCKS (93.5%):
Business Equipment & Services (0.8%):
180 Browning-Ferris Industries, Inc.
(c)............................... $ 5,985
--------
Capital Goods (2.5%):
100 Case Corp........................... 6,888
100 Ingersoll Rand Co................... 6,175
200 Westinghouse Electric Corp.......... 4,625
--------
17,688
--------
Consumer Durable (3.5%):
50 Autozone, Inc. (b).................. 1,178
250 Chrysler Corp....................... 8,203
275 General Motors Corp................. 15,314
--------
24,695
--------
Consumer Non-Durable (5.8%):
200 American Greetings Corp., Class A... 7,425
100 Archer-Daniels-Midland Co........... 2,350
115 Ball Corp........................... 3,457
50 IBP, Inc. (c)....................... 1,163
497 RJR Nabisco Holdings Corp........... 16,414
300 Supervalu, Inc...................... 10,350
--------
41,159
--------
Consumer Services (0.8%):
195 Viacom, Inc., Class A (b)........... 5,789
--------
Energy (18.7%):
100 Amoco Corp.......................... 8,694
50 Ashland, Inc........................ 2,319
330 Atlantic Richfield Co............... 23,265
50 Chevron Corp. (c)................... 3,697
100 Dresser Industries, Inc. (c)........ 3,725
500 Exxon Corp.......................... 30,748
262 Mobil Corp.......................... 18,307
456 Royal Dutch Petroleum Co. (c)....... 24,795
100 Tenneco, Inc........................ 4,519
440 USX-Marathon Group.................. 12,705
--------
132,774
--------
Financial Services (24.6%):
170 Allstate Corp....................... 12,410
239 BankAmerica Corp. (c)............... 15,430
56 Bankboston Corp..................... 4,021
60 Chase Manhattan Corp................ 5,824
63 Cigna Corp.......................... 11,094
220 Federal National Mortgage Assoc..... 9,598
115 First Union Corp.................... 10,638
80 Fleet Financial Group, Inc. (c)..... 5,060
165 Great Western Financial Corp........ 8,869
130 Hartford Financial Services Group... 10,758
100 J.P. Morgan & Co., Inc.............. 10,438
104 KeyCorp (c)......................... 5,794
110 Lincoln National Corp............... 7,081
130 Mellon Bank Corp. (c)............... 5,866
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
116 Morgan Stanley Dean Witter
Discover (c)...................... $ 4,974
245 NationsBank Corp.................... 15,803
50 Pacific Century Financial Corp...... 2,313
50 Southtrust Corp..................... 2,069
50 SunTrust Banks, Inc................. 2,753
40 TransAmerica Corp................... 3,743
320 Travelers Group, Inc................ 20,176
--------
174,712
--------
Health Care (4.0%):
65 Aetna (c)........................... 6,654
50 Bard C.R., Inc...................... 1,816
100 Baxter International, Inc........... 5,225
100 Biomet, Inc. (c).................... 1,863
100 Columbia/HCA Healthcare Corp. (c)... 3,931
100 Healthsource, Inc. (b).............. 2,169
118 Pharmacia & Upjohn, Inc. (c)........ 4,083
40 St. Jude Medical Center, Inc.
(b)(c)............................ 1,560
25 United Healthcare Corp.............. 1,300
--------
28,601
--------
Multi-Industry (0.4%):
30 Loews Corp.......................... 3,004
--------
Raw Materials (3.3%):
81 Alumax, Inc. (b).................... 3,073
40 Aluminum Co. of America (c)......... 3,015
50 B. F. Goodrich Co................... 2,166
150 Cyprus Amax Minerals Co. (c)........ 3,675
31 Dow Chemical Co..................... 2,701
220 Nalco Chemical Co. (c).............. 8,497
--------
23,127
--------
Retail (2.8%):
150 Dillard Department Stores, Inc.,
Class A........................... 5,194
180 May Department Stores Co. (c)....... 8,505
50 Rite Aid Corp. (c).................. 2,494
115 Toys R Us, Inc. (b)(c).............. 4,025
--------
20,218
--------
Shelter (2.7%):
125 International Paper Co. (c)......... 6,070
150 Masco Corp. (c)..................... 6,263
127 Weyerhaeuser Co..................... 6,604
--------
18,937
--------
Technology (12.3%):
100 Applied Materials, Inc. (b)......... 7,081
19 Boeing Co. (c)...................... 1,003
335 International Business Machines..... 30,195
200 Litton Industries, Inc. (b)......... 9,663
</TABLE>
Continued
39
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
70 Lockheed Martin Corp................ $ 7,249
50 McDonnell Douglas Corp.............. 3,425
140 Motorola, Inc....................... 10,640
100 National Semiconductor Corp. (b).... 3,063
110 Rockwell International Corp......... 6,490
100 Texas Instruments, Inc. (c)......... 8,406
--------
87,215
--------
Transportation (0.4%):
30 Burlington Northern Santa Fe
Corp. (c)......................... 2,696
--------
Utilities (10.9%):
145 American Electric Power, Inc........ 6,090
108 Bell Atlantic Corp. (c)............. 8,195
200 BellSouth Corp...................... 9,274
72 Dominion Resources, Inc. of
Virginia.......................... 2,637
280 Edison International................ 6,965
31 El Paso Natural Gas................. 1,688
139 Enron Corp. (c)..................... 5,673
100 Florida Power & Light Group, Inc.... 4,606
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
100 General Public Utilities Corp....... $ 3,588
82 GTE Corp............................ 3,598
200 MCI Communications Corp............. 7,656
50 NYNEX Corp.......................... 2,881
112 SBC Communications, Inc............. 6,930
87 Southern Co......................... 1,903
110 Sprint Corp......................... 5,789
--------
77,473
--------
Total Common Stocks 664,073
--------
REPURCHASE AGREEMENTS (6.5%):
$46,324 Prudential Securities, 6.05%,
due 7/1/97 (collateralized by
$63,935 various U.S. Government
Securities, 5.71%-7.70%,
6/23/98-5/1/25, market
value--$47,476)................... 46,324
--------
Total Repurchase Agreements 46,324
--------
Total (Cost--$581,154) (a) $710,397
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $710,276.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $2,392. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $130,950
Unrealized depreciation.................................................. (4,099)
--------
Net unrealized appreciation.............................................. $126,851
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
40
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
DISCIPLINED VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (95.5%):
Business Equipment & Services (0.6%):
192 Olsten Corp......................... $ 3,732
--------
Capital Goods (5.6%):
48 Belden, Inc......................... 1,635
49 BW/IP Holdings, Inc................. 993
27 Crane Co............................ 1,141
73 Durco International, Inc............ 2,124
127 Harsco Corp......................... 5,135
153 Mark IV Industries, Inc............. 3,660
59 Medusa Corp......................... 2,245
213 Molex, Inc.......................... 7,785
87 Southdown, Inc...................... 3,795
51 Tecumseh Products Co................ 3,066
84 Teleflex, Inc....................... 2,631
--------
34,210
--------
Consumer Durable (1.3%):
116 Arvin Industries, Inc............... 3,168
55 Lear Corp. (b)...................... 2,441
40 Whirlpool Corp. (c)................. 2,183
--------
7,792
--------
Consumer Non-Durable (5.1%):
44 American Greetings Corp., Class A... 1,634
85 Dean Foods Co....................... 3,432
35 Dole Food, Inc...................... 1,496
125 Hormel Foods Corp................... 3,359
60 Intimate Brands, Inc. (c)........... 1,260
98 McCormick & Co., Inc................ 2,475
42 Newell Co........................... 1,664
30 Smithfield Foods, Inc. (b).......... 1,845
36 Sysco Corp.......................... 1,314
345 Tyson Foods, Inc., Class A.......... 6,597
110 Universal Corp...................... 3,493
81 Warnaco Group, Inc.................. 2,582
--------
31,151
--------
Consumer Services (3.5%):
32 Belo (A.H.) Corp., Series A......... 1,332
40 Callaway Golf Co. (c)............... 1,420
65 Hasbro, Inc. (c).................... 1,844
34 Houghton Mifflin Co................. 2,270
107 International Game Technologies..... 1,899
31 King World Productions, Inc. (b).... 1,085
143 MGM Grand, Inc. (b)................. 5,291
15 Washington Post Co.................. 5,970
--------
21,111
--------
Energy (2.8%):
52 Devon Energy Corp................... 1,911
163 Mapco, Inc.......................... 5,141
66 Parker & Parsley Petroleum Co.
(c)............................... 2,333
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Energy, continued:
73 Valero Energy Corp. (c)............. $ 2,657
70 Vintage Petroleum, Inc.............. 2,153
80 Weatherford Enterra, Inc. (b)....... 3,080
--------
17,275
--------
Financial Services (22.6%):
118 A.G. Edwards, Inc................... 5,089
194 Bear Stearns Co., Inc. (c).......... 6,632
33 Capmac Holdings, Inc................ 1,096
105 Central Fidelity Banks, Inc. (c).... 3,738
140 Crestar Financial Corp.............. 5,443
42 Equitable of Iowa Co................ 2,374
147 First American Bank Corp............ 6,732
180 First Security Corp................. 4,916
111 First Tennessee National Corp.
(c)............................... 5,304
95 First Virginia Banks, Inc........... 5,706
177 Firstar Corp........................ 5,553
60 Gatx Corp........................... 3,465
92 Mercantile Bancorporation (c)....... 5,589
81 Mercantile Bankshares Corp.......... 3,240
41 National City Corp.................. 2,126
151 Pacific Century Financial Corp...... 6,961
188 Paine Webber Group, Inc............. 6,580
117 PMI Group, Inc. (c)................. 7,298
164 Provident Co., Inc.................. 8,774
348 Regions Financial Corp.............. 11,005
84 Reliance Group Holdings, Inc........ 998
258 Southtrust Corp..................... 10,671
149 Summit Bancorp (c).................. 7,469
34 Transatlantic Holdings, Inc. (c).... 3,335
66 Washington Mutual, Inc. (c)......... 3,944
52 Wilmington Trust Corp............... 2,379
--------
136,417
--------
Health Care (7.8%):
48 Advanced Technology Labs, Inc.
(b)............................... 2,064
60 Bard C.R., Inc...................... 2,179
113 Bergen Brunswig Corp................ 3,157
86 Forest Laboratories, Class A (b).... 3,580
160 Genzyme Corp. (b)(c)................ 4,440
20 HBO & Co............................ 1,378
97 Healthsource, Inc. (b).............. 2,099
62 Hillenbrand Industry, Inc........... 2,945
115 McKesson Corp. (c).................. 8,914
276 Mylan Laboratories (c).............. 4,067
55 Pacificare Health (b)(c)............ 3,509
165 Vencor, Inc. (b)(c)................. 7,136
40 Watson Pharmaceutical, Inc. (b)..... 1,690
--------
47,158
--------
</TABLE>
Continued
41
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
DISCIPLINED VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Raw Materials (7.2%):
89 Albemarle Corp...................... $ 1,875
57 Allegheny Teledyne, Inc............. 1,539
91 Alumax, Inc. (b).................... 3,452
43 B. F. Goodrich Co................... 1,862
96 Crompton & Knowles Corp............. 2,136
132 Ferro Corp.......................... 4,881
23 Fuller (H. B.) Co................... 1,238
98 Hanna (M.A.) Co..................... 2,831
150 Lubrizol Corp....................... 6,289
46 Nalco Chemical Co................... 1,777
120 Olin Corp........................... 4,688
75 Schulman, Inc....................... 1,835
54 Sigma-Aldrich Corp.................. 1,893
154 Wellman, Inc........................ 2,676
129 Witco Corp.......................... 4,894
--------
43,866
--------
Retail (4.6%):
89 Apple South, Inc. (c)............... 1,350
132 Cracker Barrel...................... 3,498
138 Family Dollar Stores................ 3,747
81 Fred Meyer, Inc. (b)(c)............. 4,171
66 Hannaford Brothers Co............... 2,344
70 Just For Feet, Inc. (b)(c).......... 1,221
320 Officemax, Inc. (b)................. 4,620
96 Outback Steakhouse, Inc. (b)........ 2,322
33 Sbarro, Inc......................... 910
50 Toys R Us, Inc. (b)................. 1,750
55 Waban, Inc. (b)..................... 1,770
--------
27,703
--------
Shelter (3.0%):
82 Bowater, Inc........................ 3,793
41 Consolidated Papers, Inc............ 2,225
168 Kaufman & Broad Home Corp........... 2,951
87 P.H. Glatfelter and Co.............. 1,740
137 Pentair, Inc........................ 4,509
69 Rayonier, Inc....................... 2,894
--------
18,112
--------
Technology (8.4%):
33 Advanced Micro Devices, Inc. (b).... 1,188
97 Analog Devices, Inc. (b)(c)......... 2,578
100 Arrow Electronics, Inc. (b)......... 5,318
121 Avnet, Inc.......................... 6,929
16 Compaq Computer Corp. (b)(c)........ 1,588
44 Lattice Semiconductor Corp. (b)..... 2,486
46 Litton Industries, Inc. (b)......... 2,222
126 Octel Communications Corp. (b)...... 2,963
100 Orbital Sciences Corp. (b).......... 1,595
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
220 Quantum Corp. (b)(c)................ $ 4,483
33 Seagate Technology, Inc. (b)........ 1,161
93 Storage Technology Corp. (b)........ 4,152
81 Stratus Computer (b)................ 4,025
200 Teradyne, Inc. (b).................. 7,849
36 Thiokol Corp........................ 2,520
--------
51,057
--------
Transportation (2.0%):
53 APL Ltd............................. 1,656
100 ASA Holdings, Inc................... 2,863
137 CNF Transportation, Inc............. 4,418
31 Kansas City Southern Industries..... 2,000
57 Yellow Corp. (b).................... 1,275
--------
12,212
--------
Utilities (21.0%):
62 AES Corp. (b)....................... 4,387
119 AGL Resources....................... 2,448
266 Allegheny Power Systems, Inc........ 7,099
140 American Water Works, Inc. (c)...... 2,993
98 Brooklyn Union Gas.................. 2,817
60 Calenergy, Inc. (b)................. 2,280
170 Century Telephone Enterprises....... 5,727
96 Cincinnati Bell, Inc. (c)........... 3,024
102 Cinergy Corp........................ 3,551
251 CMS Energy Corp. (c)................ 8,849
292 Edison International................ 7,273
78 El Paso Natural Gas................. 4,290
70 Florida Power & Light Group, Inc.... 3,224
85 General Public Utilities Corp....... 3,049
99 Kansas City Power & Light........... 2,829
263 L G & E Energy Corp................. 5,798
139 MCN Corp. (c)....................... 4,257
168 Midamerican Energy Holdings Co...... 2,909
118 Montana Power Co.................... 2,731
132 National Fuel Gas Co................ 5,536
402 Nextel Communications, Inc.,
Class A (b)(c).................... 7,603
103 Nipsco Industries, Inc. (c)......... 4,255
235 Pinnacle West Capital............... 7,053
164 Public Service Co. of Colorado
(c)............................... 6,806
120 Questar Corp........................ 4,845
84 Scana Corp.......................... 2,084
75 Southwestern Public Service Co...... 2,960
260 Teco Energy, Inc. (c)............... 6,646
--------
127,323
--------
Total Common Stocks............................ 579,119
--------
</TABLE>
Continued
42
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
DISCIPLINED VALUE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
REPURCHASE AGREEMENTS (4.8%):
29,318 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $29,953
various U.S. Government
Securities, 0.00% - 9.25%,
2/15/98 - 7/15/17, market value --
$29,905).......................... $ 29,318
--------
Total Repurchase Agreements 29,318
--------
Total (Cost--$510,158) (a) $608,437
========
</TABLE>
Percentages indicated are based on net assets of $606,710.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $224. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $101,949
Unrealized depreciation.................................................. (3,894)
--------
Net unrealized appreciation.............................................. $ 98,055
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
43
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS (98.1%):
Business Equipment & Services (1.8%):
240 Automatic Data Processing, Inc.
(c)............................ $ 11,280
35 Computer Sciences Corp. (b)...... 2,524
190 Interpublic Group Co., Inc....... 11,650
----------
25,454
----------
Capital Goods (9.2%):
340 Emerson Electric Co.............. 18,721
40 Fluor Corp....................... 2,208
1,100 General Electric Co.............. 71,912
85 Honeywell, Inc................... 6,449
100 Illinois Tool Works.............. 4,994
150 Ingersoll Rand Co................ 9,263
187 Molex, Inc. (c).................. 6,844
50 Thermo Electron Corp. (b)(c)..... 1,700
105 Tyco International, Ltd. (c)..... 7,304
----------
129,395
----------
Consumer Durable (0.2%):
105 Autozone, Inc. (b)............... 2,474
----------
Consumer Non-Durable (20.6%):
220 Anheuser Busch Co., Inc. (c)..... 9,226
745 Coca Cola Co..................... 51,976
270 Colgate Palmolive Co. (c)........ 17,618
95 CPC International................ 8,770
135 Eastman Kodak Co................. 10,361
195 Gillette Co...................... 18,533
410 H.J. Heinz Co.................... 18,911
50 Hershey Foods Corp............... 2,766
30 International Flavors &
Fragrances, Inc................ 1,515
80 Newell Co........................ 3,170
100 Nike, Inc., Class B (c).......... 5,838
690 PepsiCo, Inc..................... 25,918
1,020 Philip Morris Co., Inc........... 45,263
70 Pioneer Hi-Bred International,
Inc............................ 5,600
250 Proctor & Gamble Co.............. 35,313
25 Quaker Oats Co................... 1,122
250 Sara Lee, Corp................... 10,406
175 Sysco Corp....................... 6,388
50 Unilever N V..................... 10,703
----------
289,397
----------
Consumer Services (5.9%):
20 Comcast Corp., Class A........... 428
170 CUC International, Inc. (b)(c)... 4,388
160 Gannett, Inc..................... 15,800
180 Hilton Hotels Corp............... 4,781
175 Mattel, Inc. (c)................. 5,928
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Services, continued:
270 McGraw-Hill Co., Inc............. $ 15,879
305 Time Warner, Inc................. 14,716
250 Walt Disney Co................... 20,063
----------
81,983
----------
Energy (1.7%):
50 Halliburton Co................... 3,963
20 Mobil Corp....................... 1,398
90 Schlumberger Ltd................. 11,249
100 Union Pacific Resources Group,
Inc............................ 2,488
105 Unocal Corp...................... 4,075
----------
23,173
----------
Financial Services (6.8%):
125 American Express Co.............. 9,313
175 American International Group,
Inc............................ 26,139
40 Charles Schwab Corp.............. 1,628
185 Chase Manhattan Corp............. 17,957
490 Federal National Mortgage
Assoc.......................... 21,376
60 First Union Corp................. 5,550
40 J.P. Morgan & Co., Inc........... 4,175
50 Marsh & McLennan Co.............. 3,569
90 U.S. Bancorp..................... 5,771
----------
95,478
----------
Health Care (19.5%):
365 Abbott Labs...................... 24,364
305 Alza Corp. (b)(c)................ 8,826
160 American Home Products Co........ 12,240
140 Amgen, Inc. (b).................. 8,138
45 Baxter International, Inc........ 2,351
70 Boston Scientific Corp. (b)(c)... 4,301
360 Bristol Myers Squibb Co.......... 29,160
100 Cardinal Health, Inc. (c)........ 5,725
95 Columbia/HCA Healthcare Corp.
(c)............................ 3,735
240 Elan Corp., PLC (b)(c)........... 10,860
220 Eli Lilly & Co................... 24,049
10 Guidant Corp..................... 850
100 Healthsouth Corp. (b)(c)......... 2,494
395 Johnson & Johnson (c)............ 25,428
135 Medtronic, Inc................... 10,935
470 Merck & Co., Inc................. 48,643
235 Pfizer, Inc...................... 28,083
230 Schering Plough Corp............. 11,011
100 Warner Lambert Co................ 12,425
----------
273,618
----------
Multi-Industry (1.6%):
60 Allied Signal, Inc. (c).......... 5,040
165 Minnesota Mining & Manufacturing
Co............................. 16,830
----------
21,870
----------
</TABLE>
Continued
44
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULEOF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Raw Materials (4.1%):
85 Air Products & Chemical, Inc..... $ 6,906
375 Du Pont (EI) de Nemours & Co..... 23,578
240 Monsanto Co...................... 10,335
225 Nalco Chemical Co................ 8,691
340 Pall Corp. (c)................... 7,905
----------
57,415
----------
Retail (5.6%):
60 Dayton Hudson Corp. (c).......... 3,191
140 Gap, Inc. (c).................... 5,443
210 Home Depot, Inc.................. 14,477
175 Kroger Co. (b)................... 5,075
30 May Department Stores Co......... 1,418
290 McDonald's Corp.................. 14,011
890 Wal-Mart Stores, Inc............. 30,092
90 Walgreen Co...................... 4,826
----------
78,533
----------
Shelter (1.3%):
360 Kimberly Clark Corp.............. 17,910
----------
Technology (16.2%):
15 3Com Corp. (b)(c)................ 675
40 Applied Materials, Inc. (b)...... 2,833
70 Cabletron Systems, Inc. (b)...... 1,982
330 Cisco Systems, Inc. (b).......... 22,151
110 Compaq Computer Corp.(b)(c)...... 10,918
95 Computer Associates
International, Inc............. 5,290
70 Dell Computer Corp. (b).......... 8,221
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
390 Hewlett Packard Co............... $ 21,840
313 Intel Corp....................... 44,387
80 International Business
Machines....................... 7,215
250 Lucent Technologies, Inc......... 18,016
480 Microsoft Corp. (b).............. 60,659
75 Northern Telecom, Ltd............ 6,825
200 Oracle Corp. (b)................. 10,075
45 Parametric Technology Corp.
(b)............................ 1,915
40 Texas Instruments, Inc........... 3,363
----------
226,365
----------
Utilities (3.6%):
25 Enron Corp. (c).................. 1,020
370 GTE Corp......................... 16,234
350 SBC Communications, Inc.......... 21,656
380 WorldCom, Inc. (b)............... 12,160
----------
51,070
----------
Total Common Stocks 1,374,135
----------
REPURCHASE AGREEMENTS (2.0%):
$ 28,027 Prudential Securities, 6.05%, due
7/1/97 (collateralized by
$28,883 various U.S. Government
Securities, 0.00%-5.75%,
9/25/97-10/31/00, market value
-- $28,588).................... 28,027
Total Repurchase Agreements 28,027
----------
Total (Cost--$953,962) (a) $1,402,162
==========
</TABLE>
- ------------
Percentages indicated are based on net assets of $1,401,042.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $700. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $450,466
Unrealized depreciation.................................................. (2,966)
--------
Net unrealized appreciation.............................................. $447,500
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
45
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GROWTH OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (93.4%):
Business Equipment & Services (13.9%):
134 America Online, Inc. (b)............ $ 7,426
112 Cintas Corp......................... 7,714
227 Equifax, Inc........................ 8,427
58 Fiserv, Inc. (b).................... 2,579
71 Gtech Holdings Corp. (b)............ 2,299
115 Herman Miller, Inc.................. 4,126
27 HNC Software, Inc. (b)(c)........... 1,014
0 Imnet Systems, Inc. (b)(c)(d)....... 3
172 Manpower, Inc....................... 7,667
278 Office Depot, Inc. (b).............. 5,408
141 Omnicom Group, Inc.................. 8,714
235 Paychex, Inc. (c)................... 8,938
128 Reynolds & Reynolds Co.............. 2,011
317 Staples, Inc. (b)(c)................ 7,375
108 Sterling Commerce, Inc. (b)......... 3,558
114 Sungard Data Systems, Inc. (b)(c)... 5,292
268 U.S.A. Waste Services, Inc.
(b)(c)............................ 10,343
81 Wallace Computer Services........... 2,438
114 World Access, Inc. (b).............. 2,337
--------
97,669
--------
Capital Goods (4.0%):
108 Diebold, Inc........................ 4,203
43 Federal Signal Corp................. 1,088
93 Hubbell, Inc., Class B.............. 4,101
33 Precision Castparts Co.............. 1,974
100 Sundstrand Corp..................... 5,581
277 United States Filter Corp. (b)(c)... 7,551
75 York International Corp............. 3,445
--------
27,943
--------
Consumer Durable (1.8%):
111 Danaher Corp. (c)................... 5,620
142 Harley-Davidson, Inc. (c)........... 6,793
--------
12,413
--------
Consumer Non-Durable (7.6%):
691 Coca-Cola Enterprises (c)........... 15,883
95 Dial Corp........................... 1,484
75 Dole Food, Inc. (c)................. 3,211
394 Flowers Industries, Inc............. 6,621
4 General Cigar Holdings, Inc.
(b)(c)............................ 112
83 Interstate Bakeries Co. (c)......... 4,899
105 Intimate Brands, Inc. (c)........... 2,203
92 Jones Apparel Group, Inc. (b)....... 4,383
41 Lancaster Colony Corp............... 1,998
100 McCormick & Co., Inc................ 2,533
1 Nike, Inc., Class B................. 82
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
68 Nine West Group, Inc. (b)(c)........ $ 2,601
72 Payless Shoesource, Inc. (b)........ 3,948
95 Unifi, Inc.......................... 3,562
--------
53,520
--------
Consumer Services (3.5%):
52 Belo (A.H.) Corp., Series A......... 2,169
142 Callaway Golf Co. (c)............... 5,027
96 Hasbro, Inc. (c).................... 2,735
236 International Game Technologies..... 4,193
341 Mirage Resorts, Inc. (b)(c)......... 8,619
48 Promus Hotel Corp. (b).............. 1,868
--------
24,611
--------
Energy (8.2%):
108 Anadarko Petroleum Corp............. 6,498
151 Apache Corp. (c).................... 4,891
73 BJ Services Co.(b)(c)............... 3,931
99 Ensco International, Inc. (b)(c).... 5,212
261 Global Marine, Inc. (b)(c).......... 6,057
115 Nabors Industries, Inc. (b)(c)...... 2,856
50 Noble Affiliates, Inc............... 1,915
203 Noble Drilling Corp. (b)(c)......... 4,578
71 Reading & Bates Corp. (b)........... 1,905
55 Smith International, Inc. (b)....... 3,311
38 Tidewater, Inc...................... 1,650
307 Tosco Corp.......................... 9,183
57 Transocean Offshore, Inc............ 4,140
58 Varco International, Inc. (b)....... 1,874
--------
58,001
--------
Financial Services (12.3%):
234 AFLAC, Inc.......................... 11,038
71 Capital One Financial Corp. (c)..... 2,695
69 Charles Schwab Corp. (c)............ 2,795
201 Franklin Resources, Inc. (c)........ 14,571
269 Imperial Credit Industries, Inc.
(b)............................... 5,531
199 Northern Trust Corp. (c)............ 9,607
96 Price (T. Rowe) Associates.......... 4,971
193 Progressive Corp.- Ohio............. 16,810
124 Robert Half International, Inc.
(b)(c)............................ 5,826
0 St. Paul Co., Inc. (c)(d)........... 8
50 State Street Corp................... 2,294
145 SunAmerica, Inc. (c)................ 7,049
126 The Money Store, Inc. (c)........... 3,603
--------
86,798
--------
Health Care (7.9%):
105 Allegiance Corp..................... 2,859
50 Apria Healthcare Group, Inc.
(b)(c)............................ 888
150 Biogen, Inc. (b).................... 5,088
33 Cardinal Health, Inc. (c)........... 1,866
</TABLE>
Continued
46
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GROWTH OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care, continued:
123 Centocor, Inc. (b).................. $ 3,811
264 Chiron Corp. (b)(c)................. 5,501
58 Dentsply International, Inc......... 2,847
88 Health Care & Retirement Corp.
(b)............................... 2,934
57 Healthcare Compare Corp. (b)(c)..... 2,959
105 Hillenbrand Industry, Inc........... 4,964
147 Oxford Health Plans, Inc. (b)....... 10,517
40 R. P. Scherer Corp. (b)............. 2,065
183 Stryker Corp. (c)................... 6,396
71 Watson Pharmaceutical, Inc. (b)..... 2,983
--------
55,678
--------
Multi-Industry (0.6%):
103 Hartford Life, Inc. (b)............. 3,859
10 Rambus, Inc. (b)(c)................. 446
--------
4,305
--------
Raw Materials (1.4%):
145 Airgas, Inc. (b)(c)................. 2,863
52 Betzdearborn, Inc................... 3,445
29 Crompton & Knowles Corp............. 643
29 Cytec Industries, Inc. (b).......... 1,080
31 Lyondell Petrochemical (c).......... 683
80 RPM, Inc. (c)....................... 1,470
--------
10,184
--------
Retail (6.5%):
82 Bed Bath & Beyond, Inc. (b)(c)...... 2,485
96 Claire's Stores, Inc................ 1,678
14 CompUSA, Inc. (b)(c)................ 310
169 Consolidated Stores Co. (b)......... 5,885
260 Dollar General Corp................. 9,767
691 Just For Feet, Inc. (b)(c).......... 12,053
92 Kohl's Corp. (b).................... 4,854
60 Lands End, Inc. (b)................. 1,778
76 Outback Steakhouse, Inc. (b)........ 1,846
67 Starbucks Corp. (b)(c).............. 2,589
18 Sunglass Hut International, Inc.
(b)(c)............................ 112
57 Tiffany & Co........................ 2,633
--------
45,990
--------
Shelter (2.8%):
45 Hon Industries...................... 1,991
170 Leggett & Platt, Inc................ 7,327
71 Redwood Trust, Inc. (c)............. 3,315
81 Sealed Air Corp. (b)................ 3,829
215 Sunstone Hotel Investors, Inc....... 3,116
--------
19,578
--------
Technology (19.2%):
262 3Com Corp. (b)...................... 11,781
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
160 ADC Telecommunications, Inc. (b).... $ 5,343
207 Advanced Fibre Communication
(b)(c)............................ 12,474
133 Advanced Micro Devices, Inc. (b).... 4,770
199 Altera Corp. (b)(c)................. 10,039
83 American Power Conversion (b)....... 1,583
109 Analog Devices, Inc. (b)(c)......... 2,883
19 Applied Materials, Inc. (b)......... 1,353
262 Ascend Communications, Inc.
(b)(c)............................ 10,312
193 Atmel Corp. (b)(c).................. 5,393
195 BMC Software, Inc. (b).............. 10,776
197 Cadence Design Systems, Inc.
(b)(c)............................ 6,613
50 Cascade Communications Corp. (b).... 1,378
185 Compuware Corp. (b)................. 8,815
29 Dell Computer Corp. (b)............. 3,441
89 Electronic Arts, Inc. (b)........... 2,989
31 Hewlett Packard Co.................. 1,708
288 Informix Corp. (b).................. 2,592
47 Integrated Device Technology, Inc.
(b)............................... 494
9 KLA-Tencor Corp. (b)................ 453
72 Linear Technology Corp.............. 3,710
59 Maxim Integrated Products, Inc.
(b)............................... 3,373
70 Solectron Corp. (b)................. 4,900
63 Structural Dynamics (b)............. 1,649
24 Symbol Technologies, Inc. (b)(c).... 800
229 Teradyne, Inc. (b).................. 8,996
43 Varian Associates, Inc.............. 2,338
101 Xilinx, Inc. (b)(c)................. 4,936
--------
135,892
--------
Transportation (0.6%):
117 Illinois Central Corp............... 4,077
--------
Utilities (3.1%):
219 360 Communications Co. (b).......... 3,749
201 AES Corp. (b)(c).................... 14,199
29 LCI International, Inc. (b)......... 632
115 Seagull Energy Corp. (b)............ 2,014
35 Southern New England
Telecommunications, Inc........... 1,353
--------
21,947
--------
Total Common Stocks 658,606
--------
PREFERRED STOCKS (1.3%):
Financial Services (0.1%):
38 Arm Financial Group, Inc., Class A
(c)............................... 760
--------
Oil & Gas Exploration (0.4%):
81 Sante Fe International Corp......... 2,754
--------
Retail (0.7%):
169 Polo Ralph Lauren Corp.............. 4,626
--------
</TABLE>
Continued
47
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GROWTH OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
PREFERRED STOCKS, CONTINUED:
Technology (0.1%):
15 Aris Corp........................... $ 317
20 Great Plains Software, Inc. (c)..... 527
--------
844
--------
Total Preferred Stocks 8,984
--------
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
REPURCHASE AGREEMENTS (5.6%):
$39,449 Prudential Securities, 6.05%, 7/1/97
(Collateralized by $49,148 various
U.S. Government Securities,
5.75%-6.01%, 10/31/00-8/1/34,
market value--$40,519)............ $ 39,449
--------
Total Repurchase Agreements 39,449
--------
Total (Cost--$611,506) (a) $707,039
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $704,690.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $3,969. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $103,914
Unrealized depreciation.................................................. (12,350)
--------
Net unrealized appreciation.............................................. $ 91,564
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
(d) Amount less than 1,000.
See notes to financial statements.
48
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS (95.3%):
Business Equipment & Services (11.9%):
25 Accustaff, Inc. (b) (c).............. $ 592
50 Acxiom Corp. (b) (c)................. 1,025
25 Billing Information Concepts (b)..... 872
15 Central Parking Corp................. 522
100 Communications Central, Inc. (b)..... 1,100
15 Computational Systems, Inc. (b)...... 208
45 Concord EFS, Inc. (b)................ 1,164
30 Corrections Corp. of America (b)
(c)................................ 1,193
30 Imnet Systems, Inc. (b) (c).......... 932
20 Norrell Corp......................... 660
30 Nova Corp. (b)....................... 778
35 Stewart Enterprises, Inc., Class A... 1,470
10 Stone & Webster, Inc................. 427
45 World Access, Inc. (b)............... 923
-------
11,866
-------
Capital Goods (3.3%):
20 Blount International, Inc............ 851
15 Ionics, Inc. (b)..................... 683
13 Kent Electronics Corp. (b)........... 477
25 Kuhlman Corp......................... 806
15 Wabash National Corp................. 418
-------
3,235
-------
Commercial Services (0.2%):
10 Pierce Leahy Corp. (b)............... 180
-------
Consumer Durable (1.2%):
75 Miller Industries, Inc. (b).......... 1,200
-------
Consumer Non-Durable (6.9%):
15 Coca-Cola Bottling Co................ 728
20 Dekalb Genetics Corp................. 1,594
6 Earthgrains Co....................... 393
38 K & G Men's Center, Inc. (b)......... 816
15 Nautica Enterprises, Inc. (b)........ 397
12 Richfood Holdings.................... 312
12 Smithfield Foods, Inc. (b)........... 738
24 Westpoint Stevens, Inc. (b).......... 939
30 Wolverine World Wide, Inc............ 911
-------
6,828
-------
Consumer Services (4.4%):
30 Action Performance Co., Inc. (b)..... 728
22 Grand Casinos (b).................... 325
35 International Family Entertainment,
Class B (b)........................ 1,202
25 International Speedway Corp. (b)
(c)................................ 491
15 Regal Cinemas, Inc. (b).............. 495
30 Sturm, Ruger & Co.................... 589
25 Suburban Lodges of America (b)....... 525
-------
4,355
-------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Energy (9.0%):
10 Devon Energy Corp.................... $ 368
6 Diamond Offshore Drilling (b)........ 467
10 Falcon Drilling Co., Inc. (b)........ 576
15 Global Industries Ltd. (b)........... 350
33 Maverick Tube Corp. (b).............. 1,218
36 Newpark Resources, Inc. (b).......... 1,215
10 Ocean Energy, Inc. (b)............... 463
20 Patterson Energy, Inc. (b)........... 908
30 Pride Petroleum Services, Inc. (b)... 720
7 Saint Mary Land and Exploration...... 246
5 Seacor Holdings, Inc. (b) (c)........ 235
10 Snyder Oil Corp...................... 184
32 Stone Energy Corp. (b)............... 876
25 Trico Marine Services, Inc. (b)...... 545
20 United Meridian Corp. (b)............ 600
-------
8,971
-------
Financial Services (16.6%):
50 Alabama National Bankcorp............ 1,119
50 Amresco, Inc. (b).................... 1,075
50 Bankunited Financial Corp. (b)....... 494
7 Cenit Bancorp, Inc................... 341
25 Central Fidelity Banks, Inc.......... 888
16 Charter One Financial, Inc. (c)...... 862
20 Colonial BancGroup, Inc.............. 485
26 Cooperative Bankshares, Inc. (b)..... 546
23 Cullen/Frost Bankers, Inc............ 975
22 Deposit Guaranty Corp................ 693
30 Eagle Bancshares, Inc................ 536
30 First American Corp.................. 1,151
40 First Financial Holdings, Inc........ 1,280
20 First Liberty Financial Corp......... 430
25 Protective Life Corp................. 1,256
15 Raymond James Financial (b).......... 411
35 Sirrom Capital Corp.................. 1,208
38 Triad Guaranty, Inc. (b)............. 1,699
15 United Cos. Financial Corp. (c)...... 394
18 Whitney Holding Corp................. 761
-------
16,604
-------
Health Care (9.6%):
20 Alpharma, Inc........................ 319
9 Ballard Medical Products............. 181
20 Core Laboratories N.V. (b)........... 520
30 Cryolife, Inc. (b)................... 358
6 Envoy Corp. (b) (c).................. 200
18 Genesis Health (b) (c)............... 608
20 Gulf South Medical Supply (b)........ 390
15 Invacare Corp........................ 351
7 Mentor Corp.......................... 216
22 Neoprobe Corp. (b)................... 308
10 North American Vaccine, Inc. (b)
(c)................................ 193
</TABLE>
Continued
49
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care, continued:
40 Omnicare, Inc........................ $ 1,253
30 Phycor, Inc. (b) (c)................. 1,033
9 Protein Design Labs, Inc. (b)........ 257
10 Quorum Health Group, Inc. (b)........ 358
24 Roberts Pharmaceutical Corp. (b)..... 269
9 Safeskin Corp. (b)................... 265
10 Spine-Tech, Inc. (b)................. 371
11 Steris Corp. (b)..................... 392
40 Summit Technology, Inc. (b).......... 265
12 Sunrise Assisted Living (b).......... 420
14 Sybron International Corp. (b)....... 558
8 Tecnol Medical Products (b).......... 178
8 Vertex Pharmaceuticals, Inc. (b)..... 306
-------
9,569
-------
Raw Materials (2.6%):
25 Chemfirst, Inc....................... 678
20 Coeur D'Alene Mines Corp. (b)........ 259
10 Cytec Industries, Inc. (b)........... 374
8 Mississippi Chemical Corp............ 173
35 Quanex Corp.......................... 1,074
-------
2,558
-------
Retail (6.6%):
37 Compucom Systems, Inc. (b)........... 264
35 CompUSA, Inc. (b) (c)................ 750
20 Gymboree Corp. (b)................... 480
30 Heilig Meyers Co..................... 589
30 Hibbet Sporting Goods, Inc. (b)...... 540
40 Just For Feet, Inc. (b).............. 698
20 Landry's Seafood Restaurants, Inc.
(b)................................ 460
30 Michaels Stores, Inc. (b) (c)........ 636
7 O'Reilly Automotive, Inc. (b)........ 270
20 Pier 1 Imports, Inc.................. 530
12 Proffitts, Inc. (b) (c).............. 527
15 Ruby Tuesday, Inc. (b)............... 337
15 Stein Mart, Inc. (b)................. 450
-------
6,531
-------
Shelter (2.5%):
24 Caraustar Industries, Inc............ 831
15 Ethan Allen Interiors, Inc........... 855
20 Oakwood Homes Corp................... 480
35 Southern Energy Homes, Inc. (b)...... 319
-------
2,485
-------
Technology (15.9%):
30 Aspect Telecommunications, Inc.
(b)................................ 668
25 Benchmark Electronics, Inc. (b)...... 1,008
20 Cadence Design Systems, Inc. (b)
(c)................................ 670
20 Comverse Technology, Inc. (b) (c).... 1,014
30 Datastream Systems, Inc. (b)......... 465
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
4 Dell Computer Corp. (b).............. $ 411
24 Digital Microwave Corp. (b).......... 720
40 Harbinger Corp. (b).................. 1,120
25 Intercel, Inc. (b)................... 344
14 Kemet Corp. (b)...................... 348
17 Komag, Inc. (b)...................... 270
11 Kulicke & Soffa Industries (b)....... 357
10 Lattice Semiconductor Corp. (b)...... 565
14 Microchip Technology, Inc. (b)....... 417
15 Network General Corp. (b)............ 223
60 Network Long Distance, Inc. (b)...... 563
7 Novellus Systems, Inc. (b)........... 606
13 Oak Industries (b)................... 374
17 Read-Rite Corp. (b).................. 355
15 Sanmina Corp. (b) (c)................ 953
12 SCI Systems, Inc. (b) (c)............ 765
13 Sterling Software (b)................ 406
20 Symmetricom, Inc. (b)................ 288
46 Tech Data Corp. (b).................. 1,444
25 Teradyne, Inc. (b)................... 981
22 VLSI Technology, Inc. (b)............ 520
-------
15,855
-------
Transportation (2.4%):
20 ASA Holdings, Inc.................... 573
25 Halter Marine Group, Inc. (b)........ 600
25 Heartland Express, Inc. (b).......... 588
25 MS Carriers, Inc. (b)................ 627
-------
2,388
-------
Utilities (2.2%):
13 K N Energy, Inc...................... 548
50 LCI International, Inc. (b).......... 1,094
20 Rural Cellular Corp. Class A (b)..... 206
25 Southwestern Energy Co............... 325
-------
2,173
-------
Total Common Stocks 94,798
-------
PREFERRED STOCKS (2.6%):
Computer Software (0.3%):
8 National Data Corp................... 347
-------
Financial Services (1.7%):
20 CCB Financial Corp. (c).............. 1,461
5 Southwest Securities Group, Inc...... 98
-------
1,559
-------
Oil & Gas Exploration (0.5%):
50 Comstock Resources, Inc.............. 522
-------
</TABLE>
Continued
50
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
GULF SOUTH GROWTH FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
PREFERRED STOCKS, CONTINUED:
Telecommunications (0.1%):
7 Gray Communications Systems, Inc.
Class B............................ $ 142
-------
Total Preferred Stocks 2,570
-------
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
REPURCHASE AGREEMENTS (2.6%):
2,589 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $2,557
U.S. Treasury Note, 6.88%, 5/15/06,
market value -- $2,641)............ $ 2,589
-------
Total Repurchase Agreements 2,589
-------
Total (Cost--$75,832) (a) $99,957
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $99,452
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $25,837
Unrealized depreciation.................................................. (1,712)
-------
Net unrealized appreciation.............................................. $24,125
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
51
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (96.9%):
ARGENTINA (0.7%):
Automotive (0.0%):
29 CIADEA SA........................... $ 126
--------
Beverages & Tobacco (0.0%):
0 Buenos Aires Embottelladora SA,
Class B (b)(d).................... 27
--------
Oil & Gas Exploration, Production & Services (0.4%):
117 Perez Companc SA.................... 931
33 YPF Sociedad Anonima................ 999
--------
1,930
--------
Telecommunications (0.3%):
89 Telecom Argentina SA, Class B....... 463
215 Telefonica de Argentina SA, Class
B................................. 742
--------
1,205
--------
Total Argentina..................... 3,288
--------
AUSTRALIA (2.1%):
Banking (0.5%):
120 National Australia Bank Ltd......... 1,703
171 Westpac Banking Corp., Ltd.......... 1,020
--------
2,723
--------
Broadcasting & Publishing (0.2%):
157 News Corp., Ltd..................... 745
--------
Building Products (0.4%):
221 Boral Ltd........................... 689
135 CSR Ltd............................. 520
131 Pioneer International Ltd........... 503
--------
1,712
--------
Diversified (0.1%):
82 Southcorp Holdings Ltd.............. 305
--------
Metals (0.1%):
229 M.I.M. Holdings Ltd................. 336
36 RGC Ltd............................. 130
--------
466
--------
Metals & Mining (0.4%):
68 Aberfoyle Ltd....................... 189
111 Aud Normandy Mining Ltd............. 124
105 Broken Hill Proprietary Co. Ltd..... 1,525
35 Newcrest Mining Ltd................. 95
79 WMC Ltd............................. 497
--------
2,430
--------
Real Estate (0.3%):
186 General Property Trust.............. 369
177 Stockland Trust Group............... 462
186 Westfield Trust..................... 379
--------
1,210
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
AUSTRALIA, CONTINUED:
Retail Stores/Catalog (0.1%):
102 Coles Myer Ltd...................... $ 527
--------
Total Australia..................... 10,118
--------
AUSTRIA (1.2%):
Airlines (0.1%):
2 Austrian Airlines/Oesterreichische
Luftverskehrs AG (b).............. 347
--------
Automotive (0.0%):
7 Steyr-Daimler-Puch AG............... 139
--------
Banking & Financial Services (0.2%):
15 Ats Bank Of Austria Rights (d)...... 0
15 Bank Austria AG..................... 834
2 Bank Austria AG, Participating
Certificates...................... 63
8 Creditanstalt-Bankverein............ 479
--------
1,376
--------
Beverages & Tobacco (0.0%):
4 Osterreichische Brau-Beteiligungs
AG................................ 234
--------
Building Products (0.1%):
2 Wienerberger Baustoffindustrie AG... 488
--------
Chemicals (0.1%):
4 Lenzing AG (b)...................... 238
--------
Environmental Services (0.1%):
2 BWT AG.............................. 279
--------
Insurance (0.2%):
3 EA-Generali AG...................... 750
--------
Miscellaneous Manufacturing (0.1%):
9 Radex-Heraklith
Industriebeteiligungs AG.......... 379
--------
Oil & Gas Exploration, Production & Services (0.2%):
7 OMV AG.............................. 947
--------
Utilities--Electric & Gas (0.1%):
7 Osterreichische
Elekrizitaitswirtschafts-AG, Class
A................................. 518
--------
Total Austria....................... 5,695
--------
BELGIUM (1.8%):
Banking (0.3%):
1 Generale de Banque SA............... 568
1 Kredietbank NV...................... 377
1 Kredietbank VVPR.................... 514
--------
1,459
--------
Chemicals (0.2%):
1 Solvay SA........................... 798
--------
Industrial Holding Companies (0.1%):
4 Groupe Bruxelles Lambert SA......... 691
--------
</TABLE>
Continued
52
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
BELGIUM, CONTINUED:
Insurance (0.3%):
4 Fortis AG........................... $ 742
2 Royale Belge........................ 549
--------
1,291
--------
Merchandising (0.2%):
18 Delhaize-Le Lion SA................. 949
--------
Metals & Mining (0.1%):
3 Union Miniere Group (b)............. 280
--------
Oil & Gas Exploration, Production & Services (0.2%):
2 PetroFina SA........................ 847
--------
Utilities--Electric & Gas (0.4%):
9 Electrabel SA....................... 1,978
--------
Total Belgium....................... 8,293
--------
BRAZIL (0.3%):
Beverages & Tobacco (0.0%):
41 Companhia Cervejaria Brahma......... 31
--------
Chemicals (0.0%):
242 Copesul--Companhia Pertoquimica do
Sul............................... 9
19 White Martins SA.................... 56
--------
65
--------
Glass Products (0.0%):
5 Companhia Vidraria Santa Maria...... 14
--------
Steel (0.0%):
3,589 Companhia Siderurgica Nacional...... 118
4 Companhia Vale do Rio Doce.......... 88
--------
206
--------
Telecommunications (0.1%):
2,277 Telecomunicacoes Brasileiras SA..... 308
193 Telecomunicacoes de Sao Paulo SA.... 57
--------
365
--------
Tobacco (0.0%):
10 Souza Cruz SA....................... 105
--------
Utilities--Electric & Gas (0.2%):
655 Centrais Electricas Brasilieras
SA................................ 367
307 Centrais Electricas Brasilieras SA,
Class B........................... 182
3,516 Companhia Paranaense de
Energia-Copel..................... 62
355 Light--Servicos de Eletricidade
SA................................ 171
--------
782
--------
Total Brazil........................ 1,568
--------
CHILE (0.2%):
Banking & Financial Services (0.0%):
6 Banco De Santiago................... 150
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
CHILE, CONTINUED:
Beverages & Tobacco (0.0%):
7 Embotelladora Andina SA,
Series A, ADR..................... $ 147
--------
Telecommunications (0.2%):
18 Telecomunicaciones
De Chile SA ADR................... 585
--------
Total Chile......................... 882
--------
DENMARK (1.5%):
Agriculture (0.0%):
3 Korn-OG Foderstof Kompagniet A/S.... 80
--------
Banking & Financial Services (0.2%):
7 Den Danske Bank..................... 653
6 Unidanmark A/S, Class A............. 315
--------
968
--------
Beverages & Tobacco (0.1%):
4 Carlsberg A/S, Class A.............. 195
7 Carlsberg A/S, Class B.............. 403
--------
598
--------
Commercial Services (0.0%):
3 ISS International Service System
A/S, Class B...................... 102
--------
Diversified (0.1%):
14 Superfos A/S........................ 338
--------
Engineering (0.1%):
11 FLS Industries A/S, Class B......... 382
--------
Pharmaceuticals (0.7%):
26 Novo Nordisk A/S, Class B........... 2,839
--------
Telecommunications (0.1%):
13 Tele Danmark A/S, Class B........... 658
--------
Transportation & Shipping (0.2%):
0 D/S 1912, Class B (d)............... 466
0 D/S Svendborg A/S, Class B (d)...... 465
0 Lauritzen (J.) Holding A/S (b)(d)... 30
--------
961
--------
Total Denmark....................... 6,926
--------
FINLAND (1.1%):
Banking & Financial Services (0.1%):
131 Merita Ltd., Class A................ 435
--------
Forest Products (0.1%):
1 Rauma Oy............................ 14
27 UPM-Kymmene Corp.................... 628
--------
642
--------
</TABLE>
Continued
53
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FINLAND, CONTINUED:
Insurance (0.1%):
11 Pohjola Insurance Group, Class B.... $ 311
3 Sampo Insurance Co. Ltd., Class A... 311
--------
622
--------
Metals (0.1%):
27 Outokumpo OY, Class A............... 525
--------
Telecommunications (0.7%):
25 Nokia AB, Class A................... 1,839
14 Nokia AB, Class K................... 1,013
--------
2,852
--------
Total Finland....................... 5,076
--------
FRANCE (10.3%):
Automotive (0.1%):
6 PSA Peugeot......................... 595
--------
Banking (0.9%):
24 Banque Nationale de Paris........... 974
19 Compagnie Financiere de Paribas..... 1,299
399 Ffr Cie De Suez Corp................ 982
10 Societe Generale.................... 1,137
--------
4,392
--------
Beverages & Tobacco (0.6%):
10 LVMH (Moet Hennessy
Louis Vuitton).................... 2,568
8 Pernod Ricard....................... 419
--------
2,987
--------
Broadcasting/Cable (0.1%):
3 Canal Plus.......................... 594
--------
Building Products (0.3%):
3 Imetal SA........................... 378
20 Lafarge SA.......................... 1,221
--------
1,599
--------
Business Services (0.6%):
17 Compagnie Generale des Eaux......... 2,148
8 Havas SA............................ 598
--------
2,746
--------
Chemicals (0.7%):
10 L'Air Liquide....................... 1,538
38 Rhone-Poulenc SA.................... 1,559
--------
3,097
--------
Commercial Services (0.3%):
1 Addeco SA........................... 573
1 Sodexho SA.......................... 667
--------
1,240
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FRANCE, CONTINUED:
Construction (0.1%):
5 Bouygues............................ $ 379
--------
Defense (0.2%):
1 Sagem SA............................ 330
22 Thomson CSF......................... 574
--------
904
--------
Diversified (0.1%):
14 Lagardere SCA....................... 397
--------
Electrical & Electronic (0.8%):
17 Alcatel Alsthom..................... 2,190
5 Legrand SA.......................... 837
17 Schneider SA........................ 900
--------
3,927
--------
Energy (1.4%):
32 Elf Aquitane SA..................... 3,429
28 Total SA, Class B................... 2,853
--------
6,282
--------
Engineering (0.1%):
4 Compagnie Francaise d'Etudes et de
Construction Technip.............. 436
--------
Food & Household Products (0.1%):
4 Eridania Beghin-Say SA.............. 667
--------
Food Products & Services (0.3%):
8 Groupe Danone....................... 1,257
--------
Health & Personal Care (0.8%):
6 L'OREAL............................. 2,634
12 Sanofi SA........................... 1,129
--------
3,763
--------
Industrial Goods & Services (0.2%):
18 Michelin Class B, Registered........ 1,061
--------
Industrial Holding Companies (0.2%):
12 Lyonnaise des Eaux SA............... 1,180
--------
Insurance (0.4%):
34 AXA SA.............................. 2,104
--------
Leisure (0.2%):
4 Accor SA............................ 652
3 Salomon SA.......................... 191
--------
843
--------
Manufacturing-Consumer Goods (0.2%):
6 Societe BIC SA...................... 982
--------
Media (0.1%):
1 Pathe SA............................ 286
--------
</TABLE>
Continued
54
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FRANCE, CONTINUED:
Merchandising (1.2%):
4 Carrefour SA........................ $ 3,070
7 Etablissements Economiques du Casino
Guichard-Perrachon................ 364
3 Pinault-Printemps-Redoute SA........ 1,203
2 Promodes............................ 856
--------
5,493
--------
Miscellaneous Materials & Commodities (0.3%):
10 Compagnie de Saint Gobain........... 1,452
--------
Textile Products (0.0%):
2 Dollfus-Mieg & Cie.................. 41
--------
Total France........................ 48,704
--------
GERMANY (16.2%):
Airlines (0.2%):
55 Deutsche Lufthansa AG............... 1,061
--------
Automotive (1.9%):
65 Daimler-Benz AG..................... 5,320
3 Man AG.............................. 798
4 Volkswagen AG....................... 2,898
--------
9,016
--------
Banking (2.5%):
98 Bayer AG............................ 3,785
30 Bayerische Vereinsbank AG........... 1,229
82 Deutsche Bank AG.................... 4,800
51 Dresdner Bank AG.................... 1,783
--------
11,597
--------
Banking & Financial Services (0.2%):
26 Bayerische Hypotheken-und Weschel-
Bank AG........................... 775
--------
Building Materials (0.1%):
6 Heidelberger Zement AG.............. 571
--------
Business Services (0.4%):
9 SAP AG.............................. 1,873
--------
Chemicals (1.0%):
111 BASF AG............................. 4,082
15 Degussa AG.......................... 815
--------
4,897
--------
Conglomerates (1.8%):
13 Metro AG (b)........................ 1,382
3 Preussag AG......................... 818
86 VEBA AG............................. 4,874
3 Viag AG............................. 1,550
--------
8,624
--------
Construction (0.1%):
9 Hochtief AG......................... 403
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GERMANY, CONTINUED:
Consumer Goods & Services (0.2%):
9 Adidas AG........................... $ 953
--------
Electrical & Electronic (1.0%):
78 Siemens AG.......................... 4,650
--------
Engineering (0.6%):
23 AGIV AG............................. 521
3 Bilfinger & Berger Bau AG........... 135
5 Mannesmann AG....................... 2,052
--------
2,708
--------
Health Care (0.3%):
15 Schering AG......................... 1,593
--------
Insurance (2.4%):
33 Allianz AG.......................... 6,977
0 AMB Aachener und Muenchener
Beteiligungs AG, Bearer Shares.... 98
1 AMB Aachener und Muenchener
Beteiligungs AG, Registered
Shares............................ 490
3 CKAG Colonia Konzern AG............. 281
0 Muenchener Rueckversicherungs
Gesellschaft AG, Bearer Shares.... 137
1 Muenchener Rueckversicherungs
Gesellschaft AG, Registered
Shares............................ 3,444
--------
11,427
--------
Machinery & Equipment (0.1%):
11 Kloeckner-Humbolt-Deutz AG (b)...... 111
1 Linde AG............................ 420
--------
531
--------
Metals & Mining (0.5%):
9 Fag Kugelfischer Georg Schaefer
AG................................ 162
8 Thyssen AG.......................... 2,031
--------
2,193
--------
Personal Care Products (0.3%):
27 Beiersdorf AG....................... 1,454
--------
Pharmaceuticals (0.3%):
29 Merck KGaA.......................... 1,260
--------
Retail Stores (0.1%):
1 Karstadt AG......................... 307
--------
Retail-General Merchandise (0.0%):
3 Douglas Holding AG.................. 125
--------
Telecommunications (1.6%):
302 Deutsche Telekom AG................. 7,417
--------
Textile Products (0.0%):
1 Escada AG........................... 102
--------
</TABLE>
Continued
55
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GERMANY, CONTINUED:
Utilities--Electric & Gas (0.6%):
65 RWE AG.............................. $ 2,818
--------
Total Germany....................... 76,355
--------
GREECE (0.8%):
Agriculture (0.0%):
6 Hellenic Sugar Industry SA.......... 37
--------
Banking & Financial Services (0.6%):
17 Alpha Credit Bank................... 1,127
7 Commercial Bank of Greece SA........ 275
13 Ergo Bank SA........................ 770
4 National Bank of Greece SA.......... 507
--------
2,679
--------
Beverages & Tobacco (0.1%):
11 Hellenic Bottling Co. SA............ 409
--------
Building Products (0.1%):
26 Heracles General Cement Co. SA...... 478
--------
Telecommunications (0.0%):
3 Intracom SA (b)..................... 127
--------
Total Greece........................ 3,730
--------
HONG KONG (1.1%):
Airlines (0.1%):
194 Cathay Pacific Airways.............. 402
--------
Banking (0.1%):
83 Bank of East Asia Ltd............... 347
6 HSBC Holdings PLC................... 180
--------
527
--------
Banking & Financial Services (0.1%):
38 Wing Lung Bank...................... 243
--------
Broadcasting & Publishing (0.1%):
95 Television Broadcasts Ltd........... 427
--------
Conglomerates (0.1%):
68 Swire Pacific Ltd., Class A......... 612
--------
Electrical Equipment (0.0%):
645 Elec & Eltek International
Holdings Ltd...................... 189
--------
Industrial Holding Companies (0.3%):
145 Hutchison Whampoa Ltd............... 1,254
--------
Printing & Publishing (0.0%):
263 Oriental Press Group Ltd............ 108
--------
Real Estate (0.1%):
56 Sun Hung Kai Properties Ltd......... 674
--------
Telecommunications (0.2%):
418 Hong Kong Telecommunications Ltd.... 997
--------
Total Hong Kong..................... 5,433
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
INDONESIA (0.8%):
Agriculture (0.1%):
369 PT SMART Corp....................... $ 334
--------
Auto Parts (0.0%):
31 PT Astra International--
Foreign Registry (b).............. 126
--------
Banking & Financial Services (0.1%):
298 PT Bank International Indonesia--
Foreign Registry.................. 258
--------
Building Products (0.1%):
222 Indocement Tunggal Prakarsa......... 344
--------
Forest Products (0.1%):
203 PT Barito Pacific Timber............ 173
--------
100 PT Inti Indorayon Utama--
Foreign Registry (b).............. 70
--------
243
--------
Telecommunications (0.2%):
108 PT Indosat.......................... 322
--------
285 PT Telekomunikasi Indonesia......... 464
--------
786
--------
Textile Products (0.1%):
1,246 PT Polysindo Eka Perkasa--
Foreign Registry.................. 692
--------
Tobacco (0.1%):
155 PT Gudang Garam..................... 648
51 PT Hanjaya Mandala Sampoerna........ 193
--------
841
--------
Total Indonesia..................... 3,624
--------
IRELAND (0.3%):
Banking (0.1%):
38 Allied Irish Banks PLC.............. 287
--------
Banking & Financial Services (0.2%):
132 Allied Irish Banks PLC.............. 1,012
--------
Beverages & Tobacco (0.0%):
77 James Crean PLC..................... 231
--------
Total Ireland....................... 1,530
--------
ITALY (6.7%):
Agriculture (0.1%):
306 Parmalat Finanziaria SpA............ 432
--------
Automotive (0.5%):
616 Fiat SpA............................ 2,216
136 Fiat SpA di Risp
(Non-convertible)................. 256
--------
2,472
--------
</TABLE>
Continued
56
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
ITALY, CONTINUED:
Banking (0.6%):
378 Banca Commerciale Italiana.......... $ 782
86 Banco Ambrosiano Veneto SpA......... 249
344 Credito Italiano SpA................ 629
129 Istituto Bancario San Paolo di
Torino............................ 937
32 Riunione Adriatica di Sicurta SpA
di Risp........................... 158
--------
2,755
--------
Banking & Financial Services (0.1%):
42 Mediobanca SpA...................... 256
--------
Broadcasting & Publishing (0.2%):
190 Mediaset SpA........................ 807
--------
Building Products (0.0%):
28 Italcementi SpA (b)................. 174
--------
Chemicals (0.1%):
801 Montedison SpA (b).................. 528
--------
Computer Hardware (0.0%):
447 Olivetti Group SpA (b).............. 126
--------
Engineering (0.0%):
145 Impregilo SpA (b)................... 95
--------
Insurance (1.1%):
241 Assicurazioni Generali.............. 4,370
23 La Previdente....................... 121
56 Riuniune Adriatici de Sicurta SpA... 446
63 Societa Assicuratrice Industriale
(SAI) SpA......................... 486
5,423
--------
Oil & Gas Exploration, Production & Services (1.7%):
1,320 Ente Nazionale Idrocarburi SpA
(ENI)............................. 7,465
--------
Paper Products (0.0%):
34 Burgo (Cartiere) SpA................ 188
--------
Retail Stores (0.0%):
36 La Rinascente SpA................... 198
--------
Retail Stores/Catalog (0.0%):
36 Itl La Rinascente Rights............ 6
--------
Steel (0.0%):
22 Falck Acciaierie & Ferriere Lombarde
SpA............................... 81
--------
Telecommunications (1.9%):
56 Sirti SpA........................... 321
1,051 Telecom Italia Mobile SpA........... 3,145
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
STOCKS, CONTINUED:
ITALY, CONTINUED:
Telecommunications, continued:
1,198 Telecom Italia Mobile SpA di Risp
(Non-convertible)................. $ 3,873
329 Telecom Italia SpA.................. 588
333 Telecom Italia SpA di Risp
(Non-convertible)................. 659
--------
8,586
--------
Textile Products (0.1%):
35 Benetton Group SpA.................. 554
--------
Tire & Rubber (0.1%):
263 Pirelli SpA......................... 650
--------
Utilities--Electric & Gas (0.2%):
97 Edison SpA.......................... 481
121 Italgas SpA......................... 392
--------
873
--------
Total Italy......................... 31,669
--------
JAPAN (24.2%):
Agriculture (0.0%):
25 Nippon Beet Sugar Manufacturing..... 92
--------
Airlines (0.1%):
115 Japan Airlines (b).................. 524
--------
Aluminum (0.0%):
17 Nippon Light Metal Co............... 62
--------
Appliances & Household Products (1.2%):
127 Matsushita Electric Industrial Co.,
Ltd............................... 2,563
11 Pioneer Electronic Corp............. 267
95 Sanyo Electric Co................... 427
63 Sharp Corp.......................... 870
19 Sony Corp........................... 1,659
--------
5,786
--------
Automotive (2.1%):
60 Honda Motor Co., Ltd................ 1,809
151 Nissan Motor Co., Ltd............... 1,173
23 Toyoda Automatic Loom Works......... 523
204 Toyota Motor Corp................... 6,025
--------
9,530
--------
Banking (4.2%):
131 Asahi Bank Ltd...................... 1,116
298 Bank of Tokyo--Mitsubishi........... 5,982
78 Bank of Yokohama Ltd................ 440
75 Chiba Bank Ltd...................... 447
168 Fuji Bank Ltd....................... 2,525
115 Industrial Bank of Japan............ 1,789
48 Joyo Bank........................... 266
55 Mitsui Trust & Banking Co........... 416
198 Sakura Bank Ltd..................... 1,519
</TABLE>
Continued
57
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Banking, continued:
50 Shizuoka Bank....................... $ 572
187 Sumitomo Bank....................... 3,072
119 Tokai Bank.......................... 1,227
--------
19,371
--------
Banking & Financial Services (0.1%):
29 Gunma Bank.......................... 261
--------
Basic Industry (0.1%):
42 Sekisui Chemical Co., Ltd........... 426
--------
Beverages & Tobacco (0.2%):
17 Asahi Breweries Ltd................. 254
49 Kirin Brewery Co., Ltd.............. 510
36 Takara Shuzo........................ 260
--------
1,024
--------
Brewery (0.0%):
18 Sapporo Breweries................... 150
--------
Building Products (0.1%):
20 Chichibu Onoda Cement Co............ 78
16 Nihon Cement Co., Ltd............... 77
12 Tostem Corp......................... 333
--------
488
--------
Chemicals (0.9%):
72 Asahi Chemical Industry Co., Ltd.... 431
2 Asahi Denka Kogyo K.K............... 14
97 Denki Kagaku Kogyo K.K.............. 268
32 Kaneka Corp......................... 201
98 Mitsubishi Chemical Corp............ 320
51 Mitsui Toatsu Chemicals............. 140
14 Nippon Shokubai K.K. Co............. 111
14 NOF Corp............................ 60
6 Rasa Industries Ltd................. 37
12 Shin-Etsu Chemical Co............... 329
59 Showa Denko K.K. (b)................ 155
100 Sumitomo Chemical Co................ 454
32 Takeda Chemical Industries.......... 902
80 Toray Industries, Inc............... 571
72 Tosoh Corp. (b)..................... 244
74 Ube Industries Ltd.................. 215
--------
4,452
--------
Construction (0.4%):
9 Aoki Corp. (b)...................... 11
11 Daiko, Inc.......................... 43
21 Daiwa House Industry Co., Ltd....... 257
22 Haseko (b).......................... 35
56 Kumagai Gumi Co., Ltd............... 93
12 Misawa Homes........................ 73
18 Okumura Corp........................ 95
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Construction, continued:
20 Penta-Ocean Construction Co.,
Ltd............................... $ 65
61 Sekisui House Ltd................... 619
59 Shimizu Corp........................ 354
43 Taisei Corp......................... 200
--------
1,845
--------
Consumer Goods & Services (0.2%):
35 Nippon Sheet Glass Co., Ltd......... 129
50 Toto Ltd............................ 610
--------
739
--------
Data Processing & Reproduction (0.3%):
117 Fujitsu Ltd......................... 1,626
--------
Distribution (0.1%):
77 Itochu Corp......................... 415
--------
Diversified (0.1%):
9 Amano Corp.......................... 102
18 Yamaha Corp......................... 331
--------
433
--------
Electrical & Electronic (0.6%):
9 Kyocera Corp........................ 716
116 Mitsubishi Electric Corp............ 650
16 Nikon Corp.......................... 270
17 Omron Corp.......................... 361
7 Rohm Co............................. 721
--------
2,718
--------
Electrical Equipment (0.1%):
7 SMC Corp............................ 601
--------
Electronic Components/Instruments (0.9%):
13 Fanuc Co., Ltd...................... 500
3 Hirose Electric..................... 213
195 Hitachi Ltd......................... 2,181
93 NEC Corp............................ 1,300
23 Yokogawa Electric Corp.............. 200
--------
4,394
--------
Energy (0.5%):
51 Cosmo Oil Co., Ltd.................. 244
211 Japan Energy Corp................... 553
264 Nippon Oil Co....................... 1,447
--------
2,244
--------
Engineering (0.3%):
9 Daito Trust Construction Co.,
Ltd............................... 106
36 Fujita Corp......................... 63
33 Hazama Corp......................... 68
36 Kajima Corp......................... 211
56 Kawasaki Heavy Industries........... 261
13 Kinden Corp......................... 183
</TABLE>
Continued
58
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Engineering, continued:
19 Nishimatsu Construction............. $ 133
53 Obayashi Corp....................... 355
1 Sato Kogyo.......................... 2
--------
1,382
--------
Entertainment (0.1%):
6 Toei................................ 41
16 Tokyo Dome Corp..................... 215
--------
256
--------
Financial Services (0.8%):
11 Acom Co., Ltd....................... 531
55 Daiwa Securities Co., Ltd........... 435
57 Mitsubishi Trust & Banking Co....... 902
12 Nippon Shinpan Co................... 43
94 Nomura Securities Co................ 1,297
6 Orix Corp........................... 445
54 Yamaichi Securities Co., Ltd........ 161
43 Yasuda Trust & Banking.............. 165
--------
3,979
--------
Food & Household Products (0.2%):
27 Ajinomoto Co., Inc.................. 290
39 Kao Corp............................ 543
10 Nissin Food Products................ 260
--------
1,093
--------
Food Products & Services (0.1%):
34 Daiei, Inc.......................... 218
10 Kikkoman Corp....................... 66
28 Nichirei Corp....................... 140
8 Nippon Suisan Kaisha Ltd. (b)....... 27
12 Nisshin Oil Mills Ltd............... 68
--------
519
--------
Forest Products (0.3%):
22 Hokuetsu Paper Mills Ltd............ 134
38 Mitsubishi Paper Mills.............. 149
115 New Oji Paper Co.................... 714
70 Nippon Paper Industries Co.......... 406
--------
1,403
--------
Health & Personal Care (0.6%):
9 Chugai Pharmaceutical Co., Ltd...... 81
20 Kyowa Hakko Kogyo Co., Ltd.......... 150
21 Lion Corp........................... 96
27 Sankyo Co., Ltd..................... 908
57 Yamanouchi Pharmaceutical Co.,
Ltd............................... 1,535
--------
2,770
--------
Hotels & Lodging (0.0%):
11 Fujita Kanko, Inc................... 138
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Industrial Goods & Services (0.8%):
57 Bridgestone Corp.................... $ 1,326
50 Denso Corp.......................... 1,197
33 Mitsui Engineering & Shipbuilding
Co., Ltd. (b)..................... 72
36 NGK Insulators Ltd.................. 396
34 Sumitomo Electric Industries........ 570
--------
3,561
--------
Insurance (0.4%):
39 Mitsui Marine & Fire
Insurance Co., Ltd................ 282
14 Nichido Fire & Marine
Insurance Co., Ltd................ 100
12 Nippon Fire & Marine Insurance...... 65
22 Sumitomo Marine & Fire Insurance.... 181
85 Tokio Marine & Fire Insurance Co.... 1,114
--------
1,742
--------
Jewelry (0.1%):
40 Citizen Watch Co., Ltd.............. 309
--------
Leasing (0.1%):
45 Yamato Transport Co., Ltd........... 562
--------
Machinery & Equipment (1.1%):
20 Chiyoda Corp. (b)................... 96
9 Daifuku Co., Ltd.................... 119
18 Daikin Industries Ltd............... 164
14 Ebara Corp.......................... 210
49 Komatsu Ltd......................... 398
40 Koyo Seiko Co., Ltd................. 320
94 Kubota Corp......................... 461
32 Minebea Co., Ltd.................... 341
229 Mitsubishi Heavy Industries, Ltd.... 1,760
5 Mori Seiki.......................... 80
58 Niigata Engineering Co., Ltd. (b)... 106
25 NSK Ltd............................. 161
37 NTN Corp............................ 207
12 Okuma Corp.......................... 106
10 Tokyo Electron Ltd.................. 465
--------
4,994
--------
Manufacturing-Capital Goods (0.4%):
38 Fujikura Ltd........................ 355
16 Kokuyo Co., Ltd..................... 433
21 Makita Corp......................... 308
15 Murata Manufacturing Co., Ltd....... 599
12 Nippon Piston Ring Co., Ltd......... 37
5 Nippon Sharyo Ltd................... 32
22 Noritake Co., Ltd................... 198
</TABLE>
Continued
59
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Manufacturing-Capital Goods, continued:
7 Tokai Carbon Co., Ltd............... $ 31
11 Topy Industries Ltd................. 40
--------
2,033
--------
Manufacturing-Consumer Goods (0.7%):
69 Canon, Inc.......................... 1,882
33 Fuji Photo Film Co., Ltd............ 1,329
5 Sega Enterprises.................... 166
--------
3,377
--------
Materials (0.0%):
15 Sumitomo Osaka Cement Co., Ltd...... 47
--------
Merchandising (0.5%):
28 ITO-Yokado Co., Ltd................. 1,628
14 JUSCO Co............................ 473
10 Marui Co., Ltd...................... 186
1 Seven-Eleven Japan Ltd.............. 68
--------
2,355
--------
Metals & Mining (0.2%):
17 Dowa Mining Co., Ltd................ 66
21 Furukawa Electric Co................ 134
46 Hitachi Zosen Corp.................. 183
66 Japan Steel Works (b)............... 129
67 Mitsubishi Materials Corp........... 269
30 Mitsui Mining & Smelting............ 133
3 Seika Corp.......................... 11
22 Sumitomo Metal Mining Co............ 156
--------
1,081
--------
Miscellaneous Materials & Commodities (0.1%):
66 Asahi Glass Co., Ltd................ 658
--------
Office Equipment & Services (0.3%):
57 Dai Nippon Printing Co., Ltd........ 1,290
--------
Oil & Gas Exploration, Production & Services (0.1%):
9 Arabian Oil Co...................... 303
66 Teikoku Oil Co...................... 296
--------
599
--------
Oil & Gas Transmission (0.0%):
10 Iwatani International Corp.......... 40
33 Mitsubishi Oil Co., Ltd............. 147
--------
187
--------
Packaging (0.0%):
10 Toyo Seikan Kaisha.................. 220
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Pharmaceuticals (0.2%):
12 Meiji Seika......................... $ 66
13 Shionogi & Co....................... 101
29 Taisho Pharmacuetical Co............ 783
--------
950
--------
Real Estate (0.5%):
98 Mitsubishi Estate Co................ 1,421
75 Mitsui Fudosan...................... 1,036
--------
2,457
--------
Restaurants (0.0%):
8 Skylark Co., Ltd.................... 122
--------
Retail Stores/Catalog (0.3%):
10 Hankyu Department Stores............ 106
12 Isetan Co........................... 149
52 Mycal Corp.......................... 750
26 Takashimaya Co...................... 354
--------
1,359
--------
Retail-General Merchandise (0.0%):
8 Mitsukoshi Ltd...................... 57
--------
Services (0.3%):
12 Secom............................... 881
35 Toppan Printing Co., Ltd............ 551
--------
1,432
--------
Steel (0.6%):
53 Daido Steel Co., Ltd................ 171
4 Japan Metals & Chemicals (b)........ 10
166 Kawasaki Steel Corp................. 541
4 Nippon Denko Co., Ltd............... 11
9 Nippon Metal Industry............... 27
360 Nippon Steel Co..................... 1,151
199 NKK Corp............................ 428
201 Sumitomo Metal Industries........... 573
--------
2,912
--------
Storage (0.0%):
3 Mitsubishi Logistics Corp........... 43
--------
Telecommunications (0.5%):
0 Nippon Telegraph & Telephone
Corp. (d)......................... 2,499
--------
Textile Products (0.3%):
244 Kanebo Ltd. (b)..................... 449
26 Kurabo Industries................... 70
31 Kuraray Co., Ltd.................... 309
16 Mitsubishi Rayon Co., Ltd........... 66
13 Nisshinbo Industries................ 118
4 Nitto Boseki Co., Ltd............... 14
27 Teijin Ltd.......................... 127
</TABLE>
Continued
60
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Textile Products, continued:
27 Toyobo Ltd.......................... $ 71
48 Unitika Ltd. (b).................... 96
--------
1,320
--------
Tire & Rubber (0.0%):
14 Yokohama Rubber Co., Ltd............ 60
--------
Transportation & Shipping (0.2%):
27 Kamigumi Co., Ltd................... 152
93 Kawasaki Kisen Kaisha Ltd. (b)...... 188
33 Mitsui OSK Lines, Ltd. (b).......... 68
64 Nippon Yusen Kabushiki Kaisha....... 249
12 Seino Transportation................ 130
--------
787
--------
Transportation--Road & Railroad (0.7%):
91 Hankyu Corp......................... 503
30 Keihin Electric Express Railway..... 140
232 Kinki Nippon Railway................ 1,422
49 Nippon Express Co., Ltd............. 392
40 Odakyu Electric Railway............. 238
36 Tobu Railway Co., Ltd............... 166
49 Tokyu Corp.......................... 304
--------
3,165
--------
Utilities--Electric & Gas (0.7%):
38 Kansai Electric Power Co., Inc...... 734
82 Osaka Gas Co........................ 236
22 Tohoku Electric Power............... 396
81 Tokyo Electric Power................ 1,694
92 Tokyo Gas Co., Ltd.................. 256
--------
3,316
--------
Wholesale & International Trade (0.5%):
123 Marubeni Corp....................... 559
71 Mitsubishi Corp..................... 888
59 Mitsui & Co......................... 567
46 Sumitomo Corp....................... 438
--------
2,452
--------
Wire & Cable Products (0.0%):
4 Showa Electric Wire & Cable......... 14
8 Tokyo Rope MFG...................... 28
--------
42
--------
Total Japan......................... 114,709
--------
KOREA (0.6%):
Airlines (0.0%):
0 Korean Air (b)(d)................... 4
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
KOREA, CONTINUED:
Automotive (0.0%):
0 Hyundai Motor Co., Ltd. (d)......... $ 3
3 Kia Motors Corp. (b)................ 46
--------
49
--------
Banking (0.0%):
5 Cho Hung Bank Co., Ltd.............. 33
5 Commercial Bank of Korea............ 28
6 SeoulBank (b)....................... 25
0 Shinhan Bank (d).................... 0
--------
86
--------
Banking & Financial Services (0.0%):
5 Korea Exchange Bank................. 31
6 Korea First Bank.................... 23
2 Korea Long-Term Credit Bank......... 26
--------
80
--------
Chemicals (0.0%):
2 Han Wha Corp........................ 22
3 Hanwha Chemical Corp................ 25
7 LG Chemical Ltd..................... 93
--------
140
--------
Distribution (0.0%):
8 Daewoo Corp......................... 61
5 Samsung Corp........................ 66
--------
127
--------
Electrical & Electronic (0.1%):
9 Daewoo Electronics Co. (b).......... 70
8 LG Electronics...................... 148
1 Samsung Display Devices Co.......... 42
--------
260
--------
Electronic Components/Instruments (0.0%):
2 Samsung Electro-Mechanics Co........ 60
2 Samsung Electronics Co.............. 167
--------
227
--------
Engineering (0.1%):
6 Dong-Ah Construction Industrial
Co................................ 119
8 Hyundai Engineering &
Construction Co................... 194
--------
313
--------
Financial Services (0.0%):
2 Daewoo Securities Co. (b)........... 34
5 Hanil Bank.......................... 29
4 Hyundai Securities Co. (b).......... 61
</TABLE>
Continued
61
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
KOREA, CONTINUED:
Financial Services, continued:
2 LG Securities (b)................... $ 22
2 Ssangyong Investment &
Securities Co., Ltd. (b).......... 15
--------
161
--------
Machinery & Equipment (0.0%):
9 Daewoo Heavy Industries............. 77
2 Hyundai Precision Industry Co....... 31
8 Samsung Heavy Industries (b)........ 81
--------
189
--------
Oil & Gas Exploration, Production & Services (0.0%):
2 Ssangyong Oil Refining Co., Ltd..... 43
5 Yukong Ltd.......................... 122
--------
165
--------
Retail-General Merchandise (0.0%):
0 Shinsegae Department Store Co.
(d)............................... 16
--------
Steel (0.2%):
5 Dongkuk Steel Mill Co............... 122
14 Hyundai Pipe Co., Ltd. (b).......... 117
4 Inchon Iron & Steel Co.............. 77
--------
316
--------
Telecommunication--Services & Equipment (0.0%):
1 LG Information & Communication
Ltd............................... 111
Utilities--Electric & Gas (0.2%):
18 Korea Electric Power Corp........... 525
--------
Total Korea......................... 2,769
--------
LUXEMBOURG (0.1%):
Aluminum (0.1%):
9 Hindalco Industries Ltd. GDR........ 332
--------
MALAYSIA (0.4%):
Agriculture (0.0%):
118 Highlands & Lowlands Berhad......... 180
--------
Building Products (0.0%):
80 Pan-Malaysia Cement Works Berhad.... 95
--------
Engineering (0.0%):
19 United Engineers (Malaysia) Ltd..... 134
--------
Financial Services (0.2%):
99 Idris Hydraulic (Malaysia) Berhad
(b)............................... 110
94 Rashid Hussain Berhad............... 596
13 Rashid Hussain Rights............... 0
--------
706
--------
Food Products & Services (0.1%):
54 Nestle (Malaysia) Berhad............ 404
--------
Forest Products (0.0%):
21 Land & General Berhad............... 24
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
MALAYSIA, CONTINUED
Telecommunications (0.0%):
41 Technology Resources Industries
Berhad (b)........................ $ 70
--------
Utilities--Electric & Gas (0.1%):
51 Tenaga Nasional Berhad.............. 250
--------
Total Luxembourg.................... 1,863
--------
MEXICO (0.7%):
Banking (0.0%):
105 Grupo Financiero Banamex Accival SA
de CV (b)......................... 51
--------
Beverages & Tobacco (0.0%):
13 Grupo Continental SA................ 34
27 Grupo Embotelladoras de Mexico SA de
CV................................ 55
--------
89
--------
Brewery (0.0%):
13 Fomento Economico Mexicano SA de CV,
Class B........................... 77
--------
Building Products (0.1%):
8 Apasco SA de CV..................... 57
32 Cemex SA de CV, Series A............ 138
20 Cemex SA de CV, Series B............ 98
15 Cemex SA de CV, Series CPO.......... 65
11 Tolmex SA de CV, Series B2 (b)...... 59
--------
417
--------
Diversified (0.2%):
22 ALFA SA de CV, Class A.............. 152
37 Carso Global Telecom, Series A-1.... 142
4 Desc SA de CV, Series A............. 28
4 Desc SA de CV, Series B............. 29
3 Desc SA de CV, Series C............. 23
37 Grupo Carso SA de CV, Series A-1.... 253
--------
627
--------
Engineering (0.0%):
8 Empresas ICA Sociedad Controladora
SA de CV.......................... 134
16 Grupo Tribasa SA de CV (b).......... 41
--------
175
--------
Financial Services (0.0%):
25 Grupo Financiero Banamex Accival SA
de CV (b)......................... 67
0 Grupo Financiero Inbursa SA de CV,
Class B (b)(d).................... 0
--------
67
--------
</TABLE>
Continued
62
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
MEXICO, CONTINUED:
Food & Household Products (0.1%):
85 Kimberly-Clark de Mexico SA de CV,
Class A........................... $ 337
--------
Industrial Goods & Services (0.0%):
10 Grupo Industrial Bimbo SA de CV,
Series A.......................... 72
--------
Merchandising (0.0%):
38 Cifra SA de CV, Series B............ 70
51 Cifra SA de CV, Series C............ 81
--------
151
--------
Metals & Mining (0.0%):
18 Grupo Mexico SA, Series B........... 67
13 Industrias Penoles SA, Series CP.... 62
--------
129
--------
Retail General Merchandise (0.0%):
39 Controladora Comercial Mexicana SA
de CV............................. 36
--------
Retail Stores/Catalog (0.0%):
52 Cifra SA de CV, Series A............ 95
40 El Puerto de Liverpool SA de CV,
Series 1.......................... 51
10 Sears Roebuck de Mexico SA de CV
(b)............................... 23
--------
169
--------
Steel (0.0%):
26 Altos Hornos de Mexico SA (b)....... 63
10 Hylsamex SA......................... 51
--------
114
--------
Telecommunications (0.3%):
8 Grupo Televisa SA, Series CPO (b)... 121
269 Telefonos de Mexico SA, Series L.... 643
--------
764
--------
Tobacco (0.0%):
17 Empresas La Moderna SA de CV (b).... 88
--------
Transportation--Shipping (0.0%):
30 Vitro SA (b)........................ 109
--------
Wholesale Distribution (0.0%):
15 Grupo Casa Autrey SA de CV.......... 30
--------
Total Mexico........................ 3,502
--------
NETHERLANDS (2.8%):
Appliances & Household Products (0.2%):
14 Philips Electronics NV.............. 969
--------
Banking (0.3%):
81 ABN Amro Holding NV................. 1,506
--------
Beverages & Tobacco (0.1%):
2 Heineken NV......................... 398
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
NETHERLANDS, CONTINUED:
Broadcasting & Publishing (0.2%):
43 Elsevier NV......................... $ 715
--------
Chemicals (0.2%):
6 Akzo Nobel.......................... 755
1 DSM NV.............................. 90
--------
845
--------
Energy (0.8%):
82 Nlg Royal Dutch Petroleum........... 4,261
--------
Financial Services (0.5%):
52 ING Groep NV........................ 2,386
--------
Food Products & Services (0.3%):
6 Unilever NV CVA (b)................. 1,286
--------
Services (0.2%):
20 Koninklijke Royal PTT Nederland
NV................................ 804
--------
Total Netherlands................... 13,170
--------
NEW ZEALAND (0.3%):
Beverages & Tobacco (0.1%):
125 Lion Nathan Ltd..................... 317
--------
Telecommunications (0.2%):
205 Telecom Corp. of New Zealand Ltd.... 1,044
--------
Total New Zealand................... 1,361
--------
NORWAY (0.9%):
Engineering (0.1%):
7 Kvaerner ASA........................ 413
--------
Entertainment (0.0%):
43 NCL Holdings ASA (b)................ 135
--------
Forest Products (0.1%):
7 Norske Skogsindustrier ASA.......... 245
--------
Insurance (0.1%):
54 Storebrand ASA (b).................. 322
--------
Medical Equipment & Supplies (0.0%):
17 Hafslund ASA, Class A............... 90
--------
Metals & Mining (0.0%):
11 Elkem ASA........................... 208
Oil & Gas Exploration, Production & Services (0.5%):
7 Aker ASA, Class A................... 124
12 Aker ASA, Class B................... 227
33 Norsk Hydro ASA..................... 1,804
5 Petroleum Geo-Services ASA (b)...... 257
--------
2,412
--------
Pharmaceuticals (0.0%):
13 Nycomed ASA, Class B................ 183
--------
</TABLE>
Continued
63
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
NORWAY, CONTINUED:
Transportation--Shipping (0.1%):
17 Leif Hoegh & Co. ASA................ $ 374
--------
Total Norway........................ 4,382
--------
PHILIPPINES (0.5%):
Agriculture (0.0%):
311 Vitarich Corp. (b).................. 31
--------
Banking & Financial Services (0.2%):
54 Far East Bank & Trust Co............ 135
10 Metropolitan Bank & Trust Co........ 215
11 Philippine Commercial International
Bank.............................. 104
21 Philippine National Bank (b)........ 144
--------
598
--------
Beverages & Tobacco (0.0%):
60 San Miguel Corp., Class B........... 158
--------
Building Products (0.0%):
374 Southeast Asia Cement Holdings, Inc.
(b)............................... 18
--------
Diversified (0.0%):
306 Ayala Corp., Class B................ 220
--------
Homebuilders (0.0%):
95 C&P Homes, Inc...................... 35
--------
Oil & Gas Exploration, Production & Services (0.1%):
999 Petron Corp......................... 254
--------
Real Estate (0.1%):
413 Ayala Land, Inc., Class B........... 379
78 Filinvest Land, Inc. (b)............ 20
246 SM Prime Holdings, Inc.............. 73
--------
472
--------
Telecommunications (0.1%):
19 Philippine Long Distance
Telephone Co...................... 9
15 Philipino Telephone Corp. (b)....... 480
--------
489
--------
Utilities--Electric & Gas (0.0%):
36 Manila Electric Co., Class B........ 179
--------
Total Philippines................... 2,454
--------
PORTUGAL (0.8%):
Banking (0.4%):
25 Banco Comercial Portugues SA........ 475
17 Banco Espirito Santo e Commerical de
Lisboa SA, Registered (b)......... 378
16 Banco Internacional do Funchal SA
(b)............................... 117
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
PORTUGAL, CONTINUED:
Banking, continued:
1 Banco Totta & Acores SA............. $ 17
17 BPI-SGPS SA, Registered............. 330
--------
1,317
--------
Beverages & Tobacco (0.0%):
11 UNICER-Uniao Cervejeira SA.......... 192
--------
Building Products (0.0%):
1 Cimpor-Cimentos de Portugal,
SGPS SA........................... 30
--------
Food & Household Products (0.1%):
9 Estabelecimentos Jeronimo Martins &
Filho SA.......................... 643
--------
Forest Products (0.1%):
8 Soporcel-Sociedade Portuguesa de
Celulose SA (b)................... 241
--------
Industrial Holding Companies (0.1%):
10 Sonae Investimentos SA.............. 431
--------
Insurance (0.0%):
6 Companhia de Seguros Tranquilidade,
Registered........................ 123
--------
Retail-General Merchandise (0.0%):
5 Modelo Continente-Sociedade Gestora
de Participacoes Sociais SA....... 220
--------
Telecommunications (0.1%):
16 Portugal Telecom SA................. 658
--------
3,855
--------
Singapore (0.4%):
Lodging (0.1%):
310 Hotel Properties Ltd................ 527
--------
Machinery & Equipment (0.0%):
19 Van Der Horst Ltd................... 35
--------
Real Estate (0.0%):
78 United Industrial Corp., Ltd........ 59
27 United Overseas Land Ltd. (b)....... 37
--------
96
--------
Telecommunications (0.1%):
334 Singapore Telecommunications Ltd.... 617
--------
Transportation & Shipping (0.2%):
468 Chuan Hup Holdings Ltd.............. 336
347 Neptune Orient Lines Ltd............ 311
647
--------
Total Portugal...................... 1,922
--------
</TABLE>
Continued
64
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SOUTH AFRICA (0.7%):
Banking & Financial Services (0.2%):
7 Nedcor Ltd.......................... $ 146
3 Standard Bank Investment Corp.,
Ltd............................... 128
--------
274
--------
Brewery (0.0%):
7 South African Breweries Ltd......... 203
--------
Diversified (0.2%):
5 Anglovaal Industries Ltd............ 19
11 Barlow Ltd.......................... 115
41 Gencor Ltd.......................... 187
0 Haggie Ltd.......................... 1
18 Malbak Ltd.......................... 28
14 Rembrandt Group Ltd................. 149
13 Smith (C.G.) Ltd.................... 74
--------
573
--------
Engineering (0.0%):
31 Murray & Roberts Holdings Ltd....... 72
--------
Entertainment (0.0%):
55 Sun International (South Africa)
Ltd............................... 31
--------
Financial Services (0.0%):
12 Amalgamated Banks of South Africa... 84
7 First National Bank Holdings Ltd.... 59
--------
143
--------
Food & Household Products (0.0%):
3 Tiger Oats Ltd...................... 60
--------
Food Products & Services (0.0%):
2 Foodcorp Ltd........................ 15
--------
Forest Products (0.0%):
11 Nampak Ltd.......................... 49
13 Sappi Ltd........................... 113
--------
162
--------
Industrial Goods & Services (0.0%):
1 Anglo American Industrial Corp.,
Ltd............................... 48
--------
Insurance (0.0%):
5 Liberty Life Association of Africa
Ltd............................... 144
4 Southern Life Association Ltd....... 44
--------
188
--------
Metals & Mining (0.3%):
6 Anglo American Corp. of South Africa
Ltd............................... 357
1 Anglo American Gold Investment Co.,
Ltd............................... 30
9 DeBeers Centenary AG................ 343
5 Driefontein Consolidated Ltd........ 35
2 Gold Fields of South Africa Ltd..... 35
8 Johnnies Industrial Corp., Ltd...... 105
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SOUTH AFRICA, CONTINUED:
Metals & Mining, continued:
6 Kloof Gold Mining Company Ltd....... $ 33
8 Randfontein Estates Gold Mining
Co................................ 17
5 Rustenburg Platinum Holdings Ltd.... 86
4 Samancor Ltd........................ 41
--------
1,082
--------
Oil & Gas Exploration, Production & Services (0.0%):
14 Sasol Ltd........................... 185
--------
Pharmaceuticals (0.0%):
3 South African Druggists Ltd......... 24
--------
Retail-General Merchandise (0.0%):
2 Ellerine Holdings Ltd............... 18
7 New Clicks Holdings Ltd............. 7
--------
25
--------
Total South Africa.................. 3,085
--------
SPAIN (4.1%):
Banking (1.3%):
28 Banco Bilbao Vizcaya SA,
Registered........................ 2,261
23 Banco Central Hispanoamericano SA... 828
17 Corporacion Bancaria de Espana SA... 965
64 Esp Banco Santander Sa.............. 1,982
--------
6,036
--------
Beverages & Tobacco (0.1%):
12 El Aguila SA (b).................... 58
6 Tabacalera SA, Class A.............. 323
--------
381
--------
Building Products (0.0%):
15 Uralita SA.......................... 168
--------
Chemicals (0.0%):
54 Ercros SA (b)....................... 55
--------
Construction (0.0%):
7 Dragados Y Construcciones SA........ 146
--------
Energy (0.4%):
48 Repsol SA........................... 2,038
--------
Food & Household Products (0.1%):
17 Ebro Agricolas, Compania de
Alimentacion SA................... 330
--------
Forest Products (0.1%):
7 Empresa Nacional de Celulosas SA.... 129
38 Sarrio SA........................... 149
--------
278
--------
Industrial Holding Companies (0.2%):
6 Corporacion Financiara Alba......... 712
--------
Insurance (0.0%):
4 Corporacion Mapfre.................. 192
--------
</TABLE>
Continued
65
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SPAIN, CONTINUED:
Miscellaneous Materials & Commodities (0.0%):
6 Viscofan Industria Navarra de
Envolturas Celulosicas SA......... $ 150
--------
Real Estate (0.2%):
9 Inmobiliaria Metropolitana Vasco
Central SA........................ 313
16 Vallehermoso SA..................... 424
--------
737
--------
Steel (0.1%):
3 Acerinox SA......................... 597
--------
Telecommunications (0.8%):
130 Telefonica de Espana................ 3,757
--------
Utilities--Electric & Gas (0.8%):
20 Empresa Nacional de Electricidad
SA................................ 450
3 Fomento de Construcciones y
Contratas SA...................... 358
5 Gas Natural SDG SA.................. 1,116
114 Iberdrola SA........................ 1,446
48 Union Electric Fenosa SA............ 440
--------
3,810
--------
Total Spain......................... 19,387
--------
SWEDEN (1.8%):
Automotive (0.1%):
15 Volvo AB, Series B.................. 388
--------
Banking & Financial Services (0.1%):
27 Skandiaviska Enskilda Banken, Class
A................................. 296
11 Svenska Handlesbanken, Class A...... 357
--------
653
--------
Engineering (0.2%):
32 ABB AB, A Shares.................... 442
8 ABB AB, B Shares.................... 112
4 Skanska AB, Series B................ 188
--------
742
--------
Forest Products (0.1%):
15 Stora Kopparbergs Bergslags
Aktiebolag, Series A.............. 244
6 Stora Kopparbergs Bergslags
Aktiebolag, Series B.............. 94
16 Svenska Cellulosa AB, Series B...... 330
--------
668
--------
Insurance (0.0%):
4 Skandia Forsakrings AB.............. 155
--------
Machinery & Equipment (0.1%):
13 Atlas Copco AB, Series A............ 347
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SWEDEN, CONTINUED:
Manufacturing-Consumer Goods (0.1%):
6 Electrolux AB, Series B............. $ 399
--------
Metals & Mining (0.0%):
4 SKF AB, Series B.................... 110
7 Trelleborg AB, Series B............. 117
--------
227
--------
Metals (Non-ferrous) (0.0%):
3 Granges AB.......................... 37
--------
Office Equipment & Services (0.0%):
5 Esselte AB, Series B................ 108
--------
Pharmaceuticals (0.5%):
26 Astra AB, A Shares.................. 489
80 Astra AB, B Shares.................. 1,416
--------
1,905
--------
Retail-General Merchandise (0.2%):
32 Hennes & Mauritz AB, B Shares....... 1,146
--------
Telecommunications (0.4%):
48 Telefonaktiebolaget LM Ericsson,
Series B.......................... 1,872
--------
Tobacco (0.0%):
20 Swedish Match AB.................... 68
--------
Total Sweden........................ 8,715
--------
SWITZERLAND (2.4%):
Banking (0.1%):
1 Swiss Bank Corp. (b)................ 356
--------
Chemicals (0.1%):
4 Ciba Specialty Chemicals AG......... 327
--------
Consumer Goods (0.0%):
1 Societe Suisse pour la
Microelectronique et l'Horlogerie
AG................................ 156
--------
Diversified (0.1%):
0 ABB AG, Bearer Shares (d)........... 394
0 Alusuisse-Lonza Holding AG,
Registered (d).................... 156
--------
550
--------
Financial Services (0.3%):
5 CS Holding AG, Registered........... 580
1 Union Bank of Switzerland........... 715
--------
1,295
--------
Food Products & Services (0.2%):
1 Nestle SA, Registered............... 753
--------
Insurance (0.1%):
0 Swiss Reinsurance Co., Registered
(d)............................... 552
--------
</TABLE>
Continued
66
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SWITZERLAND, CONTINUED:
Pharmaceuticals (1.5%):
4 Novartis AG, Bearer................. $ 5,658
0 Roche Holding AG (d)................ 550
0 Roche Holding AG, Bearer (d)........ 1,178
--------
7,386
--------
Transportation (0.0%):
1 Sfr Danzas Holding Ag Reg........... 98
--------
Total Switzerland................... 11,473
--------
THAILAND (0.3%):
Airlines (0.0%):
136 Thai Airways International Public
Co., Ltd., Foreign Registered
Shares............................ 200
--------
Banking (0.1%):
42 Bangkok Bank Public Co., Ltd.,
Foreign Registered Shares......... 287
182 Krung Thai Bank Ltd................. 192
--------
479
--------
Computer Hardware (0.1%):
51 Shinamatra Computer Public Co.
Ltd............................... 272
--------
Metals & Mining (0.0%):
655 Padaeng Industries Public Co., Ltd.
(b)............................... 187
--------
Telecommunications (0.1%):
30 Advanced Information Services PLC,
Foreign Registered Shares......... 261
77 TelecomAsia Corp. Public Co., Ltd.
(b)............................... 93
--------
354
--------
Total Thailand...................... 1,492
--------
TURKEY (0.9%):
Appliances & Household Products (0.0%):
1,518 Arcelik AS.......................... 205
--------
Automotive (0.0%):
150 Otosan Otomobil Sanayii AS.......... 80
1,702 Tofas Turk Otomobil Fabrikas AS..... 82
--------
162
--------
Banking & Financial Services (0.3%):
6,824 Akbank TAS.......................... 585
5,952 Turkiye Garanti Bankasi AS.......... 225
--------
810
--------
Beverages & Tobacco (0.0%):
388 Ege Biracilik ve Malt Sanayi AS..... 90
420 Ericiyas Biracilik ve Malt
Sanayii........................... 50
--------
140
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
TURKEY, CONTINUED:
Building Products (0.0%):
385 Akcansa Cimento AS.................. $ 53
266 Cimentas AS......................... 35
333 Cimsa Cimento Sanayi ve Ticaret
AS................................ 45
709 Turk Sise ve Cam Fabrikalari AS..... 45
--------
178
--------
Chemicals (0.0%):
129 Petkim Petrokimya Holding AS........ 44
--------
Diversified (0.2%):
1,714 Dogan Sirketler Grubu Holding AS.... 44
1,604 Koc Holding AS...................... 378
--------
422
--------
Electrical & Electronic (0.0%):
94 Raks Electronik Ev Aletleri......... 19
--------
Financial Services (0.3%):
1,464 Turkiye Is Bankasi AS, Class C...... 572
8,688 Yapi ve Kredi Bankasi AS............ 199
--------
771
--------
Food Products & Services (0.0%):
455 Tat Konserve Sanayii AS............. 34
--------
Forest Products (0.0%):
569 Kartonsan Karton Sanayi ve Ticaret
AS................................ 41
--------
Industrial Goods & Services (0.0%):
273 Kordsa Kord Bezi Sanayi ve Ticaret
AS................................ 23
273 Trl Kordsa Kord Bezi Sanayi
Rights............................ 0
--------
23
--------
Investment Companies (0.0%):
190 Koc Yatrim ve Sanayi Mamulleri
Pazarlama SA...................... 50
--------
Manufacturing-Capital Goods (0.0%):
708 Turk Demir Dokum Fabrikalari AS..... 36
--------
Metals & Mining (0.0%):
874 Eregli Demir ve Celik Fabrikalari
TAS............................... 146
2,209 Izmir Demir Celik Sanayi AS (b)..... 26
--------
172
--------
Oil & Gas Exploration, Production & Services (0.1%):
327 Aygaz AS............................ 67
548 Petrol Ofisi AS..................... 103
272 Tupras Turkiye Petrol Rafinerileri
AS (b)............................ 154
--------
324
--------
Telecommunications (0.0%):
293 Netas-Northern Elektrik
Telekomunikasyon AS (b)........... 81
--------
</TABLE>
Continued
67
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
TURKEY, CONTINUED:
Textile Products (0.0%):
206 Aksa Akrilik Kimya Sanayii AS....... $ 17
--------
Tire & Rubber (0.0%):
133 Brisa Bridgestone Sabanci Lastik
SAN, ve Tic AS.................... 45
145 Goodyear Lastikleri TAS............. 53
--------
98
--------
Transportation (0.0%):
422 Turk Hava Yollari AO (b)............ 121
--------
Utilities--Electric & Gas (0.0%):
89 Cukurova Elektrik AS................ 159
--------
Wholesale Distribution (0.0%):
193 Migros Turk TAS..................... 136
--------
Total Turkey........................ 4,043
--------
UNITED KINGDOM (8.0%):
Aerospace & Military Technology (0.2%):
22 British Aerospace PLC............... 488
43 Rolls-Royce PLC..................... 165
35 Smiths Industries PLC............... 444
--------
1,097
--------
Airlines (0.2%):
65 British Airways PLC................. 735
--------
Appliances & Household Products (0.1%):
14 EMI Group PLC....................... 244
--------
Auto Parts (0.0%):
56 LucasVarity PLC..................... 195
--------
Banking (1.3%):
160 Abbey National PLC.................. 2,189
75 Barclays PLC........................ 1,478
21 HSBC Holdings PLC................... 646
49 HSBC Holdings PLC (Hong Kong
Dollars).......................... 1,446
26 Royal Bank of Scotland Group PLC.... 242
--------
6,001
--------
Beverages & Tobacco (0.2%):
55 Guinness PLC........................ 537
50 Scottish & Newcastle PLC............ 540
--------
1,077
--------
Broadcasting/Cable (0.1%):
53 British Sky Broadcasting Group
PLC............................... 385
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Building Products (0.1%):
30 Marley PLC.......................... $ 62
10 Meyer International PLC............. 72
50 Rugby Group PLC..................... 100
159 Tarmac PLC.......................... 330
--------
564
--------
Chemicals (0.1%):
33 Imperial Chemical Industries PLC.... 459
--------
Conglomerates (0.2%):
92 B.A.T. Industries PLC............... 824
--------
Construction (0.1%):
74 Taylor Woodrow PLC.................. 216
26 Wilson Connolly Holdings PLC........ 69
--------
285
--------
Diversified (0.0%):
54 Lonrho PLC.......................... 114
--------
Electrical & Electronic (0.3%):
50 Bowthorpe PLC....................... 273
57 Electrocomponents PLC............... 428
100 General Electric Co., PLC........... 598
--------
1,299
--------
Energy (0.5%):
173 British Petroleum Co., PLC.......... 2,152
20 Energy Group PLC.................... 214
--------
2,366
--------
Engineering (0.0%):
25 Barratt Developments PLC............ 101
56 Costain Group PLC (b)............... 39
--------
140
--------
Financial Services (0.4%):
169 Lloyds TSB Group PLC................ 1,732
37 St. James's Place Capital PLC....... 80
--------
1,812
--------
Food & Household Products (0.2%):
42 Cadbury Schweppes PLC............... 377
25 Unilever PLC........................ 722
--------
1,099
--------
Food Products & Services (0.1%):
66 J Sainsbury PLC..................... 401
--------
Health & Personal Care (0.6%):
98 Glaxo Wellcome PLC.................. 2,020
27 Zeneca PLC.......................... 876
--------
2,896
--------
</TABLE>
Continued
68
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Industrial Holding Companies (0.3%):
28 BICC Group PLC...................... $ 83
109 BTR PLC............................. 372
94 Grand Metropolitan PLC.............. 912
36 Hanson PLC.......................... 180
--------
1,547
--------
Insurance (0.3%):
56 Commercial Union PLC................ 592
43 Prudential Corp. PLC................ 419
34 Royal & Sun Alliance Insurance Group
PLC............................... 250
--------
1,261
--------
Leisure (0.2%):
58 Granada Group PLC................... 760
29 Rank Group PLC...................... 181
--------
941
--------
Machinery & Equipment (0.1%):
20 GKN PLC............................. 344
--------
Merchandising (0.1%):
43 Safeway PLC......................... 248
--------
Metals & Mining (0.1%):
72 English China Clays PLC............. 246
--------
Metals (Non-ferrous) (0.2%):
43 RTZ Corp., PLC, Registered.......... 740
--------
Metals (Steel) (0.0%):
89 British Steel PLC................... 220
--------
Miscellaneous Materials & Commodities (0.0%):
61 Harrison & Crossfield PLC........... 113
51 Pilkington PLC...................... 116
--------
229
--------
Oil & Gas Exploration, Production & Services (0.0%):
36 LASMO PLC........................... 155
--------
Paper Products (0.0%):
41 Rexam PLC........................... 173
--------
Pharmaceuticals (0.3%):
72 SmithKline Beecham PLC.............. 1,332
--------
Printing & Publishing (0.1%):
52 Reuters Holdings PLC................ 548
--------
Real Estate (0.2%):
19 British Land Co., PLC............... 176
49 Land Securities PLC................. 686
--------
862
--------
Retail Stores/Catalog (0.6%):
46 Boots Co., PLC...................... 533
41 Great Universal Stores PLC.......... 415
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Retail Stores/Catalog, continued:
90 Marks & Spencer PLC................. $ 744
23 Next PLC............................ 256
117 Tesco PLC........................... 720
25 Thorn PLC........................... 71
--------
2,739
--------
Road & Railroad (0.0%):
23 Peninsular & Oriental Steam
Navigation Co..................... 229
--------
Telecommunications (0.6%):
196 British Telecommunications PLC...... 1,453
84 Cable & Wireless PLC................ 769
127 Vodaphone Group PLC................. 616
--------
2,838
--------
Textile Products (0.0%):
24 Courtaulds Textiles PLC............. 124
--------
Utilities--Electric & Gas (0.2%):
108 British Gas PLC..................... 398
110 Centrica PLC........................ 134
35 National Power PLC.................. 308
--------
840
--------
Total United Kingdom................ 37,609
--------
UNITED STATES (1.9%):
Aluminum (0.0%):
16 Indian Aluminum Company Ltd. GDR
(b)............................... 55
--------
Automotive (0.1%):
14 Mahindra & Mahindra Ltd. GDR (b).... 202
16 Tata Engineering & Locomotive Co.,
Ltd. GDR (b)...................... 252
--------
454
--------
Beverages & Tobacco (0.1%):
7 Compania Cervezas Unidas SA ADR..... 147
7 Embotelladora Andina SA ADR......... 143
3 Vina Concho y Toro SA ADR........... 93
--------
383
--------
Building Products (0.0%):
19 Gujarat Ambuja Cements Ltd. GDR..... 182
--------
Chemicals (0.1%):
10 Indian Petrochemicals Corp., Ltd.
GDR............................... 116
41 Indo Gulf Fertilizers and Chemicals
Corp., Ltd. GDR (b)............... 43
6 Quimica Y Minera Chile SA ADR....... 424
7 United Phosphorus Ltd. GDR (b)...... 48
--------
631
--------
</TABLE>
Continued
69
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED STATES, CONTINUED:
Diversified (0.1%):
13 Grasim Industries Ltd. GDR (b)...... $ 176
19 ITC Ltd. GDR (b).................... 305
2 U.S. Industries, Inc. (b)........... 58
--------
539
--------
Forest Products (0.0%):
12 Maderas Y Sinteticos Anonima SA
ADR............................... 198
--------
Hotels & Lodging (0.1%):
6 East India Hotels Ltd. GDR.......... 90
8 Indian Hotels Co., Ltd. GDR (b)..... 185
--------
275
--------
Manufacturing-Capital Goods (0.1%):
5 Ashok Leyland Ltd. GDR.............. 32
27 India Cements Ltd. GDR.............. 80
14 Larsen & Toubro Ltd. GDR (b)........ 230
--------
342
--------
Metals & Mining (0.0%):
8 Madeco SA ADR....................... 187
--------
Metals (Steel) (0.0%):
20 Steel Authority of India Ltd. GDR
(b)............................... 176
--------
Packaging (0.0%):
9 Cristalerias de Chile ADR........... 203
--------
Pharmaceuticals (0.1%):
5 Laboratorio Chile ADR............... 134
9 Ranbaxy Laboratories Ltd. GDR....... 211
--------
345
--------
Textile Products (0.2%):
22 Arvind Mills Ltd. GDR............... 111
7 Bombay Dye & Manufacturing Co. GDR
(b)............................... 22
1 Century Textile & Industries Ltd.
GDR (b)........................... 66
14 Indian Rayon & Industries Ltd. GDR
(b)............................... 173
8 Raymond Ltd. GDR.................... 33
29 Reliance Industries Ltd. GDR (b).... 676
--------
1,081
--------
Transportation (0.1%):
7 Bajaj Auto Ltd. GDR................. 241
--------
Transportation--Shipping (0.0%):
21 Great Eastern Shipping Co. GDR
(b)............................... 132
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED STATES, CONTINUED:
Utilities--Electric & Gas (0.9%):
12 Chilectra SA ADR.................... $ 335
12 Chilgener SA ADR.................... 333
30 Empresa Nacional Electricidad ADR... 2,490
12 Enersis SA ADR...................... 421
--------
3,579
--------
Total United States................. 9,003
--------
Total Common Stocks 458,017
--------
PREFERRED STOCKS (1.7%):
AUSTRALIA (0.2%):
223 News Corp. Ltd...................... 873
--------
BRAZIL (0.6%):
Banking (0.0%):
14,403 Banco Bradesco SA................... 144
131 Banco Itau SA....................... 75
--------
219
--------
Beverages & Tobacco (0.0%):
91 Companhia Cervejaria Brahma......... 70
--------
Electric Utility (0.0%):
1,504 Cia Energetica de Sao Paolo (b)..... 101
2,673 Companhia Energetica de Minas
Gerais............................ 134
--------
235
--------
Forest Products (0.0%):
90 Sadia-Concordia SA.................. 96
--------
Oil & Gas Exploration, Production & Services (0.2%):
1,919 Petroleo Brasileiro SA.............. 526
--------
Steel (0.0%):
7 Companhia Vale do Rio Doce.......... 149
--------
Telecommunications (0.4%):
7,869 Telecomunicacoes Brasileiras SA..... 1,195
351 Telecomunicacoes de Sao Paolo SA.... 114
--------
1,309
--------
Total Brazil........................ 2,604
--------
GERMANY (0.7%):
Automotive (0.2%):
3 Volkswagen AG....................... 1,488
--------
Business Services (0.3%):
6 SAP AG.............................. 1,269
--------
Textile Products (0.0%):
0 Escada AG........................... 48
--------
Utilities--Electric & Gas (0.2%):
28 RWE AG.............................. 981
--------
Total Germany....................... 3,786
--------
</TABLE>
Continued
70
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
PREFERRED STOCKS, CONTINUED:
GREECE (0.1%):
Telecommunications (0.1%):
6 Intracom SA......................... $ 255
--------
ITALY (0.1%):
Automotive (0.1%):
168 Fiat SpA............................ 311
--------
Total Preferred Stocks 7,829
--------
RIGHTS (0.0%):
KOREA (0.0%):
2 Samsung Electronics Co. (d)......... 0
--------
SWEDEN (0.0%):
4 Skanska AB, Series B (d)............ 0
--------
Total Rights.............................. 0
--------
U.S. TREASURY OBLIGATIONS (0.0%):
U.S. Treasury Bills (0.0%):
20 7/10/97 (c)......................... 20
25 8/21/97 (c)......................... 25
40 8/28/97 (c)......................... 40
90 9/25/97 (c)......................... 88
--------
Total U.S. Treasury Obligations 173
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
WARRANTS (0.0%):
France (0.0%):
17 Compagnie Generale des Eaux......... $ 10
--------
Total Warrants 10
--------
REPURCHASE AGREEMENTS (2.0%):
United States (2.0%):
9,399 State Street Bank, 5.00%, 7/1/97
(Collateralized by $9,410 U.S.
Treasury Notes, 6.25%, 3/31/99,
market value--$9,593)............. 9,399
--------
Total Repurchase Agreements 9,399
--------
Total (Cost--$384,664) (a) $475,428
========
</TABLE>
Continued
71
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $472,544.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $2,915. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $112,520
Unrealized depreciation.................................................. (24,671)
--------
Net unrealized appreciation.............................................. $ 87,849
========
</TABLE>
(b) Non-income producing securities.
(c) Serves as collateral for future contracts.
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
NUMBER OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- ------------------------- --------- -------
<C> <S> <C> <C>
19 Long Eurotop 100 Index
Future, 9/19/97 $ 3,921 $4,018
34 Long Nikkei 225 Index
Future, 9/11/97 3,944 3,502
$ 7,865 $7,520
======== =======
</TABLE>
(d) Amounts less than 1,000.
ADR American Depository Receipt
GDR Global Depository Receipt
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY CONTRACT CONTRACT CONTRACT MARKET APPRECIATION/
CURRENCY DATE PRICE AMOUNT VALUE VALUE (DEPRECIATION)
-------- -------- --------- -------- -------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Long Contracts:
European Currency Unit.............. 9/19/97 $ 0.8798 $ 2,910 $3,308 $3,290 $ (18)
Japanese Yen........................ 9/11/97 111.0300 433,800 3,907 3,825 (82)
------ ------
Total Long Contracts................ $7,215 $7,115 $(100)
======= ====== ======
</TABLE>
See notes to financial statements.
72
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
ASSET ALLOCATION INCOME EQUITY EQUITY INDEX VALUE GROWTH LARGE COMPANY
FUND FUND FUND FUND VALUE FUND
---------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value.................... $168,007 $ 796,415 $713,983 $481,169 $ 664,073
Repurchase agreements, at cost........... 2,640 9,787 31,896 7,683 46,324
-------- --------- -------- -------- ---------
Total (cost $153,456; $449,883; $518,526;
$412,230; and $581,154;
respectively).......................... 170,647 806,202 745,879 488,852 710,397
Cash..................................... -- 1 -- -- 1
Interest and dividends receivable........ 1,190 1,796 888 606 830
Receivable for capital shares issued..... 320 460 1,112 31 39
Receivable from brokers for investments
sold................................... 1,196 1,012 1,488 946 --
Prepaid expenses and other assets........ 7 15 14 1 9
-------- --------- -------- -------- --------
TOTAL ASSETS............................. 173,360 809,486 749,381 490,436 711,276
-------- --------- -------- -------- --------
LIABILITIES:
Dividends payable........................ 427 696 368 248 355
Payable for capital shares redeemed...... 25 60 93 54 1
Payable to brokers for investments
purchased.............................. 2,482 511 485 974 --
Net payable for variation margin on
futures contracts...................... 3 -- 226 60 --
Accrued expenses and other payables:
Investment advisory fees............. 77 486 60 299 431
Administration fees.................. 11 111 22 67 99
12b-1 fees........................... 41 79 152 18 10
Other................................ 44 42 119 56 104
-------- --------- -------- -------- --------
TOTAL LIABILITIES........................ 3,110 1,985 1,525 1,776 1,000
-------- --------- -------- -------- --------
NET ASSETS:
Capital.................................. 139,176 395,370 502,010 380,040 565,003
Undistributed (distributions in excess
of) net investment income.............. 5 (5) -- 12 1
Accumulated undistributed net realized
gains from investment, options and
futures transactions................... 13,861 55,817 18,873 31,654 16,029
Net unrealized appreciation
(depreciation) from investments and
futures................................ 17,208 356,319 226,973 76,954 129,243
-------- --------- -------- -------- --------
NET ASSETS............................... $170,250 $ 807,501 $747,856 $488,660 $ 710,276
======== ========= ======== ======== =========
NET ASSETS:
Fiduciary............................ $ 94,971 $ 649,007 $480,819 $430,837 $ 686,156
Class A.............................. 31,379 78,976 98,338 47,306 14,832
Class B.............................. 43,900 79,518 168,699 10,517 9,288
-------- --------- -------- -------- --------
Total................................ $170,250 $ 807,501 $747,856 $488,660 $ 710,276
======== ========= ======== ======== =========
OUTSTANDING UNITS OF BENEFICIAL INTEREST
(SHARES):
Fiduciary............................ 7,314 29,591 22,055 37,439 46,382
Class A.............................. 2,414 3,606 4,510 4,113 999
Class B.............................. 3,366 3,622 7,737 917 621
-------- --------- -------- -------- --------
Total................................ 13,094 36,819 34,302 42,469 48,002
======== ========= ======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per
share.............................. $ 12.98 $ 21.93 $ 21.80 $ 11.51 $ 14.79
======== ========= ======== ======== =========
Class A
Redemption price per share......... $ 13.00 $ 21.90 $ 21.81 $ 11.50 $ 14.85
======== ========= ======== ======== =========
Maximum sales charge............... 4.50% 4.50% 4.50% 4.50% 4.50%
======== ========= ======== ========= =========
Maximum offering price per share
(100%/(100%-maximum sales charge)
of net asset value adjusted to
nearest cent).................... $ 13.61 $ 22.93 $ 22.84 $ 12.04 $ 15.55
======== ========= ======== ======== =========
Class B
Offering price per share (a)....... $ 13.04 $ 21.95 $ 21.80 $ 11.47 $ 14.95
======== ========= ======== ======== =========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
73
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
GROWTH INTERNATIONAL
DISCIPLINED LARGE COMPANY OPPORTUNITIES GULF SOUTH EQUITY INDEX
VALUE FUND GROWTH FUND FUND GROWTH FUND FUND
---------- ------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value......................... $579,119 $ 1,374,135 $ 667,590 $ 97,368 $466,029
Repurchase agreements, at cost................ 29,318 28,027 39,449 2,589 9,399
-------- ----------- -------- --------- --------
Total (cost $510,158; $953,962; $611,514;
$75,832; and $384,664; respectively)........ 608,437 1,402,162 707,039 99,957 475,428
Cash.......................................... 1 1 -- 1 1
Foreign currency, at value (cost $392)........ -- -- -- -- 391
Interest and dividends receivable............. 708 1,704 389 56 961
Receivable for capital shares issued.......... 28 668 117 5 93
Receivable from brokers for investments
sold........................................ 1,655 19,244 3,659 1,244 --
Tax reclaim receivable........................ -- -- -- -- 732
Prepaid expenses and other assets............. 10 21 21 5 4
-------- ---------- -------- -------- --------
TOTAL ASSETS.................................. 610,839 1,423,800 711,225 101,268 477,610
-------- ---------- -------- -------- --------
LIABILITIES:
Dividends payable............................. 517 297 -- -- 4,472
Payable for capital shares redeemed........... 39 67 17 59 6
Payable to brokers for investments
purchased................................... 2,993 21,081 5,891 1,665 --
Net payable for variation margin on futures
contracts................................... -- -- -- -- 49
Payable for forward foreign currency
contracts................................... -- -- -- -- 100
Accrued expenses and other payables:
Investment advisory fees.................. 370 841 427 59 209
Administration fees....................... 85 192 98 6 65
12b-1 fees................................ 22 131 39 7 11
Other..................................... 103 149 63 20 154
-------- ----------- -------- --------- --------
TOTAL LIABILITIES............................. 4,129 22,758 6,535 1,816 5,066
-------- ----------- -------- --------- --------
NET ASSETS:
Capital....................................... 464,962 843,217 584,715 70,806 380,858
Undistributed (distributions in excess of) net
investment income........................... 17 45 -- (176) (2,608)
Accumulated undistributed net realized gains
from investment, options, futures and
foreign currency transactions............... 43,452 109,580 24,450 4,697 3,571
Net unrealized appreciation (depreciation)
from investments, futures and translation of
assets and liabilities in foreign
currencies.................................. 98,279 448,200 95,525 24,125 90,723
-------- ----------- -------- --------- --------
NET ASSETS.................................... $606,710 $ 1,401,042 $ 704,690 $ 99,452 $472,544
======== =========== ========= ========= ========
NET ASSETS:
Fiduciary................................. $562,302 $ 1,142,864 $ 623,911 $ 78,318 $449,949
Class A................................... 23,909 125,910 43,370 17,299 12,562
Class B................................... 20,499 132,268 37,409 3,835 10,033
-------- ----------- -------- --------- --------
Total..................................... $606,710 $ 1,401,042 $ 704,690 $ 99,452 $472,544
======== =========== ========= ========= ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST
(SHARES):
Fiduciary................................. 35,922 58,802 32,061 7,159 26,634
Class A................................... 1,525 6,322 2,239 1,581 743
Class B................................... 1,310 6,744 1,988 354 610
-------- ----------- -------- --------- --------
Total..................................... 38,757 71,868 36,288 9,094 27,987
======== =========== ========= ========= ========
Net Asset Value:
Fiduciary--
offering and redemption price per
share................................... $ 15.65 $ 19.44 $ 19.46 $ 10.94 $ 16.89
======== =========== ========= ========= ========
Class A
Redemption price per share.............. $ 15.68 $ 19.92 $ 19.37 $ 10.94 $ 16.92
======== =========== ========= ========= ========
Maximum sales charge.................... 4.50% 4.50% 4.50% 4.50% 4.50%
======== =========== ========= ========= ========
Maximum offering price per share
(100%/(100%--maximum sales charge) of
net asset value adjusted to nearest
cent)................................. $ 16.42 $ 20.86 $ 20.28 $ 11.46 $ 17.72
======== =========== ========= ========= ========
Class B
Offering price per share (a)............ $ 15.64 $ 19.61 $ 18.82 $ 10.84 $ 16.44
======== =========== ========= ========= ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
74
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET ALLOCATION INCOME EQUITY EQUITY INDEX VALUE GROWTH LARGE COMPANY
FUND FUND FUND FUND VALUE FUND
---------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income..................... $ 4,334 $ 2,052 $ 1,218 $ 943 $ 1,683
Dividend income..................... 1,169 13,965 10,484 5,561 17,030
Income from securities lending...... 35 105 103 77 183
-------- --------- -------- -------- ---------
TOTAL INCOME........................ 5,538 16,122 11,805 6,581 18,896
-------- --------- -------- -------- ---------
EXPENSES:
Investment advisory fees............ 827 4,104 1,642 2,379 4,726
Administration fees................. 211 917 905 531 1,056
12b-1 fees (Class A)................ 81 198 203 138 42
12b-1 fees (Class B)................ 283 484 902 70 60
Custodian and accounting fees....... 77 60 221 83 94
Legal and audit fees................ 5 22 21 14 22
Trustees' fees and expenses......... 1 7 5 4 9
Transfer agent fees................. 93 248 311 139 68
Registration and filing fees........ 45 95 92 27 108
Printing costs...................... 19 78 81 48 90
Other............................... 5 15 19 6 6
-------- --------- -------- -------- ---------
Total expenses before waivers....... 1,647 6,228 4,402 3,439 6,281
Less waivers........................ (282) (56) (1,727) (109) (12)
-------- --------- -------- -------- ---------
NET EXPENSES........................ 1,365 6,172 2,675 3,330 6,269
-------- --------- -------- -------- ---------
Net Investment Income............... 4,173 9,950 9,130 3,251 12,627
-------- --------- -------- -------- ---------
REALIZED/UNREALIZED GAINS FROM
INVESTMENTS, OPTIONS AND FUTURES:
Net realized gains from investments,
options and futures
transactions...................... 15,867 63,053 20,871 42,586 17,493
Net change in unrealized
appreciation (depreciation) from
investments, options
and futures....................... 4,463 89,271 140,765 51,518 126,134
-------- --------- -------- -------- ---------
Net realized/unrealized gains from
investments, options and
futures........................... 20,330 152,324 161,636 94,104 143,627
-------- --------- -------- -------- ---------
Change in net assets resulting from
operations........................ $ 24,503 $ 162,274 $170,766 $ 97,355 $ 156,254
======== ========= ======== ======== =========
</TABLE>
See notes to financial statements.
75
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
GROWTH INTERNATIONAL
DISCIPLINED LARGE COMPANY OPPORTUNITIES GULF SOUTH EQUITY INDEX
VALUE FUND GROWTH FUND FUND GROWTH FUND FUND
---------- ------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......................... $ 431 $ 1,314 $ 1,507 $ 237 $ 416
Dividend income.......................... 13,343 16,518 11,811 546 8,560
Income from securities lending........... 153 191 668 69 --
Foreign tax withholding.................. -- -- -- -- (960)
-------- --------- -------- ------- --------
Total Income............................. 13,927 18,023 13,986 852 8,016
-------- --------- -------- ------- --------
EXPENSES:
Investment advisory fees................. 4,129 7,948 4,511 730 2,202
Administration fees...................... 923 1,776 1,008 163 662
12b-1 fees (Class A)..................... 77 332 113 61 38
12b-1 fees (Class B)..................... 180 866 226 32 74
Custodian and accounting fees............ 86 92 154 58 323
Legal and audit fees..................... 26 43 31 5 16
Organization costs....................... -- 1 -- -- 3
Trustees' fees and expenses.............. 8 13 8 2 3
Transfer agent fees...................... 140 492 172 104 76
Registration and filing fees............. 46 118 72 28 62
Printing costs........................... 81 154 87 15 56
Other.................................. 4 26 7 2 27
-------- --------- -------- ------- --------
Total expenses before waivers............ 5,700 11,861 6,389 1,200 3,542
Less waivers............................. (22) (95) (32) (117) (11)
-------- --------- -------- ------- --------
NET EXPENSES............................. 5,678 11,766 6,357 1,083 3,531
-------- --------- -------- ------- --------
Net Investment Income (Loss)............. 8,249 6,257 7,629 (231) 4,485
-------- --------- -------- ------- --------
REALIZED/UNREALIZED GAINS FROM
INVESTMENTS, FUTURES AND FOREIGN
CURRENCIES:
Net realized gains from investments,
options, futures and foreign currency
transactions........................... 59,778 130,961 35,797 10,486 5,054
Net change in unrealized appreciation
(depreciation) from investments,
options, futures and translation of
assets and liabilities in foreign
currencies............................. 36,525 186,164 87,369 1,985 51,395
-------- --------- -------- ------- --------
Net realized/unrealized gains from
investments, futures and foreign
currencies............................. 96,303 317,125 123,166 12,471 56,449
-------- --------- -------- ------- --------
Change in net assets resulting
from operations........................ $104,552 $ 323,382 $ 130,795 $12,240 $ 60,934
======== ========= ========= ======= ========
</TABLE>
See notes to financial statements.
76
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET ALLOCATION FUND INCOME EQUITY FUND EQUITY INDEX FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............. $ 4,173 $ 2,090 $ 9,950 $ 6,029 $ 9,130 $ 6,199
Net realized gains from
investment, options and futures
transactions.................... 15,867 4,144 63,053 8,723 20,871 10,186
Net change in unrealized
appreciation (depreciation) from
investments, options and
futures......................... 4,463 1,631 89,271 35,127 140,765 47,556
--------- --------- --------- --------- --------- ---------
Change in net assets resulting from
operations.......................... 24,503 7,865 162,274 49,879 170,766 63,941
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income........ (2,678) (1,520) (8,549) (5,321) (7,178) (5,782)
In excess of net investment
income.......................... (11) -- (14) (25) -- (161)
From net realized gains from
investment transactions......... (2,959) (640) (10,510) (7,457) (3,288) (8,186)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income........ (764) (343) (948) (528) (899) (269)
In excess of net investment
income.......................... (3) -- (2) (2) -- (7)
From net realized gains from
investment transactions......... (974) (143) (1,743) (850) (420) (359)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income........ (731) (216) (453) (180) (780) (149)
In excess of net investment
income.......................... (3) -- (1) (1) -- (4)
From net realized gains from
investment transactions......... (1,129) (99) (1,424) (356) (629) (256)
--------- --------- --------- --------- --------- ---------
Change in net assets from shareholder
distributions....................... (9,252) (2,961) (23,644) (14,720) (13,194) (15,173)
--------- --------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued....... 74,038 50,091 113,454 267,682 372,043 199,001
Proceeds from shares issued in
connection with acquisition..... -- -- -- 136,786 -- --
Proceeds from shares issued in
connection with conversion...... 37,254 -- 283,942 -- -- --
Dividends reinvested.............. 6,840 2,534 11,938 6,734 6,593 11,149
Cost of shares redeemed........... (49,880) (16,204) (135,743) (239,261) (180,134) (106,442)
--------- --------- --------- --------- --------- ---------
Change in net assets from share
transactions........................ 68,252 36,421 273,591 171,941 198,502 103,708
--------- --------- --------- --------- --------- ---------
Change in net assets.................. 83,503 41,325 412,221 207,100 356,074 152,476
NET ASSETS:
Beginning of period............... 86,747 45,422 395,280 188,180 391,782 239,306
--------- --------- --------- --------- --------- ---------
End of period..................... $ 170,250 $ 86,747 $ 807,501 $ 395,280 $ 747,856 $ 391,782
========= ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
Issued............................ 6,114 4,377 6,001 13,308 20,262 12,652
Issued in connection with
acquisition..................... -- -- -- 7,895 -- --
Issued in connection with
conversion...................... 3,076 -- 14,913 -- -- --
Reinvested........................ 573 221 656 414 360 721
Redeemed.......................... (4,071) (1,428) (7,141) (11,666) (9,830) (6,924)
--------- --------- --------- --------- --------- ---------
Change in shares...................... 5,692 3,170 14,429 9,951 10,792 6,449
========= ========= ========= ========= ========= =========
Undistributed (distributions in excess
of) net investment income included
in net assets:
End of period..................... $ 5 $ 19 $ (5) $ 13 $ -- $ (405)
========= ========= ========= ========= ========= =========
</TABLE>
See notes to financial statements.
77
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
VALUE GROWTH FUND
-------------------------------------------- LARGE COMPANY VALUE FUND
SEVEN MONTHS --------------------------
YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income..................... $ 3,251 $ 1,254 $ 2,459 $ 12,627 $ 12,313
Net realized gains from investment,
options and futures transactions........ 42,586 50,010 17,559 17,493 66,494
Net change in unrealized appreciation
(depreciation) from investments, options
and futures............................. 51,518 (28,550) 30,874 126,134 (17,058)
--------- --------- -------- -------- ---------
Change in net assets resulting from
operations.................................. 97,355 22,714 50,892 156,254 61,749
--------- --------- -------- -------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS (B):
From net investment income................ (2,906) (569) -- (12,228) (12,140)
In excess of net investment income........ -- (5) -- -- (119)
From net realized gains from investment
transactions............................ (36,353) -- -- (47,388) (46,275)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................ (316) (680) (2,449) (209) (142)
In excess of net investment income........ -- (5) -- -- (1)
From net realized gains from investment
transactions............................ (5,893) (34,705) (5,515) (904) (631)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................ (16) (5) (6) (69) (32)
In excess of net investment income........ -- -- (3) -- --
From net realized gains from investment
transactions............................ (992) (557) (19) (410) (183)
--------- --------- -------- -------- ---------
Change in net assets from shareholder
distributions............................... (46,476) (36,526) (7,992) (61,208) (59,523)
--------- --------- -------- -------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............... 236,686 68,807 24,259 165,729 285,428
Proceeds from shares issued in connection
with conversion......................... -- -- -- 63,222 --
Dividends reinvested...................... 39,472 27,533 1,480 26,644 32,290
Cost of shares redeemed................... (70,246) (71,560) (21,348) (238,407) (91,619)
--------- --------- -------- -------- ---------
Change in net assets from share
transactions................................ 205,912 24,780 4,391 17,188 226,099
----------- ------------- ------------ ----------- -----------
Change in net assets.......................... 256,791 10,968 47,291 112,234 228,325
NET ASSETS:
Beginning of period....................... 231,869 220,901 173,610 598,042 369,717
--------- --------- -------- -------- ---------
End of period............................. $ 488,660 $ 231,869 $220,901 $ 710,276 $ 598,042
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
Issued.................................... 22,826 1,402 1,628 12,629 22,448
Issued in restatement of net asset value
(c)..................................... -- 7,808 -- -- --
Issued in connection with conversion...... -- -- -- 4,655 --
Reinvested................................ 4,071 1,782 106 2,051 2,670
Redeemed.................................. (6,738) (1,668) (1,398) (17,923) (7,260)
--------- --------- -------- -------- ---------
Change in shares.............................. 20,159 9,324 336 1,412 17,858
========= ========= ======== ========= =========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period............................. $ 12 $ (12) $ (2) $ 1 $ (114)
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Changes in net assets for the periods prior to
March 25, 1996 represent the Paragon Value Growth Fund.
(b) Fiduciary Shares of the Value Growth Fund commenced offering on March 26,
1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Value Growth
Fund issued additional shares at the close of business March 25, 1996 as a
result of restatement of the net asset values of Class A Shares from $15.26
to $10.00 and Class B Shares from $15.21 to $10.00.
See notes to financial statements.
78
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
DISCIPLINED VALUE FUND LARGE COMPANY GROWTH FUND GROWTH OPPORTUNITIES FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............ $ 8,249 $ 10,841 $ 6,257 $ 8,466 $ 7,629 $ 5,803
Net realized gains from
investment, options and futures
transactions................... 59,778 60,286 130,961 29,317 35,797 150,392
Net change in unrealized
appreciation (depreciation)
from investments, options and
futures........................ 36,525 25,630 186,164 85,542 87,369 (49,094)
--------- --------- ---------- --------- --------- --------
Change in net assets resulting from
operations......................... 104,552 96,757 323,382 123,325 130,795 107,101
--------- --------- ---------- --------- --------- --------
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income....... (7,822) (10,409) (5,746) (7,921) (7,053) (5,538)
In excess of net investment
income......................... -- (84) -- (70) (669) (34)
From net realized gains from
investment transactions........ (53,221) (27,544) (37,414) (7,625) (83,581) (78,544)
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment income....... (274) (302) (403) (478) (361) (215)
In excess of net investment
income......................... -- (2) -- (4) (34) (1)
From net realized gains from
investment transactions........ (2,285) (920) (4,265) (558) (4,572) (2,747)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment income....... (89) (131) (23) (67) (215) (51)
In excess of net investment
income......................... -- (1) -- (1) (20) --
From net realized gains from
investment transactions........ (1,855) (708) (3,785) (253) (3,102) (896)
--------- --------- ---------- --------- --------- --------
Change in net assets from shareholder
distributions...................... (65,546) (40,101) (51,636) (16,977) (99,607) (88,026)
--------- --------- ---------- --------- --------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...... 107,311 146,331 230,983 303,743 291,882 285,336
Proceeds from shares issued in
connection with acquisition.... -- -- -- 36,982 -- --
Proceeds from shares issued in
connection with conversion..... 48,296 -- 289,603 -- -- --
Dividends reinvested............. 32,360 21,701 31,237 9,536 56,517 46,859
Cost of shares redeemed.......... (179,880) (138,383) (299,888) (145,189) (248,384) (205,266)
--------- --------- ---------- --------- --------- --------
Change in net assets from share
transactions....................... 8,087 29,649 251,935 205,072 100,015 126,929
--------- --------- ---------- --------- --------- --------
Change in net assets................. 47,093 86,305 523,681 311,420 131,203 146,004
NET ASSETS:
Beginning of period.............. 559,617 473,312 877,361 565,941 573,487 427,483
--------- --------- ---------- --------- --------- --------
End of period.................... $ 606,710 $ 559,617 $1,401,042 $ 877,361 $ 704,690 $ 573,487
========= ========= ========== ========= ========= =========
SHARE TRANSACTIONS:
Issued........................... 7,390 10,399 14,003 21,224 16,132 15,225
Issued in connection with
acquisition.................... -- -- -- 2,673 -- --
Issued in connection with
conversion..................... 3,333 -- 17,279 -- -- --
Reinvested....................... 2,299 1,573 1,936 684 3,283 2,828
Redeemed......................... (12,355) (9,741) (18,015) (9,886) (13,633) (10,779)
--------- --------- ---------- --------- --------- --------
Change in shares..................... 667 2,231 15,203 14,695 5,782 7,274
========= ========= ========== ========= ========= =========
Undistributed (distributions in
excess of) net investment income
included in net assets:
End of period.................... $ 17 $ (45) $ 45 $ (85) $ 0 $ (47)
========= ========= ========== ========= ========= =========
</TABLE>
See notes to financial statements.
79
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERNATIONAL EQUITY INDEX
GULF SOUTH GROWTH FUND FUND
-------------------------------------------- --------------------------
YEAR ENDED SEVEN MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss)............... $ (231) $ (162) $ (329) $ 4,485 $ 2,940
Net realized gains from investment,
options, futures and foreign currency
transactions............................. 10,486 20,607 2,336 5,054 1,467
Net change in unrealized appreciation
(depreciation) from investments, options,
futures and translation of assets and
liabilities in foreign currencies........ 1,985 (8,026) 17,774 51,395 26,748
--------- --------- -------- -------- ---------
Change in net assets resulting from
operations................................... 12,240 12,419 19,781 60,934 31,155
--------- --------- -------- -------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS (B):
From net investment income................. -- -- (4,346) (2,825)
In excess of net investment income......... -- -- (3,417) (429)
From net realized gains from investment
transactions............................. (8,358) (237) (3,811) (2,147)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................. -- -- -- (92) (72)
In excess of net investment income......... -- -- -- (73) (11)
From net realized gains from investment
transactions............................. (1,835) (17,443) (1,410) (111) (55)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................. -- -- -- (47) (43)
In excess of net investment income......... -- -- -- (37) (7)
From net realized gains from investment
transactions............................. (302) (393) (8) (72) (33)
--------- --------- -------- -------- ---------
Change in net assets from shareholder
distributions................................ (10,495) (18,073) (1,418) (12,006) (5,622)
--------- --------- -------- -------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................ 14,236 29,495 13,775 191,629 163,944
Dividends reinvested....................... 9,973 14,226 328 2,834 2,501
Cost of shares redeemed.................... (30,774) (31,076) (12,956) (135,282) (54,557)
--------- --------- -------- -------- ---------
Change in net assets from share transactions... (6,565) 12,645 1,147 59,181 111,888
--------- --------- -------- -------- ---------
Change in net assets........................... (4,820) 6,991 19,510 108,109 137,421
NET ASSETS:
Beginning of period........................ 104,272 97,281 77,771 364,435 227,014
--------- --------- -------- -------- ---------
End of period.............................. $ 99,452 $ 104,272 $ 97,281 $ 472,544 $ 364,435
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
Issued..................................... 1,433 620 842 12,777 11,286
Issued in restatement of net asset value
(c)...................................... -- 3,633 -- -- --
Reinvested................................. 1,042 902 22 189 175
Redeemed................................... (3,085) (838) (768) (9,008) (3,742)
--------- --------- -------- -------- ---------
Change in shares............................... (610) 4,317 96 3,958 7,719
========= ========= ======== ========= =========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of period.............................. $ (176) $ -- $ -- $ (2,608) $ 1,395
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Capital and share transactions for
the periods prior to March 25, 1996 represent the Paragon Gulf South Growth
Fund.
(b) Fiduciary Shares of the Gulf South Growth Fund commenced offering on March
26, 1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Gulf South
Growth Fund issued additional shares at the close of business March 25, 1996
as a result of restatement of the net asset values of Class A Shares from
$15.70 to $10.00 and Class B Shares from $15.48 to $10.00.
See notes to financial statements.
80
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Asset Allocation Fund,
the Income Equity Fund, the Equity Index Fund, the Value Growth Fund, the
Large Company Value Fund, the Disciplined Value Fund, the Large Company
Growth Fund, the Growth Opportunities Fund, the Gulf South Growth Fund and
the International Equity Index Fund (individually a "Fund", collectively the
"Funds") only. Subsequent to June 30, 1997, the investment objective of the
Gulf South Growth Fund was changed to permit investments in companies
headquartered or doing business outside of the Southeastern region of the
United States, and to focus the Fund's investments to a greater extent on
investments in the equity securities of small capitalization and emerging
growth companies. As a result, the name of the Fund was changed to the One
Group Small Capitalization Fund. The Funds are each offered in Fiduciary
Class, Class A and Class B Shares. Class A Shares are subject to initial
sales charges, imposed at the time of purchase, in accordance with the Funds'
prospectuses. Certain redemptions of Class B Shares are subject to contingent
deferred sales charges in accordance with the Funds' prospectuses. Each Fund
is a diversified mutual fund except the Gulf South Growth Fund which is
non-diversified.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement, all of the assets and liabilities of each
Paragon Fund transferred to a Fund of The One Group in exchange for shares of
the corresponding Fund of The One Group. Subsequent to the reorganization,
the fiscal period end changed from November 30 to June 30 for the Value
Growth Fund and the Gulf South Growth Fund. Therefore, the prior period
statement of changes in net assets and financial highlights for those Funds
present the results for the seven months ended June 30, 1996.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Asset Allocation Fund To provide total return while preserving capital.
Income Equity Fund Current income through regular payments of dividends with
the secondary goal of achieving capital appreciation by
investing primarily in equity securities.
Equity Index Fund Investment results that correspond to the aggregate price
and dividend performance of the securities in the
Standard & Poor's 500 Composite Stock Price Index.
Value Growth Fund Long-term capital growth and growth of income while, as a
secondary objective, providing a moderate level of
current income.
Large Company Value Fund Capital appreciation with the incidental goal of achieving
current income by investing primarily in equity
securities.
Disciplined Value Fund Capital appreciation with the secondary goal of achieving
current income by investing primarily in equity
securities.
Large Company Growth Fund Long-term capital appreciation and growth of income by
investing primarily in equity securities.
Growth Opportunities Fund Growth of capital and, secondarily, current income, by
investing primarily in equity securities.
</TABLE>
Continued
81
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Gulf South Growth Fund Long-term capital growth by investing in a portfolio of
equity securities of small-capitalization, emerging
growth and medium- capitalization companies which are
either headquartered in or whose primary market is in the
southeastern region of the United States.
International Equity Index Fund To provide investment results that correspond to the
aggregate price and dividend performance of the
securities in the Gross Domestic Product Weighted Morgan
Stanley Capital International Europe, Australia and Far
East Index.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Listed securities are valued at the last sales price on the principal
exchange where such securities are traded. Unlisted securities or listed
securities for which last sales prices are not available are valued at
the mean of the latest bid and asked price in the principal market where
such securities are traded. Corporate debt securities and debt securities
of U.S. issuers (other than short-term investments maturing in 60 days or
less), including municipal securities, are valued on the basis of
valuations provided by dealers or by an independent pricing service
approved by the Board of Trustees. Short-term investments maturing in 60
days or less are valued at amortized cost, which approximates market
value. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
Options traded on an exchange are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations. Investments
for which there are no such quotations or valuations are carried at fair
value as determined by the Banc One Investment Advisors Corporation (the
"Advisor") under the direction of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION
Investment valuations, other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars
based upon current exchange rates. Purchases and sales of foreign
investments and income and expenses are converted into U.S. dollars based
upon exchange rates prevailing on the respective dates of such
transactions. That portion of realized gains or losses and unrealized
appreciation or depreciation from investments due to fluctuations in
foreign currency exchange rates is not separately disclosed. Such
fluctuations are included with the net realized and unrealized gain or
loss from investments.
FORWARD FOREIGN CURRENCY CONTRACTS
Forward foreign currency contracts are valued at the daily exchange rate
of the underlying currency. Purchases and sales of forward foreign
currency contracts having the same settlement date and broker are
presented net on the Statement of Assets and Liabilities. The forward
foreign currency exchange contracts are adjusted by the daily exchange
rate of the underlying currency and any gains or losses are recorded for
financial statement purposes as unrealized appreciation or depreciation
until the contract settlement date. Gains or
Continued
82
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
losses from the purchase or sale of forward foreign currency contracts having
the same settlement date and broker are recorded as realized on the date of
offset; otherwise gains or losses are recorded as realized on settlement
date.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that the
investment advisor has determined are creditworthy. Each repurchase agreement
is recorded at cost. The Fund requires that the securities purchased in a
repurchase agreement transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
counterparty default. The seller, under the repurchase agreement, is required
to maintain the value of the securities held at not less than the repurchase
price, including accrued interest. Repurchase agreements are considered to be
loans under the 1940 Act.
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums received
are recorded as liabilities and are subsequently adjusted to the current
value of the options written. Premiums received from writing options which
expire are treated as realized gains. Premiums received from writing options,
which are either exercised or closed, are offset against the proceeds
received or amount paid on the transaction to determine realized gains or
losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period. Cash
or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change in
the market value of the position are recorded as unrealized appreciation or
depreciation until the contract is closed out, at which time the appreciation
or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities may
be more volatile than the referenced instrument itself, but any loss is
limited to the amount of the original investment.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn dividends and interest on securities lent while
simultaneously seeking to earn interest on the investment of collateral.
Collateral is marked to market daily to provide a level of collateral at
least equal to the market value of securities lent. There may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. However, loans will
be made only to borrowers deemed by the Advisor to be of good standing and
creditworthy under guidelines established by the Board of Trustees and when,
in the judgment of the Advisor, the consideration which can be earned
currently from such securities loans justifies the attendant risk. Loans are
subject to termination by the
Continued
83
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Funds or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997, the following Funds had securities
with the following market values on loan (amounts in thousands):
<TABLE>
<CAPTION>
MARKET VALUE
OF LOANED
SECURITIES
-------------
<S> <C>
Asset Allocation Fund......................................... $ 27,021
Income Equity Fund............................................ 36,562
Equity Index Fund............................................. 68,647
Value Growth Fund............................................. 50,079
Large Company Value Fund...................................... 67,650
Disciplined Value Fund........................................ 87,543
Large Company Growth Fund..................................... 86,715
Growth Opportunities Fund..................................... 157,149
Gulf South Growth Fund........................................ 12,436
</TABLE>
The loaned securities were fully collateralized by U.S. Government
securities as of June 30, 1997.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Dividends are recorded on the
ex-dividend date. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one Fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards, foreign currency transactions, and deferrals of certain
losses. Permanent book and tax basis differences have been reclassified
among the components of net assets.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and
from net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes. Withholding taxes on foreign
dividends have been paid or provided for in accordance with the
applicable country's tax rules and rates.
Continued
84
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more. The Trust is registered to offer forty series
and five classes of shares: Fiduciary, Class A, Class B, Class C and Service.
Currently, the Trust consists of thirty three active funds and, not all funds
can offer all classes of shares. As of June 30, 1997, there were no
shareholders in the Class C or the Service Class of the Funds. Shareholders
are entitled to one vote for each full share held and will vote in the
aggregate and not by class or series, except as otherwise expressly required
by law or when the Board of Trustees has determined that the matter to be
voted on affects only the interest of shareholders of a particular class or
series. The following is a summary of transactions in Fund shares for the
periods ended June 30, 1997 and June 30, 1996:
Continued
85
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ASSET ALLOCATION FUND INCOME EQUITY FUND EQUITY INDEX FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued........ $ 36,157 $ 20,364 $ 39,671 $ 74,805 $ 193,036 $ 110,800
Proceeds from shares issued in
connection with acquisition...... -- -- -- 128,593 -- --
Proceeds from shares issued in
connection with conversion....... 37,254 -- 283,942 -- -- --
Dividends reinvested............... 3,380 1,810 7,467 5,003 3,889 10,203
Cost of shares redeemed............ (41,096) (13,065) (115,841) (94,484) (148,567) (79,496)
---------- --------- --------- --------- --------- ---------
Change in net assets from
Fiduciary share transactions..... $ 35,695 $ 9,109 $ 215,239 $ 113,917 $ 48,358 $ 41,507
========== ========= ========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued........ $ 14,748 $ 14,197 $ 33,483 $ 168,343 $ 72,287 $ 52,581
Proceeds from shares issued in
connection with acquisition...... -- -- -- 6,780 -- --
Dividends reinvested............... 1,663 453 2,597 1,244 1,279 565
Cost of shares redeemed............ (5,587) (2,268) (15,299) (143,907) (25,085) (26,205)
---------- --------- --------- --------- --------- ---------
Change in net assets from
Class A share transactions....... $ 10,824 $ 12,382 $ 20,781 $ 32,460 $ 48,481 $ 26,941
========== ========= ========= ========= ========= =========
CLASS B SHARES:
Proceeds from shares issued........ $ 23,133 $ 15,530 $ 40,300 $ 24,534 $ 106,720 $ 35,620
Proceeds from shares issued in
connection with acquisition...... -- -- -- 1,413 -- --
Dividends reinvested............... 1,797 271 1,874 487 1,425 381
Cost of shares redeemed............ (3,197) (871) (4,603) (870) (6,482) (741)
---------- --------- --------- --------- --------- ---------
Change in net assets from
Class B share transactions....... $ 21,733 $ 14,930 $ 37,571 $ 25,564 $ 101,663 $ 35,260
========== ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued............................. 3,003 1,787 2,121 2,462 10,607 7,069
Issued in connection with
acquisition...................... -- -- -- 7,422 -- --
Issued in connection with
conversion....................... 3,076 -- 14,913 -- -- --
Reinvested......................... 284 159 412 316 215 660
Redeemed........................... (3,348) (1,156) (6,085) (3,267) (8,036) (5,207)
---------- --------- --------- --------- --------- ---------
Change in Fiduciary Shares......... 3,015 790 11,361 6,933 2,786 2,522
========== ========= ========= ========= ========= =========
CLASS A SHARES:
Issued............................. 1,212 1,241 1,768 9,480 3,962 3,351
Issued in connection with
acquisition...................... -- -- -- 392 -- --
Reinvested......................... 139 38 142 72 69 36
Redeemed........................... (460) (198) (814) (8,347) (1,452) (1,670)
---------- --------- --------- --------- --------- ---------
Change in Class A Shares........... 891 1,081 1,096 1,597 2,579 1,717
========== ========= ========= ========= ========= =========
CLASS B SHARES:
Issued............................. 1,899 1,349 2,112 1,366 5,693 2,232
Issued in connection with
acquisition...................... -- -- -- 81 -- --
Reinvested......................... 150 24 102 26 76 25
Redeemed........................... (263) (74) (242) (52) (342) (47)
---------- --------- --------- --------- --------- ---------
Change in Class B Shares........... 1,786 1,299 1,972 1,421 5,427 2,210
========== ========= ========= ========= ========= =========
</TABLE>
Continued
86
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
VALUE GROWTH FUND LARGE COMPANY VALUE FUND
-------------------------------------------- --------------------------
YEAR ENDED SEVEN MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued................ $ 222,240 $ 51,451 $ 150,998 $ 271,886
Proceeds from shares issued in conversion
from Class A Shares...................... -- 186,991(b) -- --
Proceeds from shares issued in connection
with conversion.......................... -- -- 63,222 --
Dividends reinvested....................... 32,485 12 25,070 31,312
Cost of shares redeemed.................... (59,895) (54,571) (229,727) (86,151)
--------- --------- ---------- ---------
Change in net assets from Fiduciary share
transactions............................. $ 194,830 $ 183,883 $ 9,563 $ 217,047
========= ========= ========== =========
CLASS A SHARES:
Proceeds from shares issued................ $ 9,761 $ 15,771 $ 21,981 $ 10,438 $ 10,239
Dividends reinvested....................... 5,980 26,959 1,452 1,100 760
Cost of shares redeemed.................... (9,421) (16,784) (21,210) (8,010) (5,175)
Cost of shares redeemed in conversion to
Fiduciary Shares......................... -- (186,991)(b) -- -- --
--------- --------- -------- --------- ---------
Change in net assets from Class A share
transactions............................. $ 6,320 $(161,045) $ 2,223 $ 3,528 $ 5,824
========= ========= ======== ========= =========
CLASS B SHARES:
Proceeds from shares issued................ $ 4,685 $ 1,585 $ 2,278 $ 4,293 $ 3,303
Dividends reinvested....................... 1,007 562 28 474 218
Cost of shares redeemed.................... (930) (205) (138) (670) (293)
--------- --------- -------- --------- ---------
Change in net assets from Class B share
transactions............................. $ 4,762 $ 1,942 $ 2,168 $ 4,097 $ 3,228
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued..................................... 21,444 254 11,519 21,371
Issued in conversion from Class A Shares... -- 18,699(b) -- --
Issued in connection with conversion....... -- -- 4,655 --
Reinvested................................. 3,352 1 1,931 2,593
Redeemed................................... (5,755) (556) (17,266) (6,817)
--------- --------- --------- ---------
Change in Fiduciary Shares................. 19,041 18,398 839 17,147
========= ========= ========= =========
CLASS A SHARES:
Issued..................................... 929 1,026 1,479 793 815
Issued in restatement of net asset
value(c)................................. -- 7,672 -- -- --
Reinvested................................. 615 1,745 104 84 61
Redeemed................................... (893) (1,096) (1,389) (607) (417)
Redeemed in conversion to Fiduciary
Shares................................... -- (18,699)(b) -- -- --
--------- --------- -------- --------- ---------
Change in Class A Shares................... 651 (9,352) 194 270 459
========= ========= ======== ========= =========
CLASS B SHARES:
Issued..................................... 453 122 149 317 262
Issued in restatement of net asset
value(c)................................. -- 136 -- -- --
Reinvested................................. 104 36 2 36 16
Redeemed................................... (90) (16) (9) (50) (26)
--------- --------- -------- --------- ---------
Change in Class B Shares................... 467 278 142 303 252
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Capital and share transactions for the periods
prior to March 26, 1996 represent the Paragon Value Growth Fund.
(b) Fiduciary Shares of the Value Growth Fund commenced offering on March 26,
1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Value Growth
Fund issued additional shares at the close of business March 25, 1996 as a
result of restatement of the net asset values of Class A Shares from $15.26
to $10.00 and Class B Shares from $15.21 to $10.00.
Continued
87
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
DISCIPLINED VALUE FUND LARGE COMPANY GROWTH FUND GROWTH OPPORTUNITIES FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued..... $ 95,887 $ 131,316 $ 134,662 $ 209,649 $ 216,371 $ 167,309
Proceeds from shares issued in
connection with acquisition... -- -- -- 33,161 -- --
Proceeds from shares issued in
connection with conversion.... 48,296 -- 289,603 -- -- --
Dividends reinvested............ 27,911 19,700 22,758 8,256 48,075 43,247
Cost of shares redeemed......... (168,332) (130,536) (274,724) (132,702) (199,916) (109,584)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Fiduciary share
transactions................ $ 3,762 $ 20,480 $ 172,299 $ 118,364 $ 64,530 $ 100,972
========= ========= ========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued..... $ 8,230 $ 10,777 $ 39,340 $ 46,490 $ 54,262 $ 108,378
Proceeds from shares issued in
connection with acquisition... -- -- -- 3,423 -- --
Dividends reinvested............ 2,515 1,180 4,698 904 5,065 2,718
Cost of shares redeemed......... (9,255) (6,449) (17,325) (10,113) (46,273) (95,119)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Class A share transactions.... $ 1,490 $ 5,508 $ 26,713 $ 40,704 $ 13,054 $ 15,977
========= ========= ========= ========= ========= =========
CLASS B SHARES:
Proceeds from shares issued..... $ 3,194 $ 4,238 $ 56,981 $ 47,604 $ 21,249 $ 9,649
Proceeds from shares issued in
connection with acquisition... -- -- -- 398 -- --
Dividends reinvested............ 1,934 821 3,781 376 3,377 894
Cost of shares redeemed......... (2,293) (1,398) (7,839) (2,374) (2,195) (563)
--------- --------- --------- --------- --------- ---------
Change in net assets from
Class B share transactions.... $ 2,835 $ 3,661 $ 52,923 $ 46,004 $ 22,431 $ 9,980
========= ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.......................... 6,612 9,341 8,322 14,892 11,966 8,947
Issued in connection with
acquisition................... -- -- -- 2,403 -- --
Issued in connection with
conversion.................... 3,333 -- 17,279 -- -- --
Reinvested...................... 1,984 1,427 1,418 594 2,790 2,608
Redeemed........................ (11,571) (9,186) (16,537) (9,049) (11,005) (5,714)
--------- --------- --------- --------- --------- ---------
Change in Fiduciary Shares...... 358 1,582 10,482 8,840 3,751 5,841
========= ========= ========= ========= ========= =========
CLASS A SHARES:
Issued.......................... 559 760 2,308 3,131 2,954 5,756
Issued in connection with
acquisition................... -- -- -- 242 -- --
Reinvested...................... 178 86 285 63 293 165
Redeemed........................ (628) (456) (1,016) (674) (2,503) (5,035)
--------- --------- --------- --------- --------- ---------
Change in Class A Shares........ 109 390 1,577 2,762 744 886
========= ========= ========= ========= ========= =========
CLASS B SHARES:
Issued.......................... 219 298 3,373 3,201 1,212 522
Issued in connection with
acquisition................... -- -- -- 28 -- --
Reinvested...................... 137 60 233 27 200 55
Cost of shares redeemed......... (156) (99) (462) (163) (125) (30)
--------- --------- --------- --------- --------- ---------
Change in Class B Shares........ 200 259 3,144 3,093 1,287 547
========= ========= ========= ========= ========= =========
</TABLE>
Continued
88
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERNATIONAL EQUITY INDEX
GULF SOUTH GROWTH FUND FUND
-------------------------------------------- --------------------------
YEAR ENDED SEVEN MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, NOVEMBER 30, JUNE 30, JUNE 30,
1997 1996(a) 1995(a) 1997 1996
----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............... $ 9,250 $ 20,747 $ 182,120 $ 154,310
Proceeds from shares issued in conversion
from Class A Shares..................... -- 80,504(b) -- --
Dividends reinvested...................... 7,857 12 2,570 2,284
Cost of shares redeemed................... (23,477) (23,690) (129,185) (51,662)
--------- --------- --------- ---------
Change in net assets from Fiduciary share
transactions............................ $ (6,370) $ 77,573 $ 55,505 $ 104,932
========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued............... $ 3,550 $ 8,112 $ 12,266 $ 5,122 $ 7,069
Dividends reinvested...................... 1,821 13,830 321 167 135
Cost of shares redeemed................... (6,707) (7,224) (12,837) (4,769) (2,083)
Cost of shares redeemed in conversion to
Fiduciary Shares........................ -- (80,504)(b) -- -- --
--------- --------- -------- --------- ---------
Change in net assets from
Class A share transactions.............. $ (1,336) $ (65,786) $ (250) $ 520 $ 5,121
========= ========= ======== ========= =========
CLASS B SHARES:
Proceeds from shares issued............... $ 1,436 $ 636 $ 1,509 $ 4,387 $ 2,565
Dividends reinvested...................... 295 384 8 97 82
Cost of shares redeemed................... (590) (162) (119) (1,328) (812)
--------- --------- -------- --------- ---------
Change in net assets from
Class B share transactions.............. $ 1,141 $ 858 $ 1,398 $ 3,156 $ 1,835
========= ========= ======== ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................... 933 66 12,143 10,623
Issued in conversion from Class A
Shares.................................. -- 8,050(b) -- --
Reinvested................................ 821 1 171 160
Redeemed.................................. (2,352) (360) (8,601) (3,542)
--------- --------- --------- ---------
Change in Fiduciary Shares................ (598) 7,757 3,713 7,241
========= ========= ========= =========
CLASS A SHARES:
Issued.................................... 354 509 750 337 484
Issued in restatement of net asset value
(c)..................................... -- 3,555 -- -- --
Reinvested................................ 190 876 21 11 10
Redeemed.................................. (673) (466) (761) (317) (143)
Redeemed in conversion to Fiduciary
Shares.................................. -- (8,050)(b) -- -- --
--------- --------- -------- --------- ---------
Change in Class A Shares.................. (129) (3,576) 10 31 351
========= ========= ======== ========= =========
CLASS B SHARES:
Issued.................................... 146 45 92 297 179
Issued in restatement of net asset
value(c)................................ -- 78 -- -- --
Reinvested................................ 31 25 1 7 5
Redeemed.................................. (60) (12) (7) (90) (57)
--------- --------- -------- --------- ---------
Change in Class B Shares.................. 117 136 86 214 127
========= ========= ======== ========= =========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Capital and share transactions for
the periods prior to March 26, 1996 represent the Paragon Gulf South Growth
Fund.
(b) Fiduciary Shares of the Gulf South Growth Fund commenced offering on March
26, 1996 upon conversion of certain Class A Shares to Fiduciary Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Gulf South
Growth Fund issued additional shares at the close of business March 26, 1996
as a result of restatement of the net asset values of Class A Shares from
$15.70 to $10.00 and Class B Shares from $15.48 to $10.00.
Continued
89
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to a fee, computed daily and paid
monthly, at the annual rate of 0.74% of the average net assets of the Income
Equity Fund, the Value Growth Fund, the Large Company Value Fund, the
Disciplined Value Fund, the Large Company Growth Fund, the Growth
Opportunities Fund, and the Gulf South Growth Fund; 0.65% of the average
daily net assets of the Asset Allocation Fund; 0.55% of the average daily net
assets of the International Equity Index Fund; and 0.30% of the average daily
net assets of the Equity Index Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
the first $1.5 billion of Trust net assets (excluding the Investor Growth
Fund, the Investor Growth & Income Fund, the Investor Conservative Fund, and
the Investor Balanced Fund (the "Investor Funds") and the Treasury Only Money
Market Fund and the Government Money Market Fund (the "Institutional Money
Market Funds")); 0.18% on the next $0.5 billion of Trust net assets
(excluding the Investor Funds and the Institutional Money Market Funds); and
0.16% of Trust net assets (excluding the the Investor Funds and the
Institutional Money Market Funds) over $2 billion. The Advisor also serves as
Sub-Administrator to each Fund of the Trust, pursuant to an agreement between
the Administrator and the Advisor. Pursuant to this agreement, the Advisor
performs many of the Administrator's duties, for which the Advisor receives a
fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A and Class B Shares are subject to distribution and
shareholder services plans (the "Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Plans, the Trust will pay the Distributor a fee
of 0.35% of the average daily net assets of Class A Shares of each of the
Funds and 1.00% of the average daily net assets of the Class B Shares of each
of the Funds. Currently, the Distributor has voluntarily agreed to limit
payments under the Plans to 0.25% of average daily net assets of the Class A
Shares of each Fund. Up to 0.25% of the fees payable under the Plans may be
used as compensation for shareholder services by the Distributor and/or
financial institutions and intermediaries. Fees paid under the Plans may be
applied by the Distributor toward (i) compensation for its services in
connection with distribution assistance or provision of shareholder services;
or (ii) payments to financial institutions and intermediaries such as banks
(including affiliates of the Adviser), brokers, dealers and other
institutions, including the Distributor's affiliates and subsidiaries as
compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of shareholder services. Fiduciary
Class Shares of each Fund are offered without distribution fees. For the year
ended June 30, 1997, the Distributor received $14,356,900 from commissions
earned on sales of Class A Shares and redemptions of Class B Shares, of
which, the Distributor re-allowed $14,210,374 to affiliated broker-dealers of
the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
90
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the year ended June 30, 1997, fees in the
following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12b-1 FEES
ADVISORY FEES ADMINISTRATION WAIVED
WAIVED FEES WAIVED CLASS A
------------- --------------- ----------
<S> <C> <C> <C>
Asset Allocation Fund.................................. $ 143 $ 116 $ 23
Income Equity Fund..................................... -- -- 56
Equity Index Fund...................................... 1,094 575 58
Value Growth Fund...................................... 69 -- 40
Large Company Value Fund............................... -- -- 12
Disciplined Value Fund................................. -- -- 22
Large Company Growth Fund.............................. -- -- 95
Growth Opportunities Fund.............................. -- -- 32
Gulf South Growth Fund................................. 30 70 17
International Equity Index Fund........................ -- -- 11
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the year ended
June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OTHER SECURITIES
--------------------- -------------------------
PURCHASES SALES PURCHASES SALES
--------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Asset Allocation Fund.......................... $34,825 $12,126 $ 129,077 $ 86,545
Income Equity Fund............................. 282,166 154,124
Equity Index Fund.............................. 208,337 30,475
Value Growth Fund.............................. 520,425 351,633
Large Company Value Fund....................... 467,040 509,396
Disciplined Value Fund......................... 510,514 579,311
Large Company Growth Fund...................... 691,114 603,321
Growth Opportunities Fund...................... 1,780,054 1,764,169
Gulf South Growth Fund......................... 87,315 104,922
International Equity Index Fund................ 88,988 37,767
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures, indexed
securities and sales of forward foreign currency contracts involves risk in
excess of the amounts reflected in the Statement of Assets and Liabilities.
The face or contract amounts reflect the extent of the involvement the Funds
have in the particular class of instrument. Risks associated with these
instruments include an imperfect correlation between the movements in the
price of the instruments and the price of the underlying securities and
interest rates, an illiquid secondary market for the instruments or inability
of counterparties to perform under the terms of the contract, and changes in
the value of currency relative to the U.S. dollar. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuations in the
value of securities.
Continued
91
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The following is a summary of written option activity for the year ended June
30, 1997 by the Large Company Value Fund and Growth Opportunities Fund
(amounts in thousands):
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES
LARGE COMPANY VALUE FUND FUND
------------------------ ------------------------
SHARES SHARES
SUBJECT SUBJECT
TO CONTRACT PREMIUMS TO CONTRACT PREMIUMS
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
COVERED CALL OPTIONS
Balance at beginning of period...... 590 $ 1,290 -- $ --
Options written..................... 1,093 3,168 360 7,986
Options closed...................... (910) (2,377) (360) (7,986)
Options expired..................... (289) (324) -- --
Options exercised................... (484) (1,757) -- --
-------- ------- -------- -------
Options outstanding at end of
period........................... -- $ -- -- $
======== ======= ======== =======
PUT OPTIONS
Balance at beginning of period...... 90 $ 116 -- $ --
Options written..................... 125 249 -- --
Options expired..................... (85) (149) -- --
Options exercised................... (130) (216) -- --
-------- ------- -------- -------
Options outstanding at end of
period........................... -- $ -- -- $ --
======== ======= ======== =======
</TABLE>
7. CONCENTRATION OF CREDIT RISK:
The Gulf South Growth Fund has a relatively large concentration of securities
invested in companies domiciled in the southeastern region of the United
States. The Fund may be more susceptible to political, social and economic
events adversely affecting the southeastern region of the United States than
funds not so concentrated.
The International Equity Index Fund has a relatively large concentration of
securities invested in companies domiciled in Japan. The Fund may be more
susceptible to the political, social and economic events adversely affecting
the Japanese companies than funds not so concentrated.
8. FEDERAL TAX INFORMATION (UNAUDITED):
The accompanying table below details distributions from long-term capital
gains for the following funds for the fiscal year ended June 30, 1997
(amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
----------------------------------------------------------------- -------
<S> <C>
Asset Allocation Fund............................................ $ 3,509
Income Equity Fund............................................... 13,420
Equity Index Fund................................................ 3,193
Value Growth Fund................................................ 34,274
Large Company Value Fund......................................... 3,737
Disciplined Value Fund........................................... 32,722
Large Company Growth Fund........................................ 45,464
Growth Opportunities Fund........................................ 11,171
Gulf South Growth Fund........................................... 7,091
International Equity Index Fund.................................. 2,598
</TABLE>
Continued
92
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Currency losses incurred after October 31 within the Fund's fiscal year may
be deferred and treated as occurring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ending June 30, 1998 (amount in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
------------------------------------------------------------------ ------
<S> <C>
International Equity Index Fund................................... $514
</TABLE>
ELIGIBLE DISTRIBUTIONS:
The Trust designates the following percentage of distributions eligible for
the dividends received deductions for corporations.
<TABLE>
<CAPTION>
FUND PERCENTAGE
---------------------------------------------------------------- ----------
<S> <C>
Asset Allocation Fund........................................... 11.10%
Income Equity Fund.............................................. 98.92%
Equity Index Fund............................................... 83.28%
Value Growth Fund............................................... 20.88%
Large Company Value Fund........................................ 24.86%
Disciplined Value Fund.......................................... 70.64%
Large Company Growth Fund....................................... 100.00%
Growth Opportunities Fund....................................... 6.33%
Gulf South Growth Fund.......................................... 5.88%
International Equity Index Fund................................. 0.00%
</TABLE>
9. REORGANIZATIONS:
The Trust entered an Agreement and Plan of Reorganization ("Reorganization")
with Paragon pursuant to which all of the assets and liabilities of each
Paragon Fund transferred to a Fund of The One Group in exchange for shares of
the corresponding Fund of The One Group. The Paragon Value Equity Income Fund
transferred its assets and liabilities to the Income Equity Fund. The Paragon
Value Growth Fund and the Paragon Gulf South Growth Fund transferred its
assets and liabilities to the Value Growth Fund and Gulf South Growth Fund,
respectively. The Reorganization, which qualified as a tax-free exchange for
Federal income tax purposes, was completed on March 25, 1996 following
approval by shareholders of Paragon at a special shareholder meeting. The
following is a summary of shares outstanding, net assets, net asset value per
share and unrealized appreciation immediately before and after the
Reorganization (amounts in thousands except net asset values):
<TABLE>
<CAPTION>
BEFORE REORGANIZATION AFTER
------------------------------- REORGANIZATION
PARAGON VALUE -------------
EQUITY INCOME INCOME EQUITY INCOME EQUITY
FUND FUND FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 8,993 13,779 21,674
Net assets............................... $ 136,786 $ 238,679 $ 375,465
Net asset value:
Fiduciary.............................. $ 17.33 $ 17.33
Class A................................ $ 15.21 $ 17.30 $ 17.30
Class B................................ $ 15.20 $ 17.33 $ 17.33
Unrealized appreciation.................. $ 41,324 $ 71,670 $ 112,994
</TABLE>
Continued
93
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------- -------------
PARAGON VALUE VALUE GROWTH VALUE GROWTH
GROWTH FUND FUND FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 14,849 -- 22,657
Net assets............................... $226,567 -- $226,567
Net asset value:
Fiduciary.............................. $ 10.00
Class A................................ $ 15.26 $ 10.00*
Class B................................ $ 15.21 $ 10.00*
Unrealized appreciation.................. $ 48,859 -- $ 48,859
</TABLE>
<TABLE>
<CAPTION>
BEFORE REORGANIZATION AFTER
------------------------------- REORGANIZATION
PARAGON GULF -------------
SOUTH GROWTH GULF SOUTH GULF SOUTH
FUND GROWTH FUND GROWTH FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 6,379 -- 10,012
Net assets............................... $100,116 -- $100,116
Net asset value:
Fiduciary.............................. $ 10.00
Class A................................ $ 15.70 $ 10.00**
Class B................................ $ 15.48 $ 10.00**
Unrealized appreciation.................. $ 19,678 -- $ 19,678
</TABLE>
* Pursuant to its reorganization as a Fund of the One Group, the Fund issued
additional shares at the close of business March 25, 1996 as a result of
the restatement of the net asset values of Class A Shares from $15.26 to
$10.00 and Class B Shares from $15.21 to $10.00.
** Pursuant to its reorganization as a Fund of the One Group, the Fund issued
additional shares at the close of business March 25, 1996 as a result of
the restatement of the net asset values of Class A Shares from $15.70 to
$10.00 and Class B Shares from $15.48 to $10.00.
On May 22, 1995, the Board of Trustees approved a Plan of Reorganization
pursuant to which the Blue Chip Equity Fund would be merged with and into the
Large Company Growth Fund. On September 1, 1995, the Blue Chip Equity Fund
transferred all of its assets and liabilities to the Large Company Growth
Fund in exchange for shares of the Large Company Growth Fund. The
reorganization, which qualified as a tax-free exchange for Federal income tax
purposes, was approved by the shareholders of the Blue Chip Equity Fund, at a
shareholders' meeting on August 28, 1995. The following is a summary of
shares outstanding, net assets, net asset value per share and unrealized
appreciation immediately before and after the reorganization (amounts in
thousands except net asset values):
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------- -------------
BLUE CHIP LARGE COMPANY LARGE COMPANY
EQUITY FUND GROWTH FUND GROWTH FUND
------------- ------------- -------------
<S> <C> <C> <C>
Shares................................... 2,777 44,457 47,130
Net assets............................... $36,983 $ 614,499 $ 651,482
Net asset value:
Fiduciary.............................. $ 13.32 $ 13.80 $ 13.80
Class A................................ $ 13.30 $ 14.17 $ 14.17
Class B................................ $ 13.37 $ 13.96 $ 13.96
Unrealized appreciation.................. $ 7,227 $ 86,413 $ 93,640
</TABLE>
Continued
94
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
10. CONVERSION OF COMMON TRUST FUNDS:
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except net asset value per share
amounts):
<TABLE>
<CAPTION>
NET ASSET VALUE
SHARES NET ASSETS PER SHARE UNREALIZED
ISSUED CONVERTED ISSUED APPRECIATION
------ ---------- --------------- ------------
<S> <C> <C> <C> <C>
Asset Allocation Fund............. 3,076 $ 37,254 $ 12.11 $ 8,361
Income Equity Fund................ 14,913 $283,942 $ 19.04 $150,438
Large Company Value Fund.......... 4,655 $ 63,222 $ 13.58 $ 7,315
Disciplined Value Fund............ 3,333 $ 48,296 $ 14.49 $ 7,763
Large Company Growth Fund......... 17,279 $289,603 $ 16.76 $102,448
</TABLE>
Continued
95
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
----------------------------------------------------
FIDUCIARY SHARES
----------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 11.71 $ 10.73 $ 9.64 $ 10.06 $ 10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.43 0.41 0.38 0.29 0.07
Net realized and unrealized gains (losses) from
investments.............................................. 1.81 1.16 1.12 (0.38) 0.06
------- ------- ------- ------- -------
Total from Investment Activities......................... 2.24 1.57 1.50 (0.09) 0.13
------- ------- ------- ------- -------
Distributions
From net investment income................................. (0.43) (0.41) (0.37) (0.29) (0.07)
From net realized gains.................................... (0.54) (0.18) (0.04) (0.04) --
------- ------- ------- ------- -------
Total Distributions...................................... (0.97) (0.59) (0.41) (0.33) (0.07)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 12.98 $ 11.71 $ 10.73 $ 9.64 $ 10.06
======= ======= ======= ======= =======
Total Return................................................. 20.16% 14.87% 16.06% (1.01)% 5.45% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $94,971 $50,323 $37,658 $42,751 $30,441
Ratio of expenses to average net assets.................... 0.80% 0.94% 1.06% 1.06% 0.90% (b)
Ratio of net investment income to average net assets....... 3.55% 3.58% 3.72% 2.91% 3.03% (b)
Ratio of expenses to average net assets*................... 1.00% 1.19% 1.31% 1.33% 1.34% (b)
Ratio of net investment income to average net assets*...... 3.35% 3.33% 3.47% 2.64% 2.59% (b)
Portfolio turnover(c)...................................... 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d)............................ $0.0497 $0.0616
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Fiduciary Shares commenced offering on April 5, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
96
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
--------------------------------------------------------
CLASS A SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 11.72 $ 10.74 $ 9.65 $ 10.06 $10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.................................... 0.39 0.37 0.35 0.27 0.05
Net realized and unrealized gains (losses) from
investments............................................ 1.83 1.16 1.13 (0.38) 0.07
------- ------- ------- ------- -------
Total from Investment Activities....................... 2.22 1.53 1.48 (0.11) 0.12
------- ------- ------- ------- -------
Distributions
From net investment income............................... (0.40) (0.37) (0.34) (0.26) (0.06)
In excess of net investment income....................... -- -- (0.01) -- --
From net realized gains.................................. (0.54) (0.18) (0.04) (0.04) --
------- ------- ------- ------- -------
Total Distributions.................................... (0.94) (0.55) (0.39) (0.30) (0.06)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................. $ 13.00 $ 11.72 $ 10.74 $ 9.65 $10.06
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)....................... 19.85% 14.48% 15.76% (1.19)% 5.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $31,379 $17,849 $ 4,745 $ 1,691 $ 571
Ratio of expenses to average net assets.................. 1.05% 1.19% 1.31% 1.33% 1.15%(b)
Ratio of net investment income to average net assets..... 3.30% 3.33% 3.57% 2.68% 2.84%(b)
Ratio of expenses to average net assets*................. 1.34% 1.54% 1.66% 1.67% 1.62%(b)
Ratio of net investment income to average net assets*.... 3.01% 2.98% 3.22% 2.34% 237%(b)
Portfolio turnover(c).................................... 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid(d).......................... $0.0497 $0.0616
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on April 2, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
97
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
-------------------------------------------
CLASS B SHARES
-------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................. $ 11.76 $ 10.76 $ 9.67 $ 10.37
------- ------- ------- -------
Investment Activities
Net investment income.............................................. 0.30 0.28 0.27 0.08
Net realized and unrealized gains (losses) from investments........ 1.83 1.18 1.14 (0.70)
------- ------- ------- -------
Total from Investment Activities................................. 2.13 1.46 1.41 (0.62)
Distributions
From net investment income......................................... (0.31) (0.28) (0.27) (0.08)
In excess of net investment income................................. -- -- (0.01) --
From net realized gains............................................ (0.54) (0.18) (0.04) --
------- ------- ------- -------
Total Distributions.............................................. (0.85) (0.46) (0.32) (0.08)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD....................................... $ 13.04 $ 11.76 $ 10.76 $ 9.67
======= ======= ======= =======
Total Return (Excludes Sales Charge)................................. 18.90% 13.79% 14.90% (5.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................. $43,900 $18,575 $ 3,019 $ 1,862
Ratio of expenses to average net assets............................ 1.81% 1.94% 2.07% 2.40%(c)
Ratio of net investment income to average net assets............... 2.54% 2.58% 2.77% 1.99%(c)
Ratio of expenses to average net assets*........................... 2.01% 2.19% 2.31% 2.40%(c)
Ratio of net investment income to average net assets*.............. 2.34% 2.33% 2.52% 1.99%(c)
Portfolio turnover(d).............................................. 80.96% 73.38% 115.36% 56.55%
Average commission rate paid(e).................................... $0.0497 $0.0616
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
98
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
--------------------------------------------------------
FIDUCIARY SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 17.65 $ 15.13 $ 13.22 $ 13.21 $ 12.24
-------- -------- -------- -------- --------
Investment Activities
Net investment income................................ 0.36 0.40 0.40 0.39 0.43
Net realized and unrealized gains from investments... 4.89 3.22 2.28 0.01 0.97
-------- -------- -------- -------- --------
Total from Investment Activities................... 5.25 3.62 2.68 0.40 1.40
-------- -------- -------- -------- --------
Distributions
From net investment income........................... (0.36) (0.40) (0.40) (0.39) (0.43)
From net realized gains.............................. (0.61) (0.70) (0.37) -- --
-------- -------- -------- -------- --------
Total Distributions................................ (0.97) (1.10) (0.77) (0.39) (0.43)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD......................... $ 21.93 $ 17.65 $ 15.13 $ 13.22 $ 13.21
======== ======== ======== ======== ========
Total Return........................................... 30.90% 24.53% 21.04% 3.27% 11.56%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................... $649,007 $321,827 $170,919 $198,787 $153,144
Ratio of expenses to average net assets.............. 1.00% 0.98% 1.01% 0.98% 0.90%
Ratio of net investment income to average net
assets............................................. 1.91% 2.44% 2.85% 3.18% 3.37%
Ratio of expenses to average net assets*............. 1.00% 1.01% 1.01% 1.05% 1.07%
Ratio of net investment income to average net
assets*............................................ 1.91% 2.41% 2.85% 3.11% 3.20%
Portfolio turnover(a)................................ 28.18% 14.92% 4.03% 22.69% 7.53%
Average commission rate paid(b)...................... $ 0.0681 $ 0.0673
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
99
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
--------------------------------------------------
CLASS A SHARES
--------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $ 17.64 $ 15.11 $ 13.20 $ 13.20 $12.23
------- ------- ------- ------- ------
Investment Activities
Net investment income...................................... 0.31 0.38 0.03 0.36 0.40
Net realized and unrealized gains from investments......... 4.87 3.20 2.29 -- 0.98
------- ------- ------- ------- ------
Total from Investment Activities......................... 5.18 3.58 2.32 0.36 1.38
------- ------- ------- ------- ------
Distributions
From net investment income................................. (0.31) (0.35) (0.03) (0.34) (0.41)
In excess of net investment income......................... -- -- (0.01) (0.02) --
From net realized gains.................................... (0.61) (0.70) (0.37) -- --
------- ------- ------- ------- ------
Total Distributions...................................... (0.92) (1.05) (0.41) (0.36) (0.41)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD............................... $ 21.90 $ 17.64 $ 15.11 $ 13.20 $13.20
======= ======= ======= ======= ======
Total Return (Excludes Sales Charge)......................... 30.39% 24.23% 20.79% 2.95% 11.38%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $78,976 $44,284 $13,793 $12,054 $9,513
Ratio of expenses to average net assets.................... 1.25% 1.23% 1.26% 1.23% 1.11%
Ratio of net investment income to average net assets....... 1.65% 2.19% 2.61% 3.01% 3.32%
Ratio of expenses to average net assets*................... 1.34% 1.36% 1.36% 1.40% 1.43%
Ratio of net investment income to average net assets*...... 1.56% 2.06% 2.51% 2.84% 3.00%
Portfolio turnover(a)...................................... 28.18% 14.92% 4.03% 22.69% 7.53%
Average commission rate paid(b)............................ $0.0681 $0.0673
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
100
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
--------------------------------------
CLASS B SHARES
--------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------- ------- ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................... $ 17.68 $ 15.14 $13.23 $13.83
------- ------- ------ ------
Investment Activities
Net investment income................................................. 0.17 0.24 0.26 0.11
Net realized and unrealized gains (losses) from investments........... 4.89 3.23 2.29 (0.60)
------- ------- ------ ------
Total from Investment Activities.................................... 5.06 3.47 2.55 (0.49)
------- ------- ------ ------
Distributions
From net investment income............................................ (0.18) (0.23) (0.25) (0.11)
In excess of net investment income.................................... -- -- (0.02) --
From net realized gains............................................... (0.61) (0.70) (0.37) --
------- ------- ------ ------
Total Distributions................................................. (0.79) (0.93) (0.64) (0.11)
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD.......................................... $ 21.95 $ 17.68 $15.14 $13.23
======= ======= ====== ======
Total Return (Excludes Sales Charge).................................... 29.48% 23.41% 19.91% (3.37)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................................... $79,518 $29,169 $3,468 $1,714
Ratio of expenses to average net assets............................... 2.00% 1.98% 2.01% 1.95%(c)
Ratio of net investment income to average net assets.................. 0.89% 1.44% 1.88% 2.70%(c)
Ratio of expenses to average net assets*.............................. 2.00% 2.01% 2.02% 1.95%(c)
Ratio of net investment income to average net assets*................. 0.89% 1.41% 1.87% 2.70%(c)
Portfolio turnover(d)................................................. 28.18% 14.92% 4.03% 22.69%
Average commission rate paid (e)...................................... $0.0681 $0.0673
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not Annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
101
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
--------------------------------------------------------
FIDUCIARY SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 16.66 $ 14.03 $ 11.59 $ 11.92 $ 10.92
-------- -------- -------- -------- -------
Investment Activities
Net investment income.................................. 0.35 0.33 0.32 0.29 0.30
Net realized and unrealized gains (losses) from
investments.......................................... 5.27 3.16 2.59 (0.20) 1.13
-------- -------- -------- -------- -------
Total from Investment Activities..................... 5.62 3.49 2.91 0.09 1.43
-------- -------- -------- -------- -------
Distributions
From net investment income............................. (0.33) (0.33) (0.29) (0.29) (0.30)
In excess of net investment income..................... -- (0.01) (0.02) (0.04) --
From net realized gains................................ (0.15) (0.52) (0.16) (0.09) (0.13)
-------- -------- -------- -------- -------
Total Distributions.................................. (0.48) (0.86) (0.47) (0.42) (0.43)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD........................... $ 21.80 $ 16.66 $ 14.03 $ 11.59 $ 11.92
======== ======== ======== ======== =======
Total Return............................................. 34.30% 25.47% 25.79% 0.63% 13.04%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $480,819 $321,058 $234,895 $165,370 $96,446
Ratio of expenses to average net assets................ 0.30% 0.30% 0.33% 0.46% 0.50%
Ratio of net investment income to average net assets... 1.87% 2.18% 2.57% 2.44% 2.46%
Ratio of expenses to average net assets *.............. 0.61% 0.59% 0.66% 0.59% 0.87%
Ratio of net investment income to average net assets
*.................................................... 1.56% 1.89% 2.24% 2.31% 2.09%
Portfolio turnover(a).................................. 5.81% 9.08% 2.71% 11.81% 2.71%
Average commission rate paid(b)........................ $ 0.0449 $ 0.0490
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
102
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
--------------------------------------------------------
CLASS A SHARES
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 16.67 $ 14.02 $ 11.59 $ 11.91 $ 10.92
-------- -------- -------- -------- -------
Investment Activities
Net investment income.................................. 0.29 0.27 0.29 0.28 0.30
Net realized and unrealized gains (losses) from
investments.......................................... 5.28 3.18 2.58 (0.20) 1.10
-------- -------- -------- -------- -------
Total from Investment Activities..................... 5.57 3.45 2.87 0.08 1.40
-------- -------- -------- -------- -------
Distributions
From net investment income............................. (0.28) (0.27) (0.28) (0.27) (0.28)
In excess of net investment income..................... -- (0.01) -- (0.04) --
From net realized gains................................ (0.15) (0.52) (0.16) (0.09) (0.13)
-------- -------- -------- -------- -------
Total Distributions.................................. (0.43) (0.80) (0.44) (0.40) (0.41)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD........................... $ 21.81 $ 16.67 $ 14.02 $ 11.59 $ 11.91
======== ======== ======== ======== =======
Total Return (Excludes Sales Charge)..................... 33.94% 25.16% 25.43% 0.56% 12.75%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $ 98,338 $ 32,186 $ 3,003 $ 1,416 $ 512
Ratio of expenses to average net assets................ 0.55% 0.55% 0.56% 0.62% 0.52%
Ratio of net investment income to average net assets... 1.59% 1.93% 2.38% 2.37% 2.51%
Ratio of expenses to average net assets *.............. 0.95% 0.94% 1.01% 0.94% 0.99%
Ratio of net investment income to average net assets
*.................................................... 1.19% 1.54% 1.94% 2.05% 2.04%
Portfolio turnover(a).................................. 5.81% 9.08% 2.71% 11.81% 2.71%
Average commission rate paid(b)........................ $ 0.0449 $ 0.0490
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
103
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
--------------------------------------------
CLASS B SHARES
--------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------
1997 1996 1995 1994(a)
-------- -------- ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................. $ 16.68 $ 14.05 $11.61 $12.39
-------- -------- ------ ------
Investment Activities
Net investment income........................................... 0.16 0.16 0.18 0.09
Net realized and unrealized gains (losses) from investments..... 5.27 3.16 2.61 (0.78)
-------- -------- ------ ------
Total from Investment Activities.............................. 5.43 3.32 2.79 (0.69)
-------- -------- ------ ------
Distributions
From net investment income...................................... (0.16) (0.16) (0.19) (0.09)
In excess of net investment income.............................. -- (0.01) -- --
From net realized gains......................................... (0.15) (0.52) (0.16) --
-------- -------- ------ ------
Total Distributions........................................... (0.31) (0.69) (0.35) (0.09)
-------- -------- ------ ------
NET ASSET VALUE, END OF PERIOD.................................... $ 21.80 $ 16.68 $14.05 $11.61
======== ======== ====== ======
Total Return (Excludes Sales Charge).............................. 32.93% 24.05% 24.58% (5.57)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................... $168,699 $ 38,538 $1,408 $ 248
Ratio of expenses to average net assets......................... 1.30% 1.30% 1.34% 1.10% (c)
Ratio of net investment income to average net assets............ 0.83% 1.18% 1.60% 2.08% (c)
Ratio of expenses to average net assets*........................ 1.61% 1.59% 1.67% 1.15% (c)
Ratio of net investment income to average net assets*........... 0.52% 0.89% 1.27% 2.03% (c)
Portfolio turnover(d)........................................... 5.81% 9.08% 2.71% 11.81%
Average commission rate paid(e)................................. $ 0.0449 $ 0.0490
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
104
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
------------------------
FIDUCIARY SHARES
------------------------
MARCH 26,
YEAR ENDED 1996 TO
JUNE 30, JUNE 30,
1997 1996(a)
---------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................................. $ 10.39 $ 10.00
--------- --------
Investment Activities
Net investment income.............................................................. 0.11 0.03
Net realized and unrealized gains from investments................................. 2.85 0.39
--------- --------
Total from Investment Activities................................................. 2.96 0.42
--------- --------
Distributions
From net investment income......................................................... (0.11) (0.03)
From net realized gains............................................................ (1.73) --
--------- --------
Total Distributions.............................................................. (1.84) (0.03)
--------- --------
NET ASSET VALUE, END OF PERIOD....................................................... $ 11.51 $ 10.39
========= ========
Total Return......................................................................... 31.97% 10.49% (b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................................. $430,837 $191,212
Ratio of expenses to average net assets............................................ 0.98% 0.95% (d)
Ratio of net investment income to average net assets............................... 1.06% 1.13% (d)
Ratio of expenses to average net assets*........................................... 1.00% 1.04% (d)
Ratio of net investment income to average net assets*.............................. 1.04% 1.04% (d)
Portfolio turnover(e).............................................................. 113.17% 65.21%
Average commission rate paid(f).................................................... $ 0.0532 $ 0.0373
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period from
March 26, 1996 through June 30, 1996.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
105
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
------------------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------------------
SEVEN
MONTHS
YEAR ENDED ENDED YEAR ENDED NOVEMBER 30,
JUNE 30, JUNE 30, --------------------------------------------
1997 1996(a) 1995 1994 1993 1992
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............... $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42 $ 7.80
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income............................ 0.09 0.94 0.12 0.13 0.11 0.11
Net realized and unrealized gains (losses) from
investments.................................... 2.83 0.08 2.44 (0.56) 0.83 1.75
-------- -------- -------- -------- -------- --------
Total from Investment Activities............... 2.92 1.02 2.56 (0.43) 0.94 1.86
-------- -------- -------- -------- -------- --------
Distributions
From net investment income....................... (0.08) (0.94) (0.12) (0.14) (0.12) (0.10)
In excess of net investment income............... -- (0.01) -- -- -- --
From net realized gains.......................... (1.73) (0.83) (0.29) (0.45) (0.22) (0.14)
-------- -------- -------- -------- -------- --------
Total Distributions............................ (1.81) (1.78) (0.41) (0.59) (0.34) (0.24)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD..................... $ 11.50 $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42
======== ======== ======== ======== ======== ========
Total Return (Excludes Sales Charge)............... 31.53% 10.40%(b) 29.57% (4.32)% 10.13% 24.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................ $ 47,306 $ 35,984 $217,978 $173,198 $171,141 $133,614
Ratio of expenses to average net assets.......... 1.23% 0.97%(c) 0.95% 0.96% 0.96% 0.97%
Ratio of net investment income to average net
assets......................................... 0.83% 0.65%(c) 1.25% 1.34% 1.21% 1.25%
Ratio of expenses to average net assets*......... 1.34% 1.05%(c) 0.95% 0.96% 0.96% 0.97%
Ratio of net investment income to average net
assets*........................................ 0.72% 0.77%(c) 1.25% 1.34% 1.21% 1.25%
Portfolio turnover(d)............................ 113.17% 65.21% 77.00% 53.00% 66.00% 43.00%
Average commission rate paid(e).................. $ 0.0532 $ 0.0373
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Financial highlights for the periods prior to
March 26, 1996 represent the Paragon Value Growth Fund. The per share data
for the periods prior to March 26, 1996 have been restated to reflect the
impact of restatement of net asset value from $15.26 to $10.00 effective
March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
106
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
------------------------------------------------------
CLASS B SHARES
------------------------------------------------------
SEVEN
MONTHS
ENDED SEPTEMBER 9,
YEAR ENDED JUNE YEAR ENDED 1994 TO
JUNE 30, 30, NOVEMBER 30, NOVEMBER 30,
1997 1996(a) 1995 1994(b)
---------- ------- ------------ -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................... $ 10.39 $ 11.16 $ 9.01 $ 9.85
-------- ------- ------ -------
Investment Activities
Net investment income................................... 0.01 0.91 0.05 0.02
Net realized and unrealized gains (losses) from
investments........................................... 2.82 0.07 2.46 (0.84)
-------- ------- ------ -------
Total from Investment Activities...................... 2.83 0.98 2.51 (0.82)
-------- ------- ------ -------
Distributions
From net investment income.............................. (0.02) (0.91) (0.07) (0.02)
In excess of net investment income...................... -- (0.01) -- --
From net realized gains................................. (1.73) (0.83) (0.29) --
-------- ------- ------ -------
Total Distributions................................... (1.75) (1.75) (0.36) (0.02)
-------- ------- ------ -------
NET ASSET VALUE, END OF PERIOD............................ $ 11.47 $ 10.39 $11.16 $ 9.01
======== ======= ====== =======
Total Return (Excludes Sales Charge)...................... 30.52% 9.86%(c) 28.74% (8.31)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $ 10,517 $ 4,673 $2,923 $ 412
Ratio of expenses to average net assets................. 1.98% 1.56%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets.... 0.07% 0.13%(d) 0.38% 0.76%(d)
Ratio of expenses to average net assets*................ 2.00% 1.94%(d) 1.70% 1.71%(d)
Ratio of net investment income to average net assets*... 0.05% 0.05%(d) 0.38% 0.76%(d)
Portfolio turnover(e)................................... 113.17% 65.21% 77.00% 53.00%
Average commission rate paid(f)......................... $ 0.0532 $0.0373
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Financial highlights for the periods prior to
March 26, 1996 represent the Paragon Value Growth Fund. The per share data
for the periods prior to March 26, 1996 have been restated to reflect the
impact of restatement of net asset value from $15.21 to $10.00 effective
March 26, 1996.
(b) Class B Shares commenced offering September 9, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
107
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
------------------------------------------------------------
FIDUCIARY SHARES
------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 12.83 $ 12.87 $ 11.34 $ 11.64 $ 11.34
-------- -------- -------- -------- --------
Investment Activities
Net investment income.............................. 0.27 0.31 0.31 0.20 0.18
Net realized and unrealized gains (losses) from
investments...................................... 3.01 1.20 2.18 (0.01) 0.58
-------- -------- -------- -------- --------
Total from Investment Activities................. 3.28 1.51 2.49 0.19 0.76
-------- -------- -------- -------- --------
Distributions
From net investment income......................... (0.26) (0.31) (0.32) (0.19) (0.18)
From net realized gains............................ (1.06) (1.24) (0.64) (0.30) (0.28)
-------- -------- -------- -------- --------
Total Distributions.............................. (1.32) (1.55) (0.96) (0.49) (0.46)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 14.79 $ 12.83 $ 12.87 $ 11.34 $ 11.64
======== ======== ======== ======== ========
Total Return......................................... 27.10% 12.71% 23.42% (1.59)% 6.73%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $686,156 $584,527 $365,376 $169,127 $132,833
Ratio of expenses to average net assets............ 0.97% 0.97% 1.00% 0.95% 0.86%
Ratio of net investment income to average net
assets........................................... 1.99% 2.43% 2.74% 1.72% 1.62%
Ratio of expenses to average net assets*........... 0.97% 0.98% 1.01% 1.02% 1.12%
Ratio of net investment income to average net
assets*.......................................... 1.99% 2.42% 2.73% 1.65% 1.36%
Portfolio turnover(a).............................. 77.05% 186.84% 203.13% 111.72% 51.75%
Average commission rate paid(b).................... $ 0.0575 $ 0.0415
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
108
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
------------------------------------------------------
CLASS A SHARES
------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.87 $ 12.89 $ 11.34 $ 11.64 $11.33
------- ------- ------- ------- ------
Investment Activities
Net investment income..................................... 0.23 0.27 0.28 0.17 0.16
Net realized and unrealized gains (losses) from
investments............................................. 3.04 1.22 2.20 (0.01) 0.59
------- ------- ------- ------- ------
Total from Investment Activities........................ 3.27 1.49 2.48 0.16 0.75
------- ------- ------- ------- ------
Distributions
From net investment income................................ (0.23) (0.27) (0.27) (0.16) (0.16)
In excess of net investment income........................ -- -- (0.02) -- --
From net realized gains................................... (1.06) (1.24) (0.64) (0.30) (0.28)
------- ------- ------- ------- ------
Total Distributions..................................... (1.29) (1.51) (0.93) (0.46) (0.44)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.85 $ 12.87 $ 12.89 $ 11.34 $11.64
======= ======= ======= ======= ======
Total Return (Excludes Sales Charge)........................ 26.90% 12.40% 22.64% 1.35% 6.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $14,832 $ 9,380 $ 3,481 $ 698 $ 451
Ratio of expenses to average net assets................... 1.22% 1.22% 1.25% 1.20% 1.10%
Ratio of net investment income to average net assets...... 1.72% 2.18% 2.52% 1.57% 1.41%
Ratio of expenses to average net assets*.................. 1.31% 1.33% 1.37% 1.37% 1.50%
Ratio of net investment income to average net assets*..... 1.63% 2.07% 2.41% 1.40% 1.01%
Portfolio turnover(a)..................................... 77.05% 186.84% 203.13% 111.72% 51.75%
Average commission rate paid(b)........................... $0.0575 $0.0415
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
109
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
-------------------------------------------
CLASS B SHARES
-------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................ $ 12.98 $ 12.96 $ 11.41 $11.87
------- ------- ------- ------
Investment Activities
Net investment income............................................. 0.14 0.18 0.17 0.05
Net realized and unrealized gains (losses) from investments....... 3.04 1.26 2.19 (0.46)
------- ------- ------- ------
Total from Investment Activities................................ 3.18 1.44 2.36 (0.41)
------- ------- ------- ------
Distributions
From net investment income........................................ (0.15) (0.18) (0.17) (0.05)
From net realized gains........................................... (1.06) (1.24) (0.64) --
------- ------- ------- ------
Total Distributions............................................. (1.21) (1.42) (0.81) (0.05)
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD...................................... $ 14.95 $ 12.98 $ 12.96 $11.41
======= ======= ======= ======
Total Return (Excludes Sales Charge)................................ 25.86% 11.95% 22.28% 3.48% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................. $ 9,288 $ 4,135 $ 861 $ 182
Ratio of expenses to average net assets........................... 1.97% 1.97% 2.00% 2.00% (c)
Ratio of net investment income to average net assets.............. 0.96% 1.43% 1.74% 1.06% (c)
Ratio of expenses to average net assets*.......................... 1.97% 1.98% 2.01% 2.00% (c)
Ratio of net investment income to average net assets*............. 0.96% 1.42% 1.72% 1.06% (c)
Portfolio turnover(d)............................................. 77.05% 186.84% 203.13% 111.72%
Average commission rate paid(e)................................... $0.0575 $0.0415
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
110
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
------------------------------------------------------------
FIDUCIARY SHARES
------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 14.69 $ 13.20 $ 11.90 $ 12.76 $ 11.49
-------- -------- -------- -------- --------
Investment Activities
Net investment income.............................. 0.22 0.29 0.28 0.26 0.28
Net realized and unrealized gains from
investments...................................... 2.57 2.27 1.57 0.29 1.27
-------- -------- -------- -------- --------
Total from Investment Activities................. 2.79 2.56 1.85 0.55 1.55
-------- -------- -------- -------- --------
Distributions
From net investment income......................... (0.22) (0.29) (0.27) (0.26) (0.28)
From net realized gains............................ (1.61) (0.78) (0.28) (1.15) --
-------- -------- -------- -------- --------
Total Distributions.............................. (1.83) (1.07) (0.55) (1.41) (0.28)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 15.65 $ 14.69 $ 13.20 $ 11.90 $ 12.76
======== ======== ======== ======== ========
Total Return......................................... 20.56% 20.10% 16.03% 4.04% 13.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $562,302 $522,474 $448,530 $418,238 $211,785
Ratio of expenses to average net assets............ 0.98% 0.99% 1.00% 0.93% 0.89%
Ratio of net investment income to average net
assets........................................... 1.52% 2.04% 2.21% 2.14% 2.30%
Ratio of expenses to average net assets*........... 0.98% 1.00% 1.10% 0.98% 1.08%
Ratio of net investment income to average net
assets*.......................................... 1.52% 2.03% 2.11% 2.09% 2.11%
Portfolio turnover(a).............................. 92.66% 90.55% 176.66% 56.33% 108.79%
Average commission rate paid(b).................... $ 0.0601 $ 0.0576
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
111
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
-------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 14.72 $ 13.22 $ 11.91 $ 12.75 $ 11.49
------- ------- ------- ------- -------
Investment Activities
Net investment income.................................... 0.19 0.25 0.24 0.24 0.25
Net realized and unrealized gains from investments....... 2.57 2.28 1.59 0.30 1.26
------- ------- ------- ------- -------
Total from Investment Activities....................... 2.76 2.53 1.83 0.54 1.51
------- ------- ------- ------- -------
Distributions
From net investment income............................... (0.19) (0.25) (0.24) (0.23) (0.25)
From net realized gains.................................. (1.61) (0.78) (0.26) (1.10) --
In excess of net realized gains.......................... -- -- (0.02) (0.05) --
------- ------- ------- ------- -------
Total Distributions.................................... (1.80) (1.03) (0.52) (1.38) (0.25)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................. $ 15.68 $ 14.72 $ 13.22 $ 11.91 $ 12.75
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)....................... 20.21% 19.80% 15.43% 3.95% 13.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $23,909 $20,838 $13,560 $10,448 $ 3,435
Ratio of expenses to average net assets.................. 1.23% 1.24% 1.26% 1.18% 1.12%
Ratio of net investment income to average net assets..... 1.26% 1.79% 1.99% 2.00% 2.06%
Ratio of expenses to average net assets*................. 1.31% 1.35% 1.36% 1.33% 1.46%
Ratio of net investment income to average net assets*.... 1.18% 1.68% 1.89% 1.85% 1.72%
Portfolio turnover(a).................................... 92.66% 90.55% 176.66% 56.33% 108.79%
Average commission rate paid(b).......................... $0.0601 $0.0576
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
112
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
-------------------------------------------
CLASS B
-------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................ $ 14.69 $ 13.19 $ 11.90 $12.60
------- ------- ------- ------
Investment Activities
Net investment income............................................. 0.08 0.15 0.15 0.07
Net realized and unrealized gains (losses) from investments....... 2.55 2.27 1.58 (0.70)
------- ------- ------- ------
Total from Investment Activities................................ 2.63 2.42 1.73 (0.63)
------- ------- ------- ------
Distributions
From net investment income........................................ (0.07) (0.14) (0.15) (0.06)
In excess of net investment income................................ -- -- (0.01) (0.01)
From net realized gains........................................... (1.61) (0.78) (0.28) --
------- ------- ------- ------
Total Distributions............................................. (1.68) (0.92) (0.44) (0.07)
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD...................................... $ 15.64 $ 14.69 $ 13.19 $11.90
======= ======= ======= ======
Total Return (Excludes Sales Charge)................................ 19.19% 18.93% 14.92% (5.00)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................. $20,499 $16,305 $11,222 $5,356
Ratio of expenses to average net assets........................... 1.98% 1.99% 2.00% 1.96% (c)
Ratio of net investment income to average net assets.............. 0.51% 1.04% 1.26% 1.80% (c)
Ratio of expenses to average net assets*.......................... 1.98% 2.00% 2.01% 1.96% (c)
Ratio of net investment income to average net assets*............. 0.51% 1.03% 1.25% 1.80% (c)
Portfolio turnover(d)............................................. 92.66% 90.55% 176.66% 56.33%
Average commission rate paid(e)................................... $0.0601 $0.0576
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
113
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
-------------------------------------------------------------
FIDUCIARY SHARES
-------------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1997 1996 1995 1994 1993
---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 15.44 $ 13.47 $ 11.32 $ 10.92 $ 9.85
---------- -------- -------- -------- -------
Investment Activities
Net investment income.............................. 0.12 0.18 0.20 0.20 0.23
Net realized and unrealized gains (losses) from
investments...................................... 4.79 2.14 3.04 0.67 1.12
---------- -------- -------- -------- -------
Total from Investment Activities................. 4.91 2.32 3.24 0.87 1.35
---------- -------- -------- -------- -------
Distributions
From net investment income......................... (0.11) (0.18) (0.20) (0.20) (0.23)
From net realized gains............................ (0.80) (0.17) (0.89) (0.27) (0.05)
---------- -------- -------- -------- -------
Total Distributions.............................. (0.91) (0.35) (1.09) (0.47) (0.28)
---------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD....................... $ 19.44 $ 15.44 $ 13.47 $ 11.32 $ 10.92
========== ======== ======== ======== =======
Total Return......................................... 33.11% 17.36% 21.85% 8.04% 13.92%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $1,142,864 $745,986 $531,595 $150,035 $41,317
Ratio of expenses to average net assets............ 0.99% 0.96% 1.00% 0.78% 0.39%
Ratio of net investment income to average net
assets........................................... 0.69% 1.20% 1.72% 1.87% 2.24%
Ratio of expenses to average net assets*........... 0.99% 0.99% 1.00% 1.13% 1.43%
Ratio of net investment income to average net
assets*.......................................... 0.69% 1.17% 1.72% 1.52% 1.21%
Portfolio turnover(a).............................. 57.17% 35.51% 14.22% 9.04% 10.61%
Average commission rate paid(b).................... $ 0.0681 $ 0.0647
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
114
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
---------------------------------------------
CLASS A SHARES
---------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------
1997 1996 1995 1994(a)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................... $ 15.83 $ 13.83 $ 11.62 $ 11.78
-------- ------- ------- -------
Investment Activities
Net investment income............................................ 0.08 0.14 0.17 0.04
Net realized and unrealized gains (losses) from investments...... 4.88 2.17 3.10 (0.16)
-------- ------- ------- -------
Total from Investment Activities............................... 4.96 2.31 3.27 (0.12)
-------- ------- ------- -------
Distributions
From net investment income....................................... (0.07) (0.14) (0.16) (0.04)
In excess of net investment income............................... -- -- (0.01) --
From net realized gains.......................................... (0.80) (0.17) (0.89) --
-------- ------- ------- -------
Total Distributions............................................ (0.87) (0.31) (1.06) (0.04)
-------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD..................................... 19.92 $ 15.83 $ 13.83 $ 11.62
======== ======= ======= =======
Total Return (Excludes Sales Charge)............................... 32.57% 16.85% 21.52% (1.02)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................ $125,910 $75,114 $27,428 $ 368
Ratio of expenses to average net assets.......................... 1.24% 1.21% 1.26% 1.25% (c)
Ratio of net investment income to average net assets............. 0.44% 0.95% 1.49% 1.78% (c)
Ratio of expenses to average net assets*......................... 1.32% 1.34% 1.36% 1.35% (c)
Ratio of net investment income to average net assets*............ 0.36% 0.82% 1.39% 1.68% (c)
Portfolio turnover(d)............................................ 57.17% 35.51% 14.22% 9.04%
Average commission rate paid(e).................................. $ 0.0681 $0.0647
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on January 1, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
115
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
---------------------------------------------
CLASS B SHARES
---------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------
1997 1996 1995 1994(a)
-------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................ $ 15.63 $ 13.63 $ 11.47 $ 11.57
-------- ------- ------- -------
Investment Activities
Net investment income (loss)...................................... (0.04) 0.05 0.09 0.03
Net realized and unrealized gains (losses) from investments....... 4.82 2.17 3.06 (0.10)
-------- ------- ------- -------
Total from Investment Activities................................ 4.78 2.22 3.15 (0.07)
-------- ------- ------- -------
Distributions
From net investment income........................................ -- (0.05) (0.09) (0.03)
In excess of net investment income................................ -- -- (0.01) --
From net realized gains........................................... (0.80) (0.17) (0.89) --
-------- ------- ------- -------
Total Distributions............................................. (0.80) (0.22) (0.99) (0.03)
-------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD...................................... $ 19.61 $ 15.63 $ 13.63 $ 11.47
======== ======= ======= =======
Total Return (Excludes Sales Charge)................................ 31.74% 16.41% 20.65% (0.66)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................. $132,268 $56,261 $ 6,918 $ 334
Ratio of expenses to average net assets........................... 2.00% 1.96% 2.01% 1.99% (c)
Ratio of net investment income (loss) to average net assets....... (0.33)% 0.20% 0.74% 0.96% (c)
Ratio of expenses to average net assets*.......................... 2.00% 1.99% 2.01% 1.99% (c)
Ratio of net investment income (loss) to average net assets*...... (0.33)% 0.17% 0.74% 0.96% (c)
Portfolio turnover(d)............................................. 57.17% 35.51% 14.22% 9.04%
Average commission rate paid(e)................................... $ 0.0681 $0.0647
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
116
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
------------------------------------------------------------
FIDUCIARY SHARES
------------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 18.81 $ 18.40 $ 15.96 $ 16.96 $ 14.54
-------- -------- -------- -------- --------
Investment Activities
Net investment income.............................. 0.25 0.20 0.06 0.07 0.06
Net realized and unrealized gains (losses) from
investments...................................... 3.59 3.83 2.98 (0.05) 2.99
-------- -------- -------- -------- --------
Total from Investment Activities................. 3.84 4.03 3.04 0.02 3.05
-------- -------- -------- -------- --------
Distributions
From net investment income......................... (0.25) (0.20) (0.06) (0.07) (0.06)
In excess of net investment........................ (0.02) -- -- -- --
From net realized gains............................ (2.92) (3.42) (0.54) (0.95) (0.57)
-------- -------- -------- -------- --------
Total Distributions.............................. (3.19) (3.62) (0.60) (1.02) (0.63)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 19.46 $ 18.81 $ 18.40 $ 15.96 $ 16.96
======== ======== ======== ======== ========
Total Return......................................... 22.75% 24.63% 19.75% (0.16)% 21.36%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $623,911 $532,525 $413,518 $389,567 $232,898
Ratio of expenses to average net assets............ 0.99% 1.00% 0.98% 0.98% 0.89%
Ratio of net investment income to average net
assets........................................... 1.32% 1.15% 0.38% 0.42% 0.41%
Ratio of expenses to average net assets*........... 0.99% 1.01% 0.98% 1.03% 1.11%
Ratio of net investment income to average net
assets*.......................................... 1.32% 1.14% 0.38% 0.37% 0.19%
Portfolio turnover(a).............................. 301.35% 435.30% 132.63% 70.67% 64.64%
Average commission rate paid(b).................... $ 0.0386 $ 0.0451
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(b) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
117
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
-------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 18.76 $ 18.36 $ 15.93 $ 16.96 $ 14.54
------- ------- ------- ------- -------
Investment Activities
Net investment income.................................... 0.21 0.17 0.02 0.04 0.03
Net realized and unrealized gains (losses) from
investments............................................ 3.58 3.80 2.98 (0.08) 3.00
------- ------- ------- ------- -------
Total from Investment Activities....................... 3.79 3.97 3.00 (0.04) 3.03
------- ------- ------- ------- -------
Distributions
From net investment income............................... (0.24) (0.15) (0.01) (0.03) (0.04)
In excess of net investment income....................... (0.02) -- (0.02) (0.01) --
From net realized gains.................................. (2.92) (3.42) (0.54) (0.95) (0.57)
------- ------- ------- ------- -------
Total Distributions.................................... (3.18) (3.57) (0.57) (0.99) (0.61)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................. $ 19.37 $ 18.76 $ 18.36 $ 15.93 $ 16.96
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)....................... 22.52% 24.32% 19.50% (0.52)% 21.70%(a)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $43,370 $28,052 $11,178 $ 8,097 $ 5,757
Ratio of expenses to average net assets.................. 1.25% 1.25% 1.23% 1.22% 1.11%(a)
Ratio of net investment income to average net assets..... 0.92% 0.90% 0.12% 0.27% 0.25%(a)
Ratio of expenses to average net assets*................. 1.34% 1.36% 1.33% 1.38% 1.48%(a)
Ratio of net investment income (loss) to average net
assets*................................................ 0.83% 0.79% 0.02% 0.11% (0.12)%(a)
Portfolio turnover(b).................................... 301.35% 435.30% 132.63% 70.67% 64.64%
Average commission rate paid(c).......................... $0.0386 $0.0451
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(c) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
118
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
--------------------------------------------
CLASS B SHARES
--------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................. $ 18.43 $ 18.14 $ 15.85 $ 17.44
------- ------- ------- -------
Investment Activities
Net investment income (loss)....................................... 0.11 0.09 (0.07) (0.02)
Net realized and unrealized gains (losses) from investments........ 3.44 3.69 2.90 (1.56)
------- ------- ------- -------
Total from Investment Activities................................. 3.55 3.78 2.83 (1.58)
------- ------- ------- -------
Distributions
From net investment income......................................... (0.22) (0.07) -- (0.01)
In excess of net investment income................................. (0.02) -- -- --
From net realized gains............................................ (2.92) (3.42) (0.54) --
------- ------- ------- -------
Total Distributions.............................................. (3.16) (3.49) (0.54) (0.01)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD....................................... $ 18.82 $ 18.43 $ 18.14 $ 15.85
======= ======= ======= =======
Total Return (Excludes Sales Charge)................................. 21.73% 23.53% 18.47% (9.07)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................. $37,409 $12,910 $ 2,787 $ 1,131
Ratio of expenses to average net assets............................ 2.00% 2.00% 1.98% 2.12% (c)
Ratio of net investment income (loss) to average net assets........ 0.01% 0.15% (0.63)% (0.55)% (c)
Ratio of expenses to average net assets*........................... 2.00% 2.01% 1.98% 2.12% (c)
Ratio of net investment income (loss) to average net assets*....... 0.01% 0.14% (0.63)% (0.55)% (c)
Portfolio turnover(d).............................................. 301.35% 435.30% 132.63% 70.67%
Average commission rate paid(e).................................... $0.0386 $0.0451
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
119
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GULF SOUTH GROWTH FUND
------------------------
FIDUCIARY SHARES
------------------------
MARCH 26,
YEAR ENDED 1996 TO
JUNE 30, JUNE 30,
1997 1996(a)
----------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................................. $ 10.75 $ 10.00
------- -------
Investment Activities
Net investment income (loss)........................................................ (0.02) --
Net realized and unrealized gains from investments.................................. 1.31 0.78
------- -------
Total from Investment Activities.................................................. 1.29 0.78
------- -------
Distributions
From net realized gains............................................................. (1.10) (0.03)
------- -------
Total Distributions............................................................... (1.10) (0.03)
------- -------
NET ASSET VALUE, END OF PERIOD........................................................ $ 10.94 $ 10.75
======= =======
Total Return.......................................................................... 13.44% 13.39%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $78,318 $83,371
Ratio of expenses to average net assets............................................. 1.02% 0.96%(d)
Ratio of net investment income (loss) to average net assets......................... (0.16)% (0.16)%(d)
Ratio of expenses to average net assets*............................................ 1.12% 1.05%(d)
Ratio of net investment income (loss) to average net assets*........................ (0.26)% (0.25)%(d)
Portfolio turnover(e)............................................................... 92.01% 59.57%
Average commission rate paid(f)..................................................... $0.0676 $0.0685
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period from
March 26, 1996 through June 30, 1996.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
120
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GULF SOUTH GROWTH FUND
---------------------------------------------------------------------
CLASS A SHARES
---------------------------------------------------------------------
SEVEN
MONTHS
YEAR ENDED ENDED YEAR ENDED NOVEMBER 30,
JUNE 30, JUNE 30, ----------------------------------------
1997 1996(a) 1995 1994 1993 1992
----------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48 $ 7.38
--------- -------- ------- ------- ------- -------
Investment Activities
Net investment income (loss)............... (0.04) (0.07) (0.04) (0.04) (0.02) 0.01
Net realized and unrealized gains (losses)
from investments......................... 1.35 1.40 2.35 (0.63) 0.88 2.10
--------- -------- ------- ------- ------- -------
Total from Investment Activities......... 1.31 1.33 2.31 (0.67) 0.86 2.11
--------- -------- ------- ------- ------- -------
Distributions
From net investment income................. -- -- -- -- (0.01) (0.01)
From net realized gains.................... (1.10) (2.10) (0.17) (0.08) (0.22) --
--------- -------- ------- ------- ------- -------
Total Distributions...................... (1.10) (2.10) (0.17) (0.08) (0.23) (0.01)
--------- -------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............... $ 10.94 $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48
========== ======== ======= ======= ======= =======
Total Return (Excludes Sales Charge)......... 13.52% 12.85%(b) 25.07% (6.66)% 9.10% 28.59%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $17,299 $ 18,356 $95,467 $77,540 $74,982 $55,719
Ratio of expenses to average net assets.... 1.27% 1.05%(c) 1.03% 1.00% 1.01% 1.00%
Ratio of net investment income (loss) to
average net assets....................... (0.41)% (0.33)%(c) (0.36)% (0.38)% (0.21)% 0.15%
Ratio of expenses to average net assets*... 1.45% 1.37%(c) 1.03% 1.00% 1.01% 1.00%
Ratio of net investment income (loss) to
average net assets*...................... (0.59)% (0.35)%(c) (0.36)% (0.30)% (0.21)% 0.15%
Portfolio turnover(d)...................... 92.01% 59.57% 65.00% 51.00% 59.00% 42.00%
Average commission rate paid(e)............ $0.0676 $ 0.0685
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Financial highlights for the periods
prior to March 26, 1996 represent the Paragon Gulf South Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.70 to $10.00
effective March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
121
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GULF SOUTH GROWTH FUND
-------------------------------------------------------------
CLASS B SHARES
-------------------------------------------------------------
SEVEN
MONTHS SEPTEMBER 12,
YEAR ENDED ENDED YEAR ENDED 1994 TO
JUNE 30, JUNE 30, NOVEMBER 30, NOVEMBER 30,
1997 1996(a) 1995 1994(b)
----------- --------- ------------- --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 10.72 $ 11.56 $ 9.47 $ 10.40
------- ------- ------- --------
Investment Activities
Net investment loss................................ (0.10) (0.06) (0.07) (0.01)
Net realized and unrealized gains (losses)
from investments................................. 1.32 1.35 2.33 (0.92)
------- ------- ------- --------
Total from Investment Activities................. 1.22 1.29 2.26 (0.93)
------- ------- ------- --------
Distributions
From net realized gains............................ (1.10) (2.13) (0.17) --
------- ------- ------- --------
Total Distributions.............................. (1.10) (2.13) (0.17) --
------- ------- ------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 10.84 $ 10.72 $ 11.56 $ 9.47
======= ======= ======= ========
Total Return (Excludes Sales Charge)................. 12.74% 12.47%(c) 24.21% (9.08)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $ 3,835 $ 2,545 $ 1,814 $ 231
Ratio of expenses to average net assets............ 2.02% 1.87%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average
net assets....................................... (1.16)% (1.10)%(d) (1.16)% (0.90)%(d)
Ratio of expenses to average net assets*........... 2.12% 1.92%(d) 1.78% 1.75%(d)
Ratio of net investment income (loss) to average
net assets*...................................... (1.26)% (1.15)%(d) (1.16)% (0.90)%(d)
Portfolio turnover(e).............................. 92.01% 59.57% 65.00% 51.00%
Average commission rate paid(f).................... $0.0676 $0.0685
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Financial highlights for the periods
prior to March 26, 1996 represent the Paragon Gulf South Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.48 to $10.00
effective March 26, 1996.
(b) Class B Shares commenced offering September 12, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
122
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
-----------------------------------------------------------
FIDUCIARY SHARES
-----------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 15.17 $ 13.93 $ 13.46 $ 11.80 $10.00
-------- -------- -------- -------- ------
Investment Activities
Net investment income............................... 0.15 0.11 0.13 0.11 0.06
Net realized and unrealized gains from
investments....................................... 2.02 1.43 0.46 1.68 1.75
-------- -------- -------- -------- ------
Total from Investment Activities.................. 2.17 1.54 0.59 1.79 1.81
-------- -------- -------- -------- ------
Distributions
From net investment income.......................... (0.17) (0.16) (0.08) (0.11) (0.01)
In excess of net investment income.................. (0.13) (0.02) -- -- --
From net realized gains............................. (0.15) (0.12) (0.04) (0.01) --
In excess of net realized gains..................... -- -- -- (0.01) --
-------- -------- -------- -------- ------
Total Distributions............................... (0.45) (0.30) (0.12) (0.13) (0.01)
-------- -------- -------- -------- ------
NET ASSET VALUE, END OF PERIOD........................ $ 16.89 $ 15.17 $ 13.93 $ 13.46 $11.80
======== ======== ======== ======== ======
Total Return.......................................... 14.64% 11.22% 4.20% 15.44% 26.96% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................... $449,949 $347,790 $218,299 $145,640 $35,384
Ratio of expenses to average net assets............. 0.86% 0.97% 1.04% 1.02% 1.22% (b)
Ratio of net investment income to average net
assets............................................ 1.00% 1.04% 1.25% 1.27% 1.37% (b)
Ratio of expenses to average net assets*............ 0.86% 1.00% 1.04% 1.02% 2.34% (b)
Ratio of net investment income to average net
assets*........................................... 1.00% 1.01% 1.25% 1.27% 0.25% (b)
Portfolio turnover(c)............................... 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d)..................... $ 0.0034 $ 0.0022
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Fiduciary Shares commenced offering on April 5, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
123
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
------------------------------------------------------
CLASS A SHARES
------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 15.16 $ 13.92 $13.49 $11.80 $11.74
------- ------- ------ ------ -------
Investment Activities
Net investment income..................................... 0.11 0.14 0.12 0.09 0.02
Net realized and unrealized gains from investments........ 2.03 1.40 0.43 1.67 0.04
------- ------- ------ ------ -------
Total from Investment Activities........................ 2.14 1.54 0.55 1.76 0.06
------- ------- ------ ------ -------
Distributions
From net investment income................................ (0.13) (0.16) (0.08) (0.05) --
In excess of net investment income........................ (0.10) (0.02) -- -- --
From net realized gains................................... (0.15) (0.12) (0.04) (0.02) --
------- ------- ------ ------ -------
Total Distributions..................................... (0.38) (0.30) (0.12) (0.07) --
------- ------- ------ ------ -------
NET ASSET VALUE, END OF PERIOD.............................. $ 16.92 $ 15.16 $13.92 $13.49 $11.80
======= ======= ====== ====== =======
Total Return (Excludes Sales Charge)........................ 14.31% 11.20% 3.87% 15.18% 2.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $12,562 $10,789 $5,028 $2,395 $ 153
Ratio of expenses to average net assets................... 1.11% 1.22% 1.28% 1.26% 1.47%(b)
Ratio of net investment income to average net assets...... 0.73% 0.79% 1.09% 1.15% 2.10%(b)
Ratio of expenses to average net assets*.................. 1.19% 1.35% 1.38% 1.36% 2.35%(b)
Ratio of net investment income to average net assets*..... 0.65% 0.66% 0.99% 1.05% 1.22%(b)
Portfolio turnover(c)..................................... 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid(d)........................... $0.0034 $0.0022
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on April 2, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
124
<PAGE>
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
------------------------------------------
CLASS B SHARES
------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------
1997 1996 1995 1994(a)
------- ------- ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................. $ 14.79 $ 13.73 $13.40 $13.00
------- ------- ------ ------
Investment Activities
Net investment income............................................... 0.09 0.03 0.03 0.06
Net realized and unrealized gains from investments.................. 1.86 1.32 0.41 0.34
------- ------- ------ ------
Total from Investment Activities.................................. 1.95 1.35 0.44 0.40
------- ------- ------ ------
Distributions
From net investment income.......................................... (0.08) (0.15) (0.07) --
In excess of net investment income.................................. (0.07) (0.02) -- --
From net realized gains............................................. (0.15) (0.12) (0.04) --
------- ------- ------ ------
Total Distributions............................................... (0.30) (0.29) (0.11) --
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD........................................ $ 16.44 $ 14.79 $13.73 $13.40
======= ======= ====== ======
Total Return (Excludes Sales Charge).................................. 13.37% 9.97% 3.17% 3.23% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................... $10,033 $ 5,856 $3,687 $1,872
Ratio of expenses to average net assets............................. 1.86% 1.97% 2.04% 2.00% (c)
Ratio of net investment income to average net assets................ 0.08% 0.04% 0.25% 1.37% (c)
Ratio of expenses to average net assets*............................ 1.86% 2.00% 2.04% 2.00% (c)
Ratio of net investment income to average net assets*............... 0.08% 0.01% 0.25% 1.37% (c)
Portfolio turnover(d)............................................... 9.61% 6.28% 4.67% 7.74%
Average commission rate paid(e)..................................... $0.0034 $0.0022
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
125
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Asset Allocation Fund, the Income Equity Fund, the Equity Index Fund, the Value
Growth Fund, the Large Company Value Fund, the Disciplined Value Fund, the Large
Company Growth Fund, the Growth Opportunities Fund, the Gulf South Growth Fund
and the International Equity Index Fund (ten series of The One Group Family of
Mutual Funds), including the schedules of portfolio investments, as of June 30,
1997, and the related statements of operations, statements of changes in net
assets and the financial highlights for each period presented except as noted in
the next paragraph. These financial statements and financial highlights are the
responsibility of The One Group Family of Mutual Funds' management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
The Large Company Growth Fund's financial highlights for the year ended June 30,
1993 were audited by other auditors, whose report dated August 25, 1993
expressed an unqualified opinion on the financial highlights. The Value Growth
Fund's statement of changes in net asset for the year ended November 30, 1995
and the financial highlights for each of the four years in the period ended
November 30, 1995 were audited by other auditors, whose report dated January 19,
1996 expressed an unqualified opinion on those financial statements and
financial highlights. The Gulf South Growth Fund's statement of changes in net
assets for the year ended November 30, 1995 and the financial highlights for
each of the four years in the period ended November 30, 1995 were audited by
other auditors, whose report dated January 19, 1996 expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above, except as noted in the second paragraph present fairly, in all material
respects, the financial position of the Asset Allocation Fund, the Income Equity
Fund, the Equity Index Fund, the Value Growth Fund, the Large Company Value
Fund, the Disciplined Value Fund, the Large Company Growth Fund, the Growth
Opportunities Fund, the Gulf South Growth Fund and the International Equity
Index Fund as of June 30, 1997, the results of their operations, the changes in
their net assets and the financial highlights for the periods indicated herein,
in conformity with generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
126
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (6.7%):
$ 4,053 NAL, Series 96-4, 6.90%,
12/15/00(b)...................... $ 4,030
810 Case Equipment Loan Trust, Series
1996-B, A2, 6.25%,
9/15/03.......................... 814
5,000 MBNA Master Credit Card Trust,
Series 1997-E, Class B, 6.10%,
9/15/04*......................... 4,984
--------
Total Asset Backed Securities 9,828
--------
COMMERCIAL PAPER (7.3%):
5,600 Columbus Southern Power, 5.80%,
7/14/97.......................... 5,588
5,100 Comdisco, 5.85%, 7/23/97........... 5,082
--------
Total Commercial Paper 10,670
--------
CORPORATE BONDS (0.7%):
Yankee & Eurodollar (0.7%):
1,000 United Mexican States, 7.88%,
8/6/01*.......................... 1,001
--------
Total Corporate Bonds 1,001
--------
OTHER MORTGAGE BACKED SECURITIES (12.1%):
983 BHN, Series 1997-1, Class A1,
7.14%, 3/25/11*.................. 984
1,570 Chemical Mortgage Acceptance Corp.,
1988-2, Class A, 7.52%,
5/25/18*......................... 1,615
3,263 Glendale Federal Bank, Series
1990-1, Class A, 7.33%,
10/25/29*........................ 3,335
3,241 Morgan Stanley Capital Issue,
Series 97-C1, Class A2, 6.08%,
8/15/06*......................... 3,239
2,000 Nomura Mortgage Capital Corp.,
Series 1990-1 H, 7.00%,
6/17/20.......................... 2,010
1,000 Prudential Home Mortgage
Securities, Series 1992-45, Class
A4, 6.50%, 1/25/00............... 1,002
461 Ryland Mortgage Securities Corp.,
Series 1991-7, Class A1, 6.84%,
6/25/21*......................... 461
1,752 Sears Mortgage Securities Corp.
Services, Series 1992-18, Class
A3, 7.69%, 9/25/22*.............. 1,787
2,000 Structured Asset Securities Corp.,
Series 1996-C1, Class C, 5.97%,
11/15/26, 144A................... 2,000
1,284 Structured Asset Securities Corp.,
Series 97-1, 6.76%, 2/25/27*..... 1,298
--------
Total Other Mortgage Backed Securities 17,731
--------
U.S. GOVERNMENT AGENCY MORTGAGES (72.9%):
Federal Home Loan Mortgage Corp. (14.1%):
2,820 6.00%, 10/1/00, Gold Pool
#G50424.......................... 2,791
1,050 7.50%, 7/15/16, CMO, Series 1106,
Class E.......................... 1,069
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
$ 2,589 7.87%, 5/1/18, Pool #840160, 1 Year
CMT ARM(b)*...................... $ 2,710
572 6.74%, 12/1/21, Pool #645083, 1
Year CMT ARM*.................... 580
4,894 6.20%, 12/15/23, Series 1637 LG,
CMO*............................. 4,811
3,142 9.00%, 9/1/25, Gold #C00387........ 3,333
5,406 6.45%, 6/1/26, Pool #785586, 1 Year
CMT ARM(b)*...................... 5,366
--------
20,660
--------
Federal National Mortgage Assoc. (45.1%):
725 7.00%, 3/25/98, Series 1993-112 EA,
CMO.............................. 725
399 6.50%, 11/1/03, Pool #44174........ 399
1,119 6.63%, 3/1/17, Pool #47109, 1 Year
CMT ARM*......................... 1,137
1,843 7.30%, 5/1/18, Pool #075505,
6 Month T-Bill ARM*.............. 1,900
554 6.74%, 6/1/18, Pool #70793, 6 Month
T-Bill ARM....................... 573
2,491 7.50%, 1/1/20, Pool #90031, 1 Year
CMT ARM*......................... 2,588
1,828 6.25%, 1/25/20, Series 1993-102G,
CMO.............................. 1,797
6,486 7.55%, 7/1/20, Pool #133558, 1 Year
CMT ARM*(b)...................... 6,736
3,198 7.31%, 12/1/20, Pool #116590, 1
Year CMT ARM*.................... 3,308
3,457 6.51%, 12/25/20, Series 1990-145,
Class A, CMO(b).................. 3,460
1,857 7.31%, 4/1/21, Pool #70983, 1 Year
CMT ARM*......................... 1,928
1,424 9.00%, 8/1/21, Pool #348983........ 1,487
1,197 7.95%, 11/1/21, Pool #124510, 1
Year CMT ARM*.................... 1,258
472 8.00%, 11/1/22, Pool #193013, 1
Year CMT ARM*.................... 489
3,159 7.14%, 3/1/23, Pool #202670,
6 Month CD ARM*.................. 3,298
1,876 7.61%, 11/1/23, Pool #241828,
6 Month CD ARM*.................. 1,977
651 8.50%, 7/1/24, Pool #342036........ 676
1,563 8.50%, 10/1/24, Pool #345876....... 1,623
1,812 9.00%, 4/1/25, Pool #370122........ 1,894
3,567 6.22%, 7/1/25, Pool #326092, 1 Year
CMT ARM*......................... 3,683
2,087 9.00%, 8/1/25, Pool #361354........ 2,181
3,273 5.73% 11/1/26, Pool #363030, 1 Year
CMT ARM*......................... 3,343
57 6.00%, 2/20/27, Pool #80045........ 57
</TABLE>
Continued
16
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 4,761 6.32%, 3/18/27, Series 1997-7 FB,
CMO*............................. $ 4,777
4,810 7.24%, 7/1/27, Pool #70179, 1 Year
CMT ARM*......................... 4,984
4,828 6.01%, 3/15/27, Pool #67694, COFI
ARM*............................. 4,773
5,139 7.63%, 1/1/31, Pool #124945, 1 Year
CMT ARM*(b)...................... 5,390
--------
66,441
--------
Government National Mortgage Assoc. (13.7%):
2,461 9.00% 11/15/24, Pool #780029....... 2,641
3,263 6.50%, 7/20/26, Pool #8927, 1 Year
CMT ARM*......................... 3,341
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 5,000 6.50%, 1 Year CMT ARM, TBA......... $ 5,058
9,000 6.00%, 1 Year CMT ARM, TBA......... 9,011
--------
20,051
--------
Total U.S. Government Agency Mortgages 107,152
--------
REPURCHASE AGREEMENTS (11.8%):
17,390 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $17,802
various U.S. Government
Securities,
5.75%-6.00%, 6/30/99-10/31/00,
market value $17,738)............ 17,390
--------
Total Repurchase Agreements 17,390
--------
Total (Cost--$163,219) (a) $163,772
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $146,874.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $ 700
Unrealized depreciation.................................................. (147)
------
Net unrealized appreciation.............................................. $ 553
======
</TABLE>
(b) Serves as collateral for futures contracts.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1997.
At June 30, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
# OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
--------- ---------------------------------- --------- -------
<C> <S> <C> <C>
SHORT CONTRACTS
35 U.S. 5 Year Note September, 1997 $ 3,704 $3,706
80 U.S. 2 Year Note September, 1997 16,458 16,481
--------- -------
$20,162 $20,187
======== =======
</TABLE>
ARM Adjustable Rate Mortgage
CD Certificate of Deposit
CMO Collateralized Mortgage Obligation
CMT Collateralized Mortgage Trust
COFI Cost of Funds Index
TBA To be announced
See notes to financial statements.
17
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (17.6%):
$ 3,749 Bay View Auto Trust, Series 97-RA1,
Class A1, 6.29%, 12/15/01........ $ 3,751
9,171 Case Equipment Loan Trust, 96-A,
Class A2, 5.50%, 2/15/03......... 9,109
1,262 CIT Group Securitization Corp.,
Series 1995-1, Class A1, 7.70%,
8/15/20.......................... 1,276
4,986 Consumer Portfolio Services, Series
1997-2 A, 6.65%,
10/15/02......................... 5,003
4,332 Countrywide Asset-Backed
Certificate, 6.53%, 2/25/14...... 4,331
6,938 DVI Equipment Receivables Trust,
Series 1997-A, Class A, 6.45%,
1/15/04.......................... 6,944
2,887 EQCC Home Equity Loan Trust,
1996-3, Class A3, 6.20%,
7/15/05.......................... 2,892
7,889 Fifth Third Auto Grantor Trust,
1996-A, Class A, 6.20%,
9/15/01.......................... 7,916
6,490 Fifth Third Auto Grantor Trust,
1996-B, Class A, 6.45% 3/15/02... 6,535
5,000 Ford Motor Credit Auto Loan Master,
1995-1, Class A, 6.50%,
8/15/02.......................... 4,997
6,500 Metris Mastertrust, 7.11%,
10/1/05.......................... 6,547
4,053 NAL, Series 96-4, 6.90%,
12/15/00......................... 4,030
7,000 National Premier Funding, Series
1995-6, 7.00%, 6/1/99............ 7,024
5,225 Navistar Financial Corp Owner
Trust, 1996-B, Class A2, 5.93%,
11/20/99......................... 5,234
14,280 Newcourt Receivables Trust, 1996-3,
Class A, 6.24%, 12/20/04......... 14,254
11,375 Olympic Automobile Receivables
Trust, 1996-D, Class A2, 5.75%,
4/15/00.......................... 11,365
1,810 Union Federal Savings Bank Trust,
Series 1993-C, 4.88%, 2/15/00.... 1,797
969 Union Federal Savings Bank Trust,
Series 1994 A A, 5.08%,
5/15/00.......................... 964
--------
Total Asset Backed Securities 103,969
--------
CORPORATE BONDS (12.5%):
Banking (0.8%):
5,000 Shinhan Bank, 7.25%, 6/26/02,
144A............................. 4,971
--------
Banking, Finance & Insurance (8.5%):
3,000 Avco Financial Services, 7.25%,
7/15/99.......................... 3,056
7,000 Ford Motor Credit Corp., 8.38%,
1/15/00.......................... 7,306
7,000 Goldman Sachs Group, 7.80%,
7/15/02, 144A.................... 7,280
10,000 Greenwich Capital, 7.04%, 12/13/99,
Private Placement................ 9,983
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Banking, Finance & Insurance, continued:
$ 4,500 Lehman Brothers Holdings, Inc.,
8.88%, 11/1/98................... $ 4,651
5,000 Lehman Brothers, Inc., 7.63%,
8/1/98........................... 5,076
3,000 Lehman Brothers, Inc., 10.00%,
5/15/99.......................... 3,184
4,000 Lehman Brothers, Inc., 9.88%,
10/15/00......................... 4,355
5,000 Visa International, 6.72%, 2/4/02,
144A............................. 4,970
--------
49,861
--------
Industrial Goods & Services (3.2%):
2,000 Columbia Pictures Entertainment,
Inc., 9.88%, 2/1/98.............. 2,036
5,000 General Motors Corp., 9.63%,
12/1/00.......................... 5,450
1,000 IBM, 6.38%, 11/1/97................ 1,002
5,000 Sears Robuck Co., 6.69%, 8/13/01... 4,981
5,000 SK Telecom, 7.75%, 4/29/04......... 5,088
--------
18,557
--------
Total Corporate Bonds 73,389
--------
OTHER MORTGAGE BACKED SECURITIES (2.6%):
5,150 Evans Withycombe Finance Trust,
Series 1, Class A1, 7.98%,
8/1/01........................... 5,364
5,000 Nomura Mortgage Capital Corp.,
Series 90-1, Class H, 7.00%,
6/17/20.......................... 5,025
4,745 Prudential Home Mortgage
Securities, Series 93-17, Class
A1, 6.50%,
5/25/00.......................... 4,693
--------
Total Other Mortgage Backed Securities 15,082
--------
U.S. GOVERNMENT AGENCY MORTGAGES (37.6%):
Federal Home Loan Mortgage Corp. (16.4%):
2,043 6.50%, 1/1/01, Pool #M8038......... 2,019
10,090 6.50%, 5/1/02, Pool #G50444........ 10,056
386 9.00%, 12/1/05, Pool #G00005....... 402
377 9.00%, 1/1/06, Pool #G00012........ 392
739 8.00%, 10/1/06, Pool #G00052....... 760
2,354 7.00%, 3/1/07, Pool #G34594........ 2,352
2,885 7.50%, 4/1/07, Pool #G00084........ 2,930
2,139 7.00%, 4/1/07, Pool #G00087........ 2,137
3,511 7.50%, 11/1/07, Pool #E00165....... 3,564
5,166 8.50%, 2/1/08, Gold Pool #10133.... 5,344
2,292 7.00%, 12/1/08, Pool #E20065....... 2,299
2,736 8.00%, 1/1/10, Pool #G00355........ 2,814
8,058 8.00%, 2/1/10, Pool #G10328........ 8,290
10,028 7.00%, 10/1/10, Gold Pool
#E61709.......................... 10,075
13,727 7.00%, 5/1/11, Pool #E20241........ 13,732
10,000 5.25%, 9/15/15, REMIC/CMO, Series
1638, Class BC................... 9,904
</TABLE>
Continued
18
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
$13,209 8.25%, 12/15/16, REMIC/CMO, Series
1770, Class PD................... $ 13,604
1,524 7.25%, 4/15/18, Series 1254 F,
CMO.............................. 1,523
4,834 6.68%, 10/1/26, Pool #785652....... 4,907
--------
97,104
--------
Federal National Mortgage Assoc. (12.7%):
10,000 5.64%, 2/20/01, Callable 2/20/98
@100............................. 9,737
15,659 7.00%, 7/17/05, Series 97-26 Gd.... 15,801
228 9.00%, 9/1/05, Pool #50340......... 238
22,178 6.60%, 10/18/05, 97-26 B........... 22,053
235 9.00%, 11/1/05, Pool #50361........ 245
258 8.50%, 4/1/06, Pool #116875........ 267
7,593 7.00%, 6/1/10, Pool #315928........ 7,621
6,639 6.50%, 9/1/10, Pool #325479........ 6,535
5,228 6.50%, 10/1/10, Pool #250377....... 5,146
3,310 7.00%, 11/1/10, Pool #250387....... 3,323
4,044 7.50%, 2/1/11, Pool #303755........ 4,105
173 6.00%, 9/25/18, REMIC/CMO, Series
1989-94, Class E................. 172
--------
75,243
--------
Government National Mortgage Assoc. (3.6%):
4 8.00%, 2/15/02, Pool #192917....... 4
22 8.00%, 3/15/02, Pool #209172....... 23
5 9.00%, 6/15/02, Pool #229311....... 5
79 9.00%, 10/15/02, Pool #229569...... 83
16 8.00%, 6/15/05, Pool #28827........ 16
12 9.00%, 9/15/05, Pool #292569....... 13
69 9.00%, 10/15/05, Pool #292589...... 72
16 8.00%, 5/15/06, Pool #303851....... 17
7 8.00%, 7/15/06, Pool #307231....... 7
46 8.00%, 8/15/06, Pool #311166....... 48
41 8.00%, 9/15/06, Pool #311301....... 42
338 8.00%, 10/15/06, Pool #316915...... 349
436 8.00%, 11/15/06, Pool #312210...... 450
154 8.00%, 11/15/06, Pool #316671...... 159
94 8.00%, 11/15/06, Pool #315078...... 97
44 8.00%, 11/15/06, Pool #311131...... 46
296 8.00%, 11/15/06, Pool #313528...... 305
207 8.00%, 12/15/06, Pool #311384...... 214
170 8.00%, 1/15/07, Pool #317663....... 175
362 8.00%, 2/15/07, Pool #316086....... 374
76 8.00%, 3/15/07, Pool #178684....... 79
200 8.00%, 3/15/07, Pool #318825....... 207
180 8.00%, 4/15/07, Pool #316441....... 186
13,068 6.00%, 11/20/25, Pool #8746 ARM*... 13,363
4,516 7.00%, 1/20/26, Pool #8790......... 4,621
--------
20,955
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
U.S. Government Agencies (4.9%):
$ 4,000 Student Loan Marketing Association,
6.34%, 8/12/99, Callable 8/12/97
@100............................. $ 3,997
4,000 Student Loan Marketing Association,
6.29%, 10/20/99.................. 3,995
20,000 Tennessee Valley Authority, 8.38%,
10/1/99 (b)...................... 20,875
--------
28,867
--------
Total U.S. Government Agency Mortgages 222,169
--------
U.S. GOVERNMENT AGENCY SECURITIES (14.2%):
Federal Farm Credit Bank (0.3%):
1,735 5.31%, 5/26/98..................... 1,728
--------
Federal Home Loan Bank (6.4%):
4,000 6.60%, 4/13/99..................... 4,033
17,000 5.58%, 2/23/01 (b)................. 16,514
10,000 7.78%, 10/19/01.................... 10,468
6,672 7.02%, 10/1/26, Pool #785674 ARM*.. 6,801
--------
37,816
--------
Federal National Mortgage Assoc. (7.5%):
3,000 8.20%, 3/10/98..................... 3,047
2,000 5.30%, 3/11/98..................... 1,995
3,600 6.90%, 3/27/98..................... 3,629
4,000 5.35%, 4/1/98...................... 3,988
22,000 5.72%, 3/8/01 (b).................. 21,471
10,000 6.16%, 3/29/01..................... 9,894
--------
44,024
--------
Total U.S. Government Agency Securities 83,568
--------
U.S. TREASURY OBLIGATIONS (13.1%):
U.S. Treasury Notes (3.5%):
5,000 7.75%, 1/31/00 (b)................. 5,183
3,500 8.50%, 2/15/00..................... 3,690
1,000 8.88%, 5/15/00 (b)................. 1,069
3,000 6.25%, 5/31/00 (b)................. 3,002
2,500 6.13%, 9/30/00..................... 2,490
5,000 6.63%, 6/30/01 (b)................. 5,049
--------
20,483
--------
U.S. Treasury Strips (9.6%):
7,000 2/15/99............................ 6,360
10,000 2/15/00 (b)........................ 8,520
25,000 11/15/01 (b)....................... 18,988
15,000 11/15/01 (b)....................... 11,413
18,000 11/15/04........................... 11,184
--------
56,465
--------
Total U.S. Treasury Obligations 76,948
--------
</TABLE>
Continued
19
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
YANKEE & EURODOLLAR (0.9%):
$ 5,000 Peoples Republic of China, 7.38%,
7/3/01........................... $ 5,088
--------
Total Yankee & Eurodollar 5,088
--------
REPURCHASE AGREEMENTS (1.0%):
5,742 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $5,885
U.S. Treasury Notes, 5.75%,
10/31/00, market value $5,857)... 5,742
--------
Total Repurchase Agreements 5,742
--------
Total (Cost--$581,508) (a) $585,955
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $588,954.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $5,275
Unrealized depreciation.................................................. (828)
------
Net unrealized appreciation.............................................. $4,447
======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1997.
<TABLE>
<S> <C>
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
REMIC Real Estate Mortgage Investment Conduit
</TABLE>
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (8.4%):
$ 2,081 Advanta Mortgage Loan Trust, Series
1994-4, Class A1, 8.55%,
11/25/12......................... $ 2,105
3,636 Aircraft Lease Portfolio
Securitization Ltd., Series 94-1,
Class A2, 7.15%, 9/15/04......... 3,683
1,968 BHN, Series 1997-1, Class A2,
7.92%, 7/25/09................... 1,984
2,887 EQCC Home Equity Loan Trust,
1996-3, Class A3, 6.20%,
7/15/05.......................... 2,892
6,000 EQCC Home Equity Loan Trust, Series
1996-4, Class A6, 6.88%,
7/15/14.......................... 5,980
4,000 Ford Motor Credit Auto Loan Master,
1995-1, Class A, 6.50%,
8/15/02.......................... 3,998
4,000 NAL 97-2, Class A, 7.75%,
12/15/02......................... 3,996
6,080 NAL, Series 96-4, 6.90%,
12/15/00......................... 6,045
4,000 Team Fleet Financing Corp., Series
97-1, Class A, 7.35%, 5/15/03.... 4,058
1,115 UCFC Home Equity Loan, Series
1994-A, Class A2, 5.53%,
5/10/09.......................... 1,113
3,741 Union Acceptance Corp., Series
1995-D, 6.03%, 1/7/03............ 3,738
801 Union Federal Savings Bank Trust,
6.43%, 7/10/00................... 803
6,000 World Financial Network Credit
Card, Series 96-1, Class A,
6.70%, 2/15/04................... 6,033
--------
Total Asset Backed Securities 46,428
--------
COMMERCIAL PAPER (1.8%):
Banking, Finance & Insurance (1.8%):
10,000 Nissan Capital America, 5.81%,
7/21/97.......................... 9,966
--------
Total Commercial Paper 9,966
--------
CORPORATE BONDS (17.7%):
Banking, Finance & Insurance (8.1%):
5,000 Bankers' Trust, 7.25%, 1/15/03..... 5,063
3,000 First Hawaiian, Inc., 6.25%,
8/15/00.......................... 2,963
1,000 Ford Motor Credit Corp., 6.63%,
6/30/03.......................... 990
10,000 Goldman Sachs Group, 6.38%,
6/15/00.......................... 9,923
5,000 Greenwich Capital, 7.04%, 12/13/99,
Private Placement................ 4,991
5,000 Lehman Brothers Holdings, 8.88%,
3/1/02........................... 5,363
3,000 Lehman Brothers Holdings, Inc.,
7.25%, 4/15/03................... 3,019
3,000 Lehman Brothers, Inc., 9.88%,
10/15/00......................... 3,266
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
$ 4,000 Liberty Mutual Insurance, 8.20%,
5/4/07........................... $ 4,235
5,000 Metropolitan Life, 7.70%,
11/1/15.......................... 4,975
--------
44,788
--------
Industrial Goods & Services (2.7%):
2,000 Dayton Hudson Corp., 7.50%,
3/1/99........................... 2,038
5,000 Excel Paralubes Funding, 7.13%,
11/1/11.......................... 4,974
2,419 Kern River Fund, 6.42%,
3/31/01 (b)...................... 2,390
2,000 Limited, Inc., 8.88%, 8/15/99...... 2,085
600 Lockheed Martin Corp., 9.38%,
10/15/99......................... 638
2,500 Union Oil Co., 7.24%, 4/1/99....... 2,541
--------
14,666
--------
Real Estate (1.3%):
2,000 Colonial Realty Properties, 7.50%,
7/15/01.......................... 2,018
5,000 Meditrust, 7.60%, 7/15/01.......... 5,050
--------
7,068
--------
Utilities (0.5%):
3,000 D.R. Investments, 7.10%, 5/15/02... 3,023
--------
Yankee & Eurodollar (5.1%):
2,000 Dao Heng Bank, 7.75%, 1/24/07,
144A............................. 2,005
2,000 Hanson Overseas, 6.75%, 9/15/05.... 1,958
5,000 Kingdom of Thailand, 7.75%,
4/15/07 (b)...................... 5,113
500 Nippon Telephone & Telegraph,
9.50%, 7/27/98................... 518
4,000 Peoples Republic of China, 6.63%,
1/15/03 (b)...................... 3,920
3,000 Ras Laffan Gas, 7.63%, 9/15/06,
144A............................. 3,056
5,000 Samsung Electronics, 8.50%,
11/1/02.......................... 5,275
6,000 United Mexican States, 7.88%,
8/6/01*.......................... 6,006
--------
27,851
--------
Total Corporate Bonds 97,396
--------
OTHER MORTGAGE BACKED SECURITIES (5.5%):
4,000 Equitable, Series 174, Class A1,
7.24%, 5/15/06, Private
Placement........................ 4,076
3,413 Independent National Mortgage
Corp., Series 1995-S, Class A1,
7.10%, 1/15/26................... 3,416
2,000 J.P. Morgan & Co., Inc., Series
1997, Class C4, 7.47%,
12/26/28......................... 2,043
</TABLE>
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
OTHER MORTGAGE BACKED SECURITIES, CONTINUED:
$ 6,000 Kidder Peabody Acceptance Corp.,
Series 1994-C2, Class A, 7.18%,
10/1/05.......................... $ 6,096
2,000 Merrill Lynch Mortgage, Series
1996-C2, Class B, 6.96%,
11/21/28......................... 1,976
58 Morgan Stanley Mortgage Trust,
Series Y, Class 3, 8.95%,
3/1/16........................... 59
4,000 Mortgage Capital Funding Inc.,
Series 1996-MC2, Class A3, 7.08%,
9/20/06.......................... 3,986
3,601 Prudential Home Mortgage
Securities, 6.50%, 5/25/00....... 3,561
5,250 Wells Fargo Capital Markets, Series
96-1, Class A1, 6.56%,
12/29/05......................... 5,171
--------
Total Other Mortgage Backed Securities 30,384
--------
U.S. GOVERNMENT AGENCY MORTGAGES (35.5%):
Federal Home Loan Mortgage Corp. (12.0%):
2,000 7.00%, 6/15/06, Series #1457-PH,
CMO.............................. 1,977
62 8.00%, 4/1/07, Pool #160022........ 64
1,016 7.50%, 8/1/08, Gold Pool #G10117... 1,032
9,063 6.00%, 12/15/08, Series 1624,
CMO.............................. 8,233
2,141 8.50%, 1/1/10, Gold Pool #E00356... 2,215
4,390 8.50%, 1/1/10, Gold Pool #G10305... 4,541
248 7.00%, 8/1/10, Gold Pool #E20187... 249
3,877 7.00%, 9/1/10, Gold Pool #E00393... 3,889
3,695 7.50%, 7/1/11, Gold Pool #E20253... 3,752
305 7.25%, 4/15/18, Series 1254 F,
CMO.............................. 305
8,000 8.00%, 2/15/20, Gold Series
#1770-PE, CMO.................... 8,253
3,000 6.00%, 4/15/20, Series #1534-F,
CMO.............................. 2,918
690 8.00%, 7/1/20, Gold Pool #A01047... 714
3,000 6.50%, 10/15/21, Series #1590-GA,
CMO.............................. 2,937
32 7.00%, 4/1/22, Pool #D17544........ 32
2,987 8.00%, 8/1/24, Pool #G00245........ 3,068
2,872 8.00%, 11/1/24, Gold Pool
#C00376.......................... 2,950
4,270 7.50%, 8/1/25, Gold Pool #C00414... 4,294
3,803 7.00%, 4/1/26, Pool #C00452........ 3,739
4,184 6.98%, 7/1/26, Pool #785618........ 4,171
7,038 7.50%, 1/15/27, Series 1927, CMO... 7,046
--------
66,379
--------
Federal National Mortgage Assoc. (8.3%):
13 6.50%, 12/1/02, Pool #6345......... 13
1,849 8.00%, 9/25/04, Series 1991-155G... 1,890
2,000 6.75%, 12/25/04, Series 1993-6C,
CMO.............................. 2,003
767 7.00%, 1/1/07, Pool #145771........ 765
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 424 7.50%, 11/1/09, Pool #158.......... $ 428
2,863 7.00%, 6/1/10, Pool #312903........ 2,874
4,710 6.50%, 12/1/10, Pool #322598....... 4,623
1,866 6.50%, 4/1/11, Pool #337903........ 1,832
270 7.50%, 5/1/14, Pool #57930......... 274
156 7.00%, 4/1/17, Pool #44696......... 155
680 7.95%, 8/25/19, Series 1990-14,
CMO.............................. 691
117 8.00%, 3/1/21, Pool #70825......... 121
3,331 7.50%, 11/1/22, Pool #189190....... 3,351
2,303 8.00%, 5/1/24, Pool #250066........ 2,363
4,683 8.50%, 7/1/24, Pool #250103........ 4,876
2,872 7.50%, 10/1/24, Pool #303031....... 2,889
1,140 8.50%, 5/1/25, Pool #308499........ 1,186
893 7.50%, 5/1/25, Pool #311810........ 897
337 7.50%, 5/1/25, Pool #293928........ 338
1,679 8.50%, 6/1/25, Pool #315277........ 1,746
3,568 7.00%, 7/1/25, Pool #312931........ 3,506
3,574 7.00%, 7/1/25, Pool #290387........ 3,512
5,412 7.13%, 6/1/26, Pool #341503........ 5,473
--------
45,806
--------
Government National Mortgage Assoc. (15.2%):
2 10.50%, 2/15/98, Pool #59539....... 2
4 10.50%, 7/15/98, Pool #069629...... 4
8 11.00%, 9/15/98, Pool #101670...... 8
1 10.50%, 9/15/98, Pool #103573...... 1
9 11.00%, 6/15/99, Pool #110948...... 9
6 11.00%, 3/15/00, Pool #123750...... 6
7 10.00%, 12/15/00, Pool #136214..... 7
59 10.00%, 1/15/01, Pool #145167...... 63
58 10.00%, 1/15/01, Pool #145328...... 61
19 9.00%, 6/15/01, Pool #166985....... 20
6 9.00%, 6/15/01, Pool #161443....... 6
2 9.00%, 6/15/01, Pool #164431....... 2
6 8.50%, 6/15/01, Pool #162447....... 6
56 8.50%, 6/15/01, Pool #137056....... 58
14 9.00%, 7/15/01, Pool #155822....... 15
52 9.00%, 8/15/01, Pool #173460....... 55
68 8.50%, 8/15/01, Pool #164207....... 71
8 9.00%, 9/15/01, Pool #177121....... 8
5 9.00%, 10/15/01, Pool #177634...... 5
82 9.00%, 10/15/01, Pool #179852...... 85
8 9.00%, 10/15/01, Pool #185596...... 9
11 9.00%, 11/15/01, Pool #174365...... 12
101 9.00%, 11/15/01, Pool #191819...... 106
4 8.50%, 11/15/01, Pool #183462...... 4
53 8.50%, 12/15/01, Pool #199182...... 55
49 8.50%, 12/15/01, Pool #199837...... 51
13 8.50%, 12/15/01, Pool #182959...... 13
13 9.00%, 1/15/02, Pool #205001....... 14
76 8.00%, 3/15/02, Pool #205933....... 78
</TABLE>
Continued
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 57 8.00%, 3/15/02, Pool #210065....... $ 59
60 8.50%, 5/15/02, Pool #213776....... 62
70 8.00%, 5/15/02, Pool #180296....... 72
38 8.00%, 5/15/02, Pool #203042....... 39
46 9.00%, 8/15/02, Pool #232424....... 48
74 9.00%, 10/15/02, Pool #246307...... 78
12 9.00%, 11/15/02, Pool #235553...... 12
8 9.00%, 6/15/03, Pool #247863....... 9
48 8.50%, 9/15/04, Pool #274390....... 49
100 9.00%, 10/15/04, Pool #281655...... 105
69 9.00%, 10/15/04, Pool #229506...... 72
64 8.50%, 10/15/04, Pool #277469...... 66
101 8.50%, 11/15/04, Pool #253471...... 105
89 9.00%, 5/15/05, Pool #288771....... 94
34 9.00%, 6/15/05, Pool #283904....... 35
126 9.00%, 8/15/05, Pool #297031....... 132
68 9.50%, 10/15/05, Pool #291846...... 72
15 9.00%, 10/15/05, Pool #292589...... 16
52 9.00%, 11/15/05, Pool #299161...... 54
87 9.00%, 11/15/05, Pool #292610...... 91
72 9.00%, 12/15/05, Pool #299569...... 76
93 8.50%, 4/15/06, Pool #307487....... 97
31 8.00%, 10/15/06, Pool #11503....... 32
90 8.00%, 1/15/07, Pool #14709........ 93
28 7.50%, 4/15/07, Pool #16991........ 28
270 7.50%, 5/15/07, Pool #329528....... 276
78 7.50%, 7/15/07, Pool #17316........ 79
22 9.00%, 1/15/09, Pool #26076........ 24
129 9.00%, 4/15/09, Pool #30352........ 138
99 8.00%, 5/15/09, Pool #385676....... 103
4,777 6.50%, 7/15/09, Pool #780316....... 4,739
25 8.00%, 8/15/09, Pool #372143....... 26
39 9.50%, 10/15/09, Pool #36582....... 42
624 8.00%, 10/15/09, Pool #380639...... 644
12 11.00%, 2/15/10, Pool #38993....... 14
1,527 7.50%, 2/15/12, Pool# 393363....... 1,556
1,473 7.50%, 3/15/12, Pool #441145....... 1,500
1,953 7.50%, 3/15/12, Pool #399163....... 1,989
5 12.00%, 1/15/15, Pool #112920...... 6
78 9.00%, 8/15/16, Pool #164502....... 83
43 9.50%, 9/15/16, Pool #158201....... 47
20 9.00%, 9/15/16, Pool #175362....... 21
23 9.00%, 9/15/16, Pool #168987....... 25
57 9.00%, 9/15/16, Pool #179044....... 62
65 9.00%, 12/15/16, Pool #198652...... 69
60 9.50%, 1/15/17, Pool #185619....... 65
165 8.50%, 1/15/17, Pool #203625....... 174
39 9.00%, 3/15/17, Pool #180330....... 42
9 8.50%, 3/15/17, Pool #196700....... 10
214 8.50%, 5/15/17, Pool #217536....... 226
10 8.50%, 6/15/17, Pool #188545....... 11
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 2,815 8.50%, 11/15/17, Pool #780086...... $ 2,936
195 9.00%, 7/15/18, Pool #226769....... 209
10 9.50%, 9/15/18, Pool #258627....... 11
42 9.50%, 12/15/18, Pool #229531...... 46
56 9.50%, 10/15/19, Pool #279630...... 61
77 9.00%, 11/15/19, Pool #279649...... 83
138 9.50%, 2/15/20, Pool #281655....... 150
49 9.00%, 2/15/20, Pool #286315....... 53
68 9.50%, 9/15/20, Pool #292918....... 74
71 9.00%, 7/15/21, Pool #311256....... 75
217 8.00%, 4/15/22, Pool #325461....... 223
266 8.00%, 5/15/22, Pool #317346....... 273
112 8.00%, 5/15/22, Pool #320675....... 115
16 8.00%, 5/15/22, Pool #317358....... 17
2,976 8.00%, 7/15/22, Pool #426612....... 3,047
433 8.00%, 7/15/22, Pool #183670....... 445
515 7.50%, 8/15/22, Pool #333881....... 519
1,794 7.00%, 8/15/23, Pool #352108....... 1,771
7,117 7.00%, 9/15/23, Pool #363030....... 7,026
2,516 7.00%, 11/15/23, Pool #352022...... 2,485
11,932 7.00%, 2/15/24, Pool #371281....... 11,783
3,924 9.00% 11/15/24, Pool #780029....... 4,211
1,942 7.50%, 1/15/26, Pool #416874....... 1,952
2,226 7.00%, 1/15/26, Pool #421081....... 2,192
2,592 7.00%, 1/15/26, Pool #420653....... 2,551
1,949 7.50%, 3/15/26, Pool #422292....... 1,959
2,886 7.50%, 4/15/26, Pool #426059....... 2,899
2,893 8.00%, 7/15/26, Pool #428509....... 2,962
2,966 7.50%, 11/15/26, Pool #442119...... 2,978
10,000 7.50%, 30 Year, TBA................ 10,016
6,054 7.50%, 5/20/27, Pool #2432......... 6,046
--------
83,569
--------
Total U.S. Government Agency Mortgages 195,754
--------
U.S. TREASURY OBLIGATIONS (29.5%):
U.S. Treasury Bonds (7.3%):
3,000 10.75%, 5/15/03.................... 3,623
7,000 8.75%, 11/15/08.................... 7,767
4,000 7.50%, 11/15/16.................... 4,276
3,000 8.75%, 5/15/17 (b)................. 3,610
16,000 8.13%, 8/15/19 (b)................. 18,264
3,000 6.25%, 8/15/23 (b)................. 2,779
--------
40,319
--------
U.S. Treasury Inflation Protected Bonds (2.1%):
12,133 3.38%, 1/15/07 (b)................. 11,845
--------
U.S. Treasury Notes (19.6%):
7,000 7.25%, 2/15/98 (b)................. 7,065
5,000 5.13%, 4/30/98 (b)................. 4,976
5,000 8.25%, 7/15/98 (b)................. 5,120
4,000 4.75%, 8/31/98 (b)................. 3,950
2,500 7.13%, 10/15/98.................... 2,537
</TABLE>
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes, continued:
$ 3,000 8.88%, 11/15/98.................... $ 3,113
1,500 6.88%, 8/31/99..................... 1,523
11,500 7.50%, 10/31/99 (b)................ 11,826
5,000 7.75%, 1/31/00(b).................. 5,182
3,000 7.13%, 2/29/00 (b)................. 3,066
5,000 7.75%, 2/15/01 (b)................. 5,229
2,000 7.50%, 11/15/01 (b)................ 2,085
10,000 5.75%, 8/15/03 (b)................. 9,660
11,000 7.25%, 5/15/04 (b)................. 11,475
4,000 7.88%, 11/15/04 (b)................ 4,315
9,000 6.50%, 5/15/05 (b)................. 8,983
12,000 5.88%, 11/15/05 (b)................ 11,483
6,000 8.00%, 8/15/99 (b)................. 6,221
--------
107,809
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Strips (0.5%):
$ 4,000 2/15/04............................ $ 2,622
--------
Total U.S. Treasury Obligations 162,595
--------
REPURCHASE AGREEMENTS (2.8%):
15,554 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $15,942
U.S. Treasury Note, 5.75%,
10/31/00, market value
$15,866)......................... 15,554
--------
Total Repurchase Agreements 15,554
--------
Total (Cost--$555,733) (a) $558,077
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $551,338.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $ 6,175
Unrealized depreciation.................................................. (3,831)
-------
Net unrealized appreciation.............................................. $ 2,344
=======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
rates. The rate reflected on the Schedule of Portfolio Investments is the rate
in effect at June 30, 1997.
<TABLE>
<S> <C>
CMO Collateralized Mortgage Obligation
TBA To be announced
</TABLE>
See notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<S> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGES (79.1%):
Federal Home Loan Mortgage Corp. (30.4%):
$ 8,953 6.00%, 4/15/01, Gold Balloon,
Pool #G50347..................... $ 8,793
7,180 8.00%, 11/1/24, Gold Pool
#C00376.......................... 7,375
5,649 7.50%, 4/1/09, Gold Pool #E00315... 5,767
16,500 6.50%, 9/15/09, Series 1838 G,
CMO.............................. 15,958
4,683 8.50%, 1/1/10, Gold Pool #G10305... 4,844
10,000 6.50%, 15 Year, Gold............... 9,794
20,000 6.50%, 7/1/12...................... 19,589
311 9.00%, 10/1/17, Gold Pool
#A00756.......................... 331
220 9.00%, 4/1/18, Gold Pool #A01143... 234
1,220 7.25%, 4/15/18, Series 1254 F,
CMO.............................. 1,218
22 9.00%, 8/1/20, Gold Pool #D38661... 24
64 9.00%, 10/1/20, Gold Pool
#A01134.......................... 68
73 9.00%, 1/1/21, Gold Pool #A00948... 77
59 9.00%, 4/1/21, Gold Pool #D04193... 63
113 9.00%, 6/1/21, Gold Pool #A01017... 121
119 9.00%, 7/1/21, Gold Pool #A01093... 127
68 9.00%, 9/1/21, Gold Pool #D32271... 73
118 9.00%, 11/1/21, Gold Pool
#D11866.......................... 126
53 9.00%, 11/1/21, Gold Pool
#C00078.......................... 56
117 9.00%, 11/1/21, Gold Pool
#D11191.......................... 125
217 9.00%, 5/1/22, Gold Pool #D19203... 231
76 9.00%, 5/1/22, Gold Pool #D19142... 81
10,000 5.50%, 9/15/22, Series 1367-K...... 8,437
4,375 7.00%, 4/15/23, Pool #348645....... 4,314
6,977 10.00%, 10/15/23, Series 1591 E,
CMO.............................. 7,769
17,851 5.00%, 11/15/23, Series 1686 PG,
CMO.............................. 16,701
4,909 8.50%, 5/1/24, Gold Pool #G00229... 5,158
4,487 8.50%, 7/1/24, Gold Pool #C00354... 4,680
7,646 7.50%, 9/1/24, Gold Pool #D56307... 7,703
2,981 7.50%, 5/1/25, Gold Pool #D59996... 2,999
7,461 8.00%, 11/1/24, Gold Pool
#C00376.......................... 7,652
5,411 7.50%, 6/1/25, Gold Pool #C80321... 5,444
4,270 7.50%, 8/1/25, Gold Pool #C00414... 4,294
4,268 7.50%, 8/1/25, Gold Pool #C80334... 4,290
4,602 7.00%, 8/1/25, Gold Pool #C00418... 4,530
4,227 8.00%, 9/1/25, Gold Pool #D63705... 4,331
4,548 7.00%, 9/1/25, Gold Pool #D63303... 4,476
8,844 7.50%, 10/1/25, Gold Pool
#C80349.......................... 8,888
9,429 6.50%, 2/1/26, Gold Pool #D68098... 9,051
9,574 6.50%, 3/1/26, Gold Pool #G00453... 9,191
12,528 7.00%, 4/1/26, Gold Pool #D69810... 12,313
11,532 7.00%, 4/1/26, Gold Pool #D69811... 11,334
4,964 6.50%, 6/1/26, Pool #250575........ 4,754
5,889 7.00%, 3/1/27, Pool #D78691........ 5,782
4,111 7.00%, 4/1/27, Pool #C00512........ 4,037
--------
233,203
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<S> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc. (23.8%):
$10,338 6.00%, 3/1/01, Pool #50783......... $ 10,038
9,347 7.00%, 4/1/03, 7 Year Balloon...... 9,382
1,448 7.50%, 5/1/03, Pool #347175........ 1,471
2,976 7.50%, 7/1/03, Pool #250656........ 3,024
5,000 7.86%, 5/25/04, Callable 5/25/99
@100............................. 5,052
7,035 7.00%, 7/17/05, Series 97-26 Gd.... 7,099
4,196 7.00%, 4/1/08, Pool #211750........ 4,211
8,000 6.00%, 6/25/09, Series 1994-86 PJ,
CMO.............................. 7,472
3,999 7.00%, 7/1/10, Pool #250326........ 4,014
2,532 6.50%, 12/1/10, Pool #332301....... 2,486
14,223 6.00%, 3/1/11, Pool #340683........ 13,731
6,551 6.25%, 2/25/13, Series 1993-2 PC,
CMO.............................. 6,530
3,596 6.35%, 8/25/13, Series 1993-225B
VG, CMO.......................... 3,481
4,216 7.50%, 6/1/14, Pool #250081........ 4,241
3,457 7.50%, 7/1/14, Pool #250082........ 3,477
148 10.00%, 10/1/16, Pool #70110....... 163
8,015 10.00%, 9/1/17, Pool #303969....... 8,747
450 10.00%, 10/1/19, Pool #231675...... 493
10,000 7.00%, 5/25/20, Pool #1990-57...... 9,836
282 10.00%, 7/1/20, Pool #050318....... 309
5,584 6.50%, 5/25/21, Series 1992-205 K,
CMO.............................. 5,410
5,000 7.00%, 9/25/21, Series G92-64 K,
CMO.............................. 4,984
637 10.00%, 11/1/21, Pool #208374...... 698
716 10.00%, 11/1/21, Pool #208372...... 785
5,000 6.55%, 12/25/21, Pool #1993-137 PH,
CMO.............................. 4,872
10,785 6.50%, 2/17/23, Series #G94-12 C,
CMO.............................. 10,079
5,000 6.50%, 5/25/23, Series 1994-110 H,
CMO.............................. 4,825
9,094 6.35%, 12/25/23, Series 1994-43 PJ,
CMO.............................. 8,551
5,042 7.00%, 1/25/24, Series 1994-62 PJ,
CMO.............................. 4,802
8,439 7.00%, 2/1/24, Pool #190257........ 8,302
3,279 9.00%, 12/1/24, Pool #353898....... 3,460
4,274 7.50%, 5/1/25, Pool #300064........ 4,293
3,767 7.50%, 6/1/25, Pool #312684........ 3,783
4,064 7.50%, 6/1/25, Pool #312899........ 4,082
4,524 7.00%, 8/1/25, Pool #315500........ 4,445
964 7.50%, 9/1/25, Pool #324749........ 967
3,907 7.50%, 9/1/25, Pool #322899........ 3,921
--------
183,516
--------
</TABLE>
Continued
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc. (24.9%):
$ 22 10.00%, 9/15/00, Pool #138814...... $ 23
9 10.00%, 12/15/00, Pool #136214..... 10
6 10.00%, 1/15/01, Pool #145144...... 6
50 8.50%, 6/15/01, Pool #166491....... 52
4 8.50%, 7/15/01, Pool #161997....... 4
53 9.50%, 9/15/01, Pool #180786....... 57
6 9.00%, 9/15/01, Pool #174330....... 7
74 9.00%, 9/15/01, Pool #166928....... 77
19 9.50%, 11/15/01, Pool #182995...... 20
85 8.50%, 11/15/01, Pool #179383...... 88
96 9.00%, 12/15/01, Pool #187723...... 101
49 8.50%, 12/15/01, Pool #199837...... 51
76 8.00%, 3/15/02, Pool #205933....... 78
218 6.50%, 10/15/23, Pool #345391...... 210
215 9.00%, 5/15/03, Pool #154134....... 225
138 9.00%, 6/15/05, Pool #283904....... 144
65 9.00%, 8/15/05, Pool #291836....... 68
56 9.00%, 9/15/05, Pool #292898....... 58
25 9.00%, 9/15/05, Pool #295227....... 26
65 8.00%, 7/15/06, Pool #11337........ 67
33 7.50%, 7/15/07, Pool #17316........ 34
74 8.00%, 8/15/07, Pool #18539........ 76
82 8.00%, 8/15/07, Pool #18677........ 85
302 7.50%, 12/15/07, Pool #338189...... 308
56 9.00%, 11/15/08, Pool #27932....... 60
97 9.00%, 4/15/09, Pool #30352........ 104
21 9.00%, 5/15/09, Pool #32214........ 23
8 9.50%, 7/15/09, Pool #34487........ 9
150 9.50%, 9/15/09, Pool #34878........ 163
41 9.50%, 10/15/09, Pool #36804....... 44
31 11.00%, 11/15/09, Pool #37615...... 35
1 12.00%, 4/15/15, Pool #125262...... 2
13 11.00%, 6/15/15, Pool #130125...... 14
81 9.00%, 5/15/16, Pool #149877....... 87
107 9.00%, 6/15/16, Pool #166130....... 115
13 9.50%, 7/15/16, Pool #166772....... 14
107 9.00%, 7/15/16, Pool #158921....... 115
76 9.50%, 8/15/16, Pool #177531....... 82
162 9.00%, 9/15/16, Pool #179044....... 174
23 9.50%, 1/15/17, Pool #185619....... 25
346 9.00%, 2/15/17, Pool #195058....... 372
260 9.00%, 6/15/17, Pool #219079....... 279
43 9.50%, 8/15/17, Pool #224015....... 47
79 9.50%, 8/15/17, Pool #218841....... 85
29 9.00%, 8/15/17, Pool #225825....... 31
104 9.00%, 6/15/18, Pool #238161....... 111
79 9.50%, 8/15/18, Pool #248390....... 86
20 9.00%, 10/15/18, Pool #253188...... 21
128 9.50%, 12/15/18, Pool #263400...... 139
3 9.00%, 10/15/19, Pool #267676...... 3
59 9.00%, 11/15/19, Pool #162768...... 64
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 69 9.00%, 1/15/20, Pool #283138....... $ 74
76 9.00%, 2/15/20, Pool #276157....... 82
124 9.00%, 3/15/20, Pool #285283....... 133
68 9.50%, 9/15/20, Pool #292918....... 74
86 9.50%, 12/15/20, Pool #291865...... 93
245 9.00%, 6/15/21, Pool #307120....... 262
15,886 9.00%, 8/15/21, Pool #306081....... 16,968
4,702 9.00%, 12/15/21, Pool #780284...... 4,987
37 7.50%, 2/15/22, Pool #324025....... 37
611 8.00%, 7/15/22, Pool #321560....... 628
820 7.50%, 8/15/22, Pool #337141....... 826
39 7.00%, 10/15/22, Pool #337175...... 38
214 7.00%, 11/15/22, Pool #323008...... 211
40 7.00%, 12/15/22, Pool #339969...... 39
237 7.00%, 1/15/23, Pool #346214....... 234
41 7.00%, 1/15/23, Pool #321675....... 40
394 7.00%, 1/15/23, Pool #342248....... 389
384 7.00%, 1/15/23, Pool #341536....... 379
479 7.00%, 1/15/23, Pool #332022....... 473
51 7.00%, 3/15/23, Pool #350110....... 51
788 7.00%, 5/15/23, Pool #346572....... 778
769 7.00%, 5/15/23, Pool #351041....... 760
63 7.00%, 5/15/23, Pool #338005....... 62
625 7.00%, 5/15/23, Pool #221604....... 617
325 6.50%, 5/15/23, Pool #343208....... 313
740 7.00%, 5/15/23, Pool #342348....... 731
843 7.00%, 7/15/23, Pool #362982....... 832
401 6.50%, 6/15/23, Pool #348677....... 387
97 6.50%, 6/15/23, Pool #346624....... 94
59 6.50%, 6/15/23, Pool #349788....... 57
59 6.50%, 6/15/23, Pool #358250....... 57
347 7.00%, 7/15/23, Pool #353569....... 342
844 7.00%, 7/15/23, Pool #346673....... 833
31 7.00%, 7/15/23, Pool #354538....... 31
25 7.00%, 7/15/23, Pool #350709....... 24
455 7.00%, 7/15/23, Pool #360889....... 449
262 7.00%, 7/15/23, Pool #325977....... 259
181 7.00%, 7/15/23, Pool #357782....... 179
479 7.00%, 7/15/23, Pool #358382....... 473
595 7.00%, 7/15/23, Pool #360697....... 587
269 6.50%, 7/15/23, Pool #322200....... 259
326 6.50%, 8/15/23, Pool #344505....... 314
633 6.50%, 8/15/23, Pool #356717....... 610
204 6.50%, 8/15/23, Pool #359027....... 197
153 6.50%, 8/15/23, Pool #360713....... 148
288 6.50%, 8/15/23, Pool #360738....... 277
448 6.50%, 8/15/23, Pool #353137....... 432
770 6.50%, 9/15/23, Pool #345375....... 742
50 6.50%, 9/15/23, Pool #339041....... 48
3,876 8.00%, 10/15/23, Pool #354681...... 3,983
396 6.00%, 10/15/23, Pool #345389...... 371
</TABLE>
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 34 6.00%, 10/15/23, Pool #370006...... $ 32
458 6.00%, 10/15/23, Pool #364717...... 429
637 6.50%, 11/15/23, Pool #369356...... 614
20 6.50%, 11/15/23, Pool #370927...... 19
151 6.50%, 12/15/23, Pool #349944...... 145
977 6.50%, 12/15/23, Pool #349265...... 942
34 6.50%, 12/15/23, Pool #370289...... 33
640 6.50%, 12/15/23, Pool #369830...... 617
110 6.50%, 12/15/23, Pool #365740...... 106
730 6.50%, 1/15/24, Pool #379127....... 703
354 6.50%, 2/15/24, Pool #389200....... 341
1,187 6.50%, 2/15/24, Pool #362341....... 1,143
305 6.50%, 2/15/24, Pool #370338....... 294
22,156 6.50%, 2/15/24, Pool #354747....... 21,337
168 6.50%, 2/15/24, Pool #380818....... 161
348 6.50%, 2/15/24, Pool #371999....... 335
91 7.50%, 6/15/24, Pool #389827....... 91
607 7.50%, 6/15/24, Pool #388747....... 612
3,864 8.00%, 9/15/24, Pool #403212....... 3,971
425 8.00%, 9/15/24, Pool #393908....... 437
9,811 9.00% 11/15/24, Pool #780029....... 10,529
4,873 7.50%, 3/15/26, Pool #422308....... 4,897
6,915 8.00% 5/15/26, Pool #416233........ 7,079
12,252 8.00%, 5/15/26, Pool #422690....... 12,543
20,000 6.50%, 30 Year, TBA................ 19,144
9,708 8.00%, 7/15/26, Pool #423877....... 9,939
9,730 8.00%, 7/15/26, Pool #412644....... 9,961
14,773 8.00%, 12/20/26, G2 Pool #2344..... 15,054
9,999 7.50%, 6/30/26..................... 9,987
5,000 6.50%, 30 Year, TBA................ 5,058
10,000 6.00%, 30 Year, TBA................ 10,013
--------
192,009
--------
Total U.S. Government Agency Mortgages 608,728
--------
U.S. GOVERNMENT AGENCY SECURITIES (13.3%):
Federal Farm Credit Bank (0.7%):
5,000 6.88%, 5/1/00...................... 5,065
--------
Federal Home Loan Bank (1.6%):
2,000 9.25%, 11/25/98.................... 2,080
2,000 9.30%, 1/25/99..................... 2,094
3,000 8.60%, 6/25/99..................... 3,135
5,000 6.27%, 1/14/04 (b)................. 4,836
--------
12,145
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES, CONTINUED:
Federal Home Loan Mortgage Corp. (0.9%):
$ 2,000 6.44%, 1/28/00..................... $ 2,004
4,500 7.13%, 11/18/02.................... 4,614
--------
6,618
--------
Federal National Mortgage Assoc. (5.3%):
2,000 8.80%, 7/25/97..................... 2,005
4,000 8.70%, 6/10/99..................... 4,179
3,000 8.90%, 6/12/00..................... 3,195
3,000 6.20%, 11/12/03.................... 2,897
15,000 7.16%, 5/11/05..................... 15,340
10,000 5.88%, 2/2/06 (b).................. 9,430
5,000 6.67%, 2/6/06, Callable 2/6/98
@100............................. 4,888
--------
41,934
--------
Resolution Funding Corp. (1.6%):
50,000 Principal Strip, 7/15/20........... 9,909
15,000 Principal Strip, 4/15/28........... 1,847
5,000 Principal Strip, 4/15/30........... 537
--------
12,293
--------
Tennessee Valley Authority (3.2%):
25,000 6.24%, 7/15/45, Putable on 7/15/01
@ 100............................ 24,781
--------
Total U.S. Government Agency Securities 102,836
--------
U.S. TREASURY OBLIGATIONS (6.4%):
U.S. Treasury Bonds (3.9%):
15,000 8.13%, 8/15/19 (b)................. 17,123
15,000 6.00%, 2/15/26..................... 13,425
--------
30,548
--------
U.S. Treasury Notes (1.0%):
7,500 7.50%, 11/15/01.................... 7,818
--------
U.S. Treasury Strips (1.5%):
5,000 8/15/02 (b)........................ 3,623
50,000 2/15/25 (b)........................ 7,718
--------
11,341
--------
Total U.S. Treasury Obligations 49,707
--------
</TABLE>
Continued
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
REPURCHASE AGREEMENTS (9.3%):
$71,674 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $79,388
various U.S. Government
Securities,
5.50%-9.00%, 1/1/00-6/20/27,
market value $73,724).......... $ 71,674
--------
Total Repurchase Agreements................... 71,674
--------
Total (Cost--$826,948) (a) $832,945
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $770,879.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $51. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $10,092
Unrealized depreciation.................................................. (4,146)
-------
Net unrealized appreciation.............................................. $ 5,946
=======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
CMO Collateralized Mortgage Obligation
TBA To be announced
See notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (9.0%):
$ 5,000 Advanta Mortgage Loan Trust, 97-2,
Class A4, 7.60%, 6/25/27......... $ 5,048
7,500 Advanta Mortgage Loan Trust, Series
1995-1, Class A5, 8.32%,
12/25/19......................... 7,778
5,817 Aircraft Lease Portfolio
Securitization Ltd., Series 94-1,
Class A2, 7.15%, 9/15/04......... 5,892
2,952 BHN, Series 1997-1, Class A2,
7.92%, 7/25/09................... 2,976
4,980 Federal Express, Series A-1, 7.85%,
6/1/24........................... 5,111
5,000 ML CBO 1996 PM1, 7.87%,
12/17/06......................... 4,871
3,427 NAL 96, Class A, 7.10%, 3/15/01,
Private Placement, 144A.......... 3,416
2,027 NAL, Series 96-4, 6.90%,
12/15/00......................... 2,015
11,262 Northwest Air, Series 2, Class A,
9.25%, 6/21/14................... 12,782
4,692 Northwest Air, Trust, Series B,
10.23%, 6/21/14.................. 5,255
5,701 Olympic Automobile Receivables
Trust, Series 1994-B, Class A2,
6.85%, 6/15/01................... 5,751
6,882 Olympic Automobile Receivables
Trust, Series 1995-B, Class A2,
7.35%, 10/15/01.................. 6,999
--------
Total Asset Backed Securities 67,894
--------
CORPORATE BONDS (53.1%):
Banking, Finance & Insurance (16.5%):
9,000 Associates Corp., 8.34%,
11/25/99......................... 9,371
6,000 Associates Corp., 8.15%, 8/1/09.... 6,503
2,000 Bank of Boston, Corp., 9.50%,
8/15/97.......................... 2,009
5,000 BankAmerica Corp., 9.50%, 4/1/01... 5,450
4,000 BCH Cayman Islands, 7.50%,
6/15/05.......................... 4,055
5,000 Bear Stearns Co., 9.13%, 4/15/98... 5,122
5,000 Bear Stearns Co., 8.25%, 2/1/02.... 5,269
5,000 First Chicago Capital Trust, 7.95%,
12/1/26.......................... 4,875
2,000 Fleet Financial Group, Inc., 8.13%,
7/1/04........................... 2,123
3,500 Ford Capital BV, 10.13%,
11/15/00......................... 3,863
1,500 Ford Motor Credit Corp., 6.38%,
10/6/00.......................... 1,493
3,000 General Motors Acceptance Corp.,
8.40%, 10/15/99.................. 3,128
8,000 General Motors Acceptance Corp.,
7.00%, 3/1/00.................... 8,090
10,000 Lehman Brothers Holdings, 8.88%,
3/1/02........................... 10,721
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Banking, Finance & Insurance, continued:
$ 5,000 Lehman Brothers Holdings, 8.80%,
3/1/15........................... $ 5,563
5,000 Lehman Brothers, Inc., 11.63%,
5/15/05.......................... 6,256
6,000 Massachusetts Mutual Life
Insurance, 7.50%, 3/1/24, 144A... 5,858
3,500 MEPC Finance, Inc., 7.50%,
5/1/03........................... 3,557
5,000 Money Store, Inc., 8.05% 4/15/02... 5,081
6,000 Morgan Stanley Group, Inc., 6.13%,
10/1/03.......................... 5,783
4,806 Oslo Seismic Service, 8.28%,
6/1/11, 144A..................... 5,065
5,000 Principal Mutual, 7.88%, 3/1/24.... 4,944
5,000 Security Pacific Corp., 11.00%,
3/1/01........................... 5,688
5,000 Western Banktrust REIT, 7.88%,
2/15/04.......................... 5,125
--------
124,992
--------
Financial Services (3.5%):
2,000 American Health Properties, 7.50%,
1/15/07.......................... 2,028
6,500 Corestates Capital, 8.00%,
12/15/26......................... 6,435
5,000 Cullen Frost Bank Capital Trust,
8.42%, 2/1/27.................... 5,050
3,000 International Lease Finance Corp.,
6.50%, 7/15/97................... 3,001
5,000 MIC Financial Trust, 8.38%,
2/1/27........................... 5,006
5,000 Sun Life, 8.53%, 5/6/27............ 5,056
--------
26,576
--------
Food Products & Services (0.3%):
2,500 RJR Nabisco Corp., 8.75%,
8/15/05.......................... 2,528
--------
Industrial Goods & Services (7.9%):
3,000 Boise Cascade Co., 9.45%,
11/1/09.......................... 3,424
4,000 Comcast Cable, 8.38%, 5/1/07,
144A............................. 4,240
3,000 Comdisco, Inc., 6.05%, 10/31/97.... 3,002
2,500 EES Coke Battery, 7.13%, 4/15/02,
144A............................. 2,518
5,000 Excel Paralubes Funding, 7.13%,
11/1/11.......................... 4,975
2,000 Freeport McMoran, Copper & Gold,
7.50%, 11/15/06.................. 1,995
5,000 General Motors Corp., 9.13%,
7/15/01.......................... 5,413
3,000 Golden State Petroleum, 8.04%,
2/1/19, 144A..................... 3,056
5,000 Hilton Hotels Corp., 7.95%,
4/15/07.......................... 5,131
5,000 Hyundai Semiconductor, 8.63%,
5/15/07.......................... 5,031
4,828 Newmont Mining Co., 8.91%,
1/5/09........................... 5,159
</TABLE>
Continued
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Industrial Goods & Services, continued:
$ 2,500 Northrop Grumman, 7.00%, 3/1/06.... $ 2,447
9,000 Penske Truck Leasing, 8.25%,
11/1/99 (b)...................... 9,372
4,000 Tenneco, Inc., 8.20%, 11/15/99..... 4,150
--------
59,913
--------
Real Estate (4.9%):
2,000 Avalon Properties, 7.38%,
9/15/02.......................... 2,018
4,750 Meditrust, 7.77%, 8/16/02.......... 4,833
3,000 Meditrust, 7.82%, 9/10/26.......... 3,090
5,000 Security Capital Pacific Trust,
6.95%, 10/15/02.................. 4,969
2,500 Security Capital Pacific Trust,
7.15%, 10/15/03.................. 2,484
5,000 Spieker Properties, 6.65%,
12/15/00......................... 4,956
4,000 Spieker Properties, 8.00%,
7/19/05.......................... 4,095
8,000 Taubman Realty Group, 7.00%,
10/1/03.......................... 7,810
3,000 Wellsford Residential Property,
7.25%, 8/15/00................... 3,034
--------
37,289
--------
Utilities (2.2%):
7,000 NRG Energy Corp., 7.63%, 2/1/06.... 7,052
5,009 Salton Sea Funding Corp., 6.69%,
5/30/00.......................... 4,997
4,000 Termoemcali, 10.13%, 12/15/14,
144A............................. 4,340
--------
16,389
--------
Yankee & Eurodollar (17.8%):
9,000 Bangkok Bank Public Co. Ltd.,
7.25%, 9/15/05, 144A (b)......... 8,674
10,000 Bank Nagrara Indonesia, 7.63%,
2/5/07........................... 9,875
5,000 BCH Cayman Islands, 8.25%,
6/15/04.......................... 5,281
5,000 Celulosa Arauco, 6.75%, 12/15/03... 4,869
12,548 Centra Gas, 10.65%, 12/1/10,
144A............................. 13,127
5,000 China International Trust &
Investing, 9.00%, 10/15/06 (b)... 5,525
5,000 Citra Marga Finance, 7.25%,
2/20/02.......................... 4,881
5,000 Coca Cola Femsa, 8.95%, 11/1/06.... 5,013
4,000 Dao Heng Bank, 7.75%, 1/24/07,
Private Placement................ 4,010
9,000 Financiera Energy, 9.38%,
6/15/06.......................... 9,675
3,000 Guangdong Enterprises, 8.88%,
5/22/07.......................... 3,086
5,000 Guangdong International, 6.75%,
11/15/03......................... 4,850
6,000 Honam Oil Refinery Co., 7.13%,
10/15/05, 144A................... 5,925
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Yankee & Eurodollar, continued:
$ 2,500 Jasmine Submarine, 8.48%, 5/30/11,
Private Placement................ $ 2,509
2,000 Kansalis-Osake Pankki, 9.75%,
12/15/98......................... 2,098
6,000 Peoples Democratic Republic of
Poland, 3.75%, 10/27/14.......... 5,160
5,000 Peoples Republic of China, 7.75%,
7/5/06........................... 5,175
4,250 Ras Laffan Gas, 7.63%, 9/15/06,
144A............................. 4,330
2,500 Republic of Indonesia, 7.75%,
8/1/06........................... 2,509
5,000 Republic Of South Africa, 8.50%,
6/23/17.......................... 4,950
5,000 Scotland International Finance,
8.80%, 1/27/04, 144A............. 5,419
4,000 Scotland International Finance,
8.85%, 11/1/06, 144A............. 4,400
5,000 Tenaga Nasional Berhad, 7.88%,
6/15/04, 144A.................... 5,225
2,500 Total Access, 8.38% 11/4/06,
144A............................. 2,416
2,500 Yanacocha, 8.40%, 5/15/04.......... 2,538
2,889 Ypf Sociedad Anomima, 7.00%,
10/26/02......................... 2,893
--------
134,413
--------
Total Corporate Bonds 402,100
--------
OTHER MORTGAGED BACKED SECURITIES (0.7%):
5,000 Residential Funding Corp., Series
96-H52, Class A4, 7.55%,
9/25/12.......................... 5,048
--------
Total Other Mortgaged Backed Securities 5,048
--------
U.S. GOVERNMENT AGENCY MORTGAGES (20.6%):
Federal Home Loan Mortgage Corp. (11.3%):
5,000 7.13%, 7/21/99 (b)................. 5,093
18,000 0.00%, 8/15/02..................... 12,939
4,450 7.00%, 6/1/09, Pool #E00313........ 4,471
4,378 7.00%, 2/1/11, Gold Pool #E62602... 4,379
9,052 7.50%, 5/1/11, Pool #E00438........ 9,207
8,285 7.00%, 5/1/11, Gold Pool #E00434... 8,293
7,427 7.00%, 6/1/11, Gold Pool #E64220... 7,434
1,218 7.50%, 6/1/24, Pool #C80161........ 1,227
16,025 7.00%, 9/1/24, Pool #G00271........ 15,790
7,241 7.50%, 10/1/24, Pool #C80245....... 7,295
9,756 7.00%, 12/1/24..................... 9,613
--------
85,741
--------
Federal National Mortgage Assoc. (6.3%):
500 8.15%, 5/11/98..................... 510
9,347 7.00%, 4/1/03, 7 Year Balloon...... 9,382
500 6.53%, 4/10/03..................... 494
</TABLE>
Continued
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued
$21,656 8.00%, 12/1/09, Pool #250168....... $ 22,289
2,000 8.20%, 3/10/16..................... 2,206
12,650 7.50%, 9/1/25, Pool #324179........ 12,593
--------
47,474
--------
Government National Mortgage Assoc. (3.0%):
3,434 9.00% 11/15/24, Pool #780029....... 3,685
8,875 7.50%, 7/15/26, Pool #430999....... 8,914
9,900 7.50%, 6/30/26, TBA................ 9,888
--------
22,487
--------
Total U.S. Government Agency Mortgages 155,702
--------
U.S. GOVERNMENT AGENCY SECURITIES (2.2%):
Federal Home Loan Bank (1.3%):
10,000 7.10%, 3/16/98 (b)................. 10,092
--------
Government Trust Certificate (0.3%):
2,285 Government Trust Certificate,
Israel, 9.40%, 5/15/02........... 2,417
--------
Resolution Trust Corp. (0.1%):
1,000 Resolution Trust Corp., 0.00%,
7/15/02.......................... 732
--------
Tennessee Valley Authority (0.5%):
3,200 Tennessee Valley Authority, 8.63%,
11/15/29......................... 3,456
--------
Total U.S. Government Agency Securities 16,697
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (12.4%):
U.S. Treasury Bonds (9.0%):
$ 3,250 13.38%, 8/15/01.................... $ 4,070
9,600 11.88%, 11/15/03 (b)............... 12,271
14,000 9.00%, 11/15/18.................... 17,313
11,250 8.13%, 8/15/21 (b)................. 12,886
3,000 8.00%, 11/15/21 (b)................ 3,394
17,600 7.13%, 2/15/23 (b)................. 18,136
--------
68,070
--------
U.S. Treasury Notes (3.4%):
15,000 6.25%, 8/31/00 (b)................. 14,998
10,300 6.63%, 6/30/01 (b)................. 10,402
--------
25,400
--------
Total U.S. Treasury Obligations 93,470
--------
REPURCHASE AGREEMENTS (1.1%):
8,469 Prudential Securities, 6.05%, due
7/1/97 (collateralized by $8,680
U.S. Treasury Notes, 5.75%,
10/31/00, market value $8,639)... 8,469
--------
Total Repurchase Agreements 8,469
--------
Total (Cost--$725,490) (a) $749,380
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $755,952.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $25,110
Unrealized depreciation.................................................. (1,220)
-------
Net unrealized appreciation.............................................. $23,890
=======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
TBA To be announced
See notes to financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Treasury & Agency Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY (33.4%):
Federal Farm Credit Bank (6.5%):
$ 7,000 7.16%, 5/15/06..................... $ 7,170
--------
Federal Home Loan Bank (9.1%):
3,800 5.70%, 3/11/99*.................... 3,776
4,300 7.74%, 10/01/03.................... 4,303
2,000 6.26%, 11/26/03.................... 1,939
--------
10,018
--------
Other U.S. Agencies (17.8%):
4,000 Student Loan Marketing Association,
6.29%, 10/20/99.................. 3,995
6,000 Student Loan Marketing Association,
6.00%, 3/5/01.................... 5,894
10,000 Tennessee Valley Authority, 6.13%,
7/15/03.......................... 9,699
--------
19,588
--------
Total U.S. Government Agency 36,776
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (64.9%):
U.S. Treasury Bonds (9.2%):
$ 8,000 10.75%, 8/15/05.................... $ 10,094
--------
U.S. Treasury Notes (55.7%):
12,500 5.88%, 10/31/98 (b)................ 12,488
25,000 7.75%, 11/30/99.................... 25,864
23,000 6.63%, 6/30/01 (b)................. 23,227
--------
61,579
--------
Total U.S. Treasury Obligations 71,673
--------
INVESTMENT COMPANIES (1.1%):
1,183 The One Group Treasury Only Money
Market Fund, Fiduciary Class..... 1,183
--------
Total Investment Companies 1,183
--------
Total (Cost--$108,064) (a) $109,632
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $110,258.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $1,621
Unrealized depreciation.................................................. (53)
------
Net unrealized appreciation.............................................. $1,568
======
</TABLE>
(b) A portion of this security was loaned as of June 30, 1997.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
See notes to financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
ULTRA
SHORT- LIMITED VOLATILITY INTERMEDIATE GOVERNMENT INCOME TREASURY &
TERM INCOME BOND BOND BOND BOND AGENCY
FUND FUND FUND FUND FUND FUND
----------- ------------------ ------------ ---------- -------- ----------
(Amounts in Thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value.......... $ 146,382 $580,213 $542,523 $761,271 $740,911 $109,632
Repurchase agreements, at
cost.......................... 17,390 5,742 15,554 71,674 8,469 --
--------- -------- -------- -------- -------- --------
Total (cost $163,219; $581,508;
$555,733; $826,948; $725,490;
$108,064, respectively)....... 163,772 585,955 558,077 832,945 749,380 109,632
Interest receivable............ 776 6,275 6,392 5,966 11,377 1,290
Receivable from brokers for
investments sold.............. 241 14 5 -- 5,009 --
Receivable for capital shares
issued........................ 1,066 11 207 18 14 --
Net receivable for variation
margin on futures contracts... 26 -- -- -- -- --
Deferred organization costs.... 3 -- -- 2 -- 3
Prepaid expenses and other
assets........................ -- 12 1 21 7 2
--------- -------- -------- -------- -------- --------
TOTAL ASSETS................... 165,884 592,267 564,682 838,952 765,787 110,927
--------- -------- -------- -------- -------- --------
LIABILITIES:
Dividends payable.............. 694 3,068 2,981 3,973 4,259 586
Payable to brokers for
investments purchased......... 18,263 -- 10,073 63,696 5,113 --
Payable for capital shares
redeemed...................... -- 3 5 5 25 --
Accrued expenses and other
payables:
Investment advisory fees...... 23 146 149 259 247 18
Administration fees........... -- 83 76 78 105 3
12b-1 fees.................... 7 4 11 16 11 --
Other......................... 23 9 49 46 75 62
--------- -------- -------- -------- -------- --------
TOTAL LIABILITIES.............. 19,010 3,313 13,344 68,073 9,835 669
--------- -------- -------- -------- -------- --------
NET ASSETS:
Capital........................ 150,589 595,935 554,206 786,147 786,479 108,512
Undistributed (distributions in
excess of) net investment
income........................ (201) (246) 69 (101) 288 --
Accumulated undistributed net
realized gains (losses) from
investment and futures
transactions.................. (4,042) (11,182) (5,281) (21,164) (54,705) 178
Net unrealized appreciation
(depreciation) from
investments and futures....... 528 4,447 2,344 5,997 23,890 1,568
--------- -------- -------- -------- -------- --------
Net Assets..................... $ 146,874 $588,954 $551,338 $770,879 $755,952 $110,258
========= ======== ======== ======== ======== ========
Net Assets
Fiduciary................... $ 114,413 $563,979 $522,423 $724,423 $730,754 $110,084
Class A..................... 29,643 20,055 18,763 34,727 14,325 94
Class B..................... 2,818 4,920 10,152 11,729 10,873 80
--------- -------- -------- -------- -------- --------
Total.......................... $ 146,874 $588,954 $551,338 $770,879 $755,952 $110,258
========= ======== ======== ======== ======== ========
Outstanding units of beneficial
interest (shares)
Fiduciary................... 11,588 53,876 52,660 74,751 77,589 11,024
Class A..................... 3,003 1,918 1,886 3,583 1,522 9
Class B..................... 287 466 1,023 1,210 1,145 8
--------- -------- -------- -------- -------- --------
Total.......................... 14,878 56,260 55,569 79,544 80,256 11,041
========= ======== ======== ======== ======== ========
Net asset value:
Fiduciary
Offering and redemption
price per share........ $ 9.87 $ 10.47 $ 9.92 $ 9.69 $ 9.42 $ 9.99
========= ======== ======== ======== ======== ========
Class A
Redemption price per
share.................. $ 9.87 $ 10.46 $ 9.95 $ 9.69 $ 9.41 $ 9.98
========= ======== ======== ======== ======== ========
Maximum sales charge.... 3.00% 3.00 4.50% 4.50% 4.50% 3.00%
========= ======== ======== ======== ======== ========
Maximum offering price
(100%/ (100%--maximum
sales charge) of net
asset value adjusted to
nearest cent) per
share.................. $ 10.18 $ 10.78 $ 10.42 $ 10.15 $ 9.85 $ 10.29
========= ======== ======== ======== ======== ========
Class B
Offering price per share
(a).................... $ 9.81 $ 10.53 $ 9.92 $ 9.69 $ 9.49 $ 9.99
========= ======== ======== ======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
33
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ULTRA
SHORT- LIMITED VOLATILITY INTERMEDIATE GOVERNMENT INCOME TREASURY &
TERM INCOME BOND BOND BOND BOND AGENCY
FUND FUND FUND FUND FUND FUND(a)
----------- ------------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income............... $ 6,022 $ 39,891 $ 28,044 $ 51,661 $47,951 $3,404
Dividend income............... -- 32 1 2 -- 9
Income from securities
lending...................... -- 187 200 87 138 7
------- -------- -------- -------- ------ ------
Total Income.................. 6,022 40,110 28,245 51,750 48,089 3,420
------- -------- -------- -------- ------ ------
EXPENSES:
Investment advisory fees...... 520 3,660 2,365 3,293 3,873 198
Administration fees........... 157 1,009 652 1,210 1,067 82
12b-1 fees (Class A).......... 47 73 52 129 43 --(b)
12b-1 fees (Class B).......... 17 50 80 113 88 --(b)
Custodian and accounting
fees......................... 9 58 54 117 56 12
Legal and audit fees.......... 5 21 6 31 20 6
Organization costs............ 5 -- -- 3 -- --
Trustees' fees and expenses... 2 7 3 10 7 1
Transfer agent fees........... 19 56 40 83 47 9
Registration and filing
fees......................... 35 95 50 148 47 71
Printing costs................ 10 56 37 67 60 11
Other......................... 6 5 4 15 4 1
------- -------- -------- -------- ------ ------
Total expenses before
waivers...................... 832 5,090 3,343 5,219 5,312 391
Less waivers.................. (457) (1,867) (1,115) (463) (1,312) (167)
------- -------- -------- -------- ------ ------
Net Expenses............... 375 3,223 2,228 4,756 4,000 224
------- -------- -------- -------- ------ ------
Net Investment Income......... 5,647 36,887 26,017 46,994 44,089 3,196
------- -------- -------- -------- ------ ------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS AND
FUTURES:
Net realized gains (losses)
from investment and futures
transactions................. (269) (2,851) (935) (894) (280) 178
Net change in unrealized
appreciation (depreciation)
from investments and
futures...................... 1,032 5,502 3,378 10,875 6,049 (341)
------- -------- -------- -------- ------ ------
Net realized/unrealized gains
(losses) from investments and
futures...................... 763 2,651 2,443 9,981 5,769 (163)
------- -------- -------- -------- ------ ------
Change in net assets resulting
from operations.............. $ 6,410 $ 39,538 $ 28,460 $ 56,975 $49,858 $3,033
======= ======== ======== ======== ======= ======
</TABLE>
- ------------
(a) The Fund commenced operations on January 20, 1997.
(b) Amounts are less than $1,000.
See notes to financial statements.
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
ULTRA SHORT-TERM LIMITED VOLATILITY
INCOME FUND BOND FUND INTERMEDIATE BOND FUND
------------------------ ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996(a) 1997 1996 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income....................... $ 5,647 $ 3,180 $ 36,887 $ 28,018 $ 26,017 $ 14,817
Net realized gains (losses) from investment
and futures transactions.................. (269) (594) (2,851) 1,885 (935) 1,421
Net change in unrealized appreciation
(depreciation) from investments and
futures................................... 1,032 150 5,502 (6,631) 3,378 (5,722)
-------- -------- --------- --------- -------- --------
Change in net assets resulting from
operations.................................. 6,410 2,736 39,538 23,272 28,460 10,516
-------- -------- --------- --------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.................. (4,769) (2,924) (35,406) (26,964) (24,622) (14,065)
Tax return of capital....................... -- (26) -- -- -- --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.................. (761) (129) (1,219) (878) (940) (607)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.................. (94) (24) (262) (175) (455) (144)
-------- -------- --------- --------- -------- --------
Change in net assets from shareholder
distributions............................... (5,624) (3,103) (36,887) (28,017) (26,017) (14,816)
-------- -------- --------- --------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................. 109,550 38,704 117,648 325,572 187,226 121,175
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 123,673 -- --
Proceeds from shares issued in connection
with conversion........................... -- -- -- -- 207,582 --
Dividends reinvested........................ 790 1,028 3,251 8,797 1,664 3,437
Cost of shares redeemed..................... (26,641) (32,817) (165,778) (248,283) (98,172) (66,140)
-------- -------- --------- --------- -------- --------
Change in net assets from share
transactions................................ 83,699 6,915 (44,879) 209,759 298,300 58,472
-------- -------- --------- --------- -------- --------
Change in net assets.......................... 84,485 6,548 (42,228) 205,014 300,743 54,172
NET ASSETS:
Beginning of period......................... 62,389 55,841 631,182 426,168 250,595 196,423
-------- -------- --------- --------- -------- --------
End of period............................... $146,874 $ 62,389 $ 588,954 $ 631,182 $551,338 $250,595
======== ======== ========= ========= ======== ========
SHARE TRANSACTIONS:
Issued...................................... 11,129 3,934 11,253 31,111 18,923 12,114
Issued in connection with acquisition....... -- -- -- 11,748 -- --
Issued in connection with conversion........ -- -- -- -- 20,926 --
Reinvested.................................. 81 105 311 834 169 343
Redeemed.................................... (2,708) (3,338) (15,866) (23,593) (9,913) (6,607)
-------- -------- --------- --------- -------- --------
Change in shares.............................. 8,502 701 (4,302) 20,100 30,105 5,850
======== ======== ========= ========= ======== ========
Undistributed (distributions in excess of)
net investment income included in net
assets:
End of period............................... $ (201) $ (313) $ (246) $ (121) $ 69 $ 94
======== ======== ========= ========= ======== ========
</TABLE>
- ------------
(a) Previously named the Government ARM Fund
See notes to financial statements.
35
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
TREASURY & AGENCY
GOVERNMENT BOND FUND INCOME BOND FUND FUND
------------------------ ------------------------ -----------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED JANUARY 20, 1997
JUNE 30, JUNE 30, JUNE 30, JUNE 30, THROUGH JUNE 30,
1997 1996 1997 1996 1997(a)
---------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............................ $ 46,994 $ 31,623 $ 44,089 $ 34,329 $ 3,196
Net realized gains (losses) from investment and
futures transactions........................... (894) (2,769) (280) (1,361) 178
Net change in unrealized appreciation
(depreciation) from investments and futures.... 10,875 (15,409) 6,049 (11,155) (341)
--------- --------- --------- --------- ---------
Change in net assets resulting from operations..... 56,975 13,445 49,858 21,813 3,033
--------- --------- --------- --------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income....................... (44,081) (30,195) (42,737) (33,573) (3,196)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income....................... (2,290) (1,103) (828) (545) --(b)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income....................... (623) (324) (524) (211) --(b)
--------- --------- --------- --------- ---------
Change in net assets from shareholder
distributions.................................... (46,994) (31,622) (44,089) (34,329) (3,196)
--------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...................... 229,453 451,887 224,558 166,169 6,409
Proceeds from shares issued in connection with
acquisition.................................... -- 301,865 -- -- --
Proceeds from shares issued in connection with
conversion..................................... -- -- 132,470 -- 113,243
Dividends reinvested............................. 3,881 8,081 4,757 13,106 --(b)
Cost of shares redeemed.......................... (199,344) (407,217) (148,078) (113,090) (9,231)
--------- --------- --------- --------- ---------
Change in net assets from share transactions....... 33,990 354,616 213,707 66,185 110,421
--------- --------- --------- --------- ---------
Change in net assets............................... 43,971 336,439 219,476 53,669 110,258
NET ASSETS:
Beginning of period.............................. 726,908 390,469 536,476 482,807 --
--------- --------- --------- --------- ---------
End of period.................................... $ 770,879 $ 726,908 $ 755,952 $ 536,476 $ 110,258
========= ========= ========= ========= =========
SHARE TRANSACTIONS:
Issued........................................... 23,794 45,897 23,912 17,425 644
Issued in connection with acquisition............ -- 30,887 -- -- --
Issued in connection with conversion............. -- -- 14,063 -- 11,324
Reinvested....................................... 404 821 508 1,371 --(b)
Redeemed......................................... (20,680) (41,383) (15,750) (11,865) (927)
--------- --------- --------- --------- ---------
Change in shares................................... 3,518 36,222 22,733 6,931 11,041
========= ========= ========= ========= =========
Undistributed (distributions in excess of)
net investment income included in net assets:
End of period.................................... $ (101) $ (325) $ 288 $ 396 $ --
========= ========= ========= ========= =========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Dollar and share amounts are less than 1,000.
See notes to financial statements.
36
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30,1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Ultra Short-Term Income
Fund (previously named the Government ARM Fund), the Limited Volatility Bond
Fund, the Intermediate Bond Fund, the Government Bond Fund, the Income Bond
Fund , and the Treasury & Agency Fund (individually a "Fund", collectively
the "Funds") only. The Funds are each offered in Fiduciary Class, Class A and
Class B Shares. Class A Shares are subject to initial sales charges, imposed
at the time of purchase, in accordance with the Funds' prospectuses. Certain
redemptions of Class B Shares are subject to contingent deferred sales
charges in accordance with the Funds' prospectuses. Each Fund is a
diversified mutual fund.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. The statements of changes in net
assets and financial highlights for periods prior to the reorganization,
March 25, 1996, are presented for funds of The One Group only.
The Funds investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
----------------------------- -----------------------------------------------------------------
<S> <C>
Ultra Short-Term Income Fund A high level of current income consistent with low volatility of
principal by investing in a diversified portfolio of short-term
investment grade securities.
Limited Volatility Bond Fund Current income consistent with the preservation of capital
through investment in high and medium-grade fixed-income
securities.
Intermediate Bond Fund Current income consistent with the preservation of capital by
investing in high and medium-grade fixed-income securities with
intermediate maturities.
Government Bond Fund A high level of current income with liquidity and safety of
principal.
Income Bond Fund A high level of current income by investing primarily in a
diversified portfolio of high, medium and low grade debt
securities.
Treasury & Agency Fund A high level of current income by investing in U.S. Treasury and
other U.S. Agency obligations with a primary, but not exclusive,
focus on issues that produce income exempt from state income
taxes.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Corporate debt securities and debt securities of U.S. issuers (other than
short-term investments maturing in 60 days or less), including municipal
securities, are valued on the basis of valuations provided by dealers or
by
Continued
37
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
an independent pricing service approved by the Board of Trustees.
Short-term investments maturing in 60 days or less are valued at
amortized cost, which approximates market value. Futures contracts are
valued at the settlement price established each day by the board of trade
or an exchange on which they are traded. Options traded on an exchange
are valued using the last sale price or, in the absence of a sale, the
last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations. Investments for which there are no such
quotations or valuations are valued at fair value as determined in good
faith by the Adviser under the direction of the Board of Trustees.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that Banc
One Investment Advisors Corporation (the "Advisor") has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund
requires that the securities purchased in a repurchase agreement
transaction be transferred to the custodian in a manner sufficient to
enable the Fund to obtain those securities in the event of a counterparty
default. The seller, under the repurchase agreement, is required to
maintain the value of the securities held at not less than the repurchase
price, including accrued interest. Repurchase agreements are considered
to be loans by a fund under the 1940 Act.
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums
received are recorded as liabilities and are subsequently adjusted to the
current value of the options written. Premiums received from writing
options which expire are treated as realized gains. Premiums received
from writing options, which are either exercised or closed, are offset
against the proceeds received or amount paid on the transaction to
determine realized gains or losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period.
Cash or securities are deposited with brokers in order to maintain a
position. Subsequent payments made or received by the fund based on the
daily change in the market value of the position are recorded as
unrealized appreciation or depreciation until the contract is closed out,
at which time the appreciation or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities
may be more volatile than the referenced instrument itself, but any loss
is limited to the amount of the original investment.
MORTGAGE ROLLS
The Funds may enter into mortgage "dollar rolls" in which the Fund sells
mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar securities
on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the mortgage-backed securities. The Fund
is compensated by fee income or the difference between the current sales
price and the lower forward price for the future purchase.
Continued
38
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgment of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risk. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997, the following Funds had securities
with the following market values on loan (amounts in thousands):
<TABLE>
<CAPTION>
MARKET VALUE
OF LOANED
SECURITIES
------------
<S> <C>
Limited Volatility Bond Fund................................. $112,080
Intermediate Bond Fund....................................... 129,598
Government Bond Fund......................................... 30,498
Income Bond Fund............................................. 86,176
Treasury & Agency Fund....................................... 16,979
</TABLE>
The loaned securities were fully collateralized by cash, U.S. Government
securities, and commercial paper as of June 30, 1997.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on the
accrual basis. Dividends are recorded on the ex-dividend date. Interest income,
including any discount or premium, is accrued as earned using the effective
interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one fund of the Trust are
allocated among the respective Funds. Each class of shares bears its pro-rata
portion of expenses attributable to its series, except that each class
separately bears expenses related specifically to that class, such as
distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly for the
Funds. Net realized capital gains, if any, are distributed at least annually.
Dividends are declared separately for each class. No class has preferential
dividend rights; differences in per share dividend rates are generally due to
differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
Continued
39
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
differing treatments for mortgage-backed securities, expiring capital loss
carryforwards, and deferrals of certain losses. Permanent book and tax basis
differences have been reclassified among the components of net assets.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization, including the
fees and expenses of registering and qualifying its shares for distribution have
been deferred and are being amortized using the straight-line method over a
period of five years beginning with the commencement of each Fund's operations.
All such costs, which are attributable to more than one fund of the Trust, have
been allocated among the respective funds pro-rata, based on the relative net
assets of each Fund. In the event that any of the initial shares are redeemed
during such period by any holder thereof, the related fund will be reimbursed by
such holder for any unamortized organization costs in the proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax purposes.
Each Fund intends to continue to qualify as a regulated investment company by
complying with the provisions available to certain investment companies as
defined in applicable sections of the Internal Revenue Code, and to make
distributions from net investment income and from net realized capital gains
sufficient to relieve it from all, or substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service. Currently, the Trust consists of thirty three active funds and not
all funds can offer all classes of shares. As of June 30, 1997, no
shareholders were in Class C or the Service Class of the Funds. Shareholders
are entitled to one vote for each full share held and will vote in the
aggregate and not by class or series, except as otherwise expressly required
by law or when the Board of Trustees has determined that the matter to be
voted on affects only the interest of shareholders of a particular class or
series. The following is a summary of transactions in Fund shares for the
fiscal years ending June 30, 1997 and 1996:
Continued
40
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
ULTRA SHORT-TERM LIMITED VOLATILITY
INCOME FUND BOND FUND INTERMEDIATE BOND FUND
------------------------ ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996(a) 1997 1996 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued................. $ 77,614 $ 35,008 $ 111,732 $ 196,323 $ 172,698 $102,645
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 115,134 -- --
Proceeds from shares issued in connection
with conversion........................... -- -- -- -- 207,582 --
Dividends reinvested........................ 148 923 2,151 8,093 661 2,976
Cost of shares redeemed..................... (21,314) (29,367) (157,344) (129,046) (91,579) (62,091)
-------- -------- --------- --------- --------- --------
Change in net assets from Fiduciary Share
transactions.............................. $ 56,448 $ 6,564 $ (43,461) $ 190,504 $ 289,362 $ 43,530
======== ======== ========= ========= ========= ========
CLASS A SHARES:
Proceeds from shares issued................. $ 29,729 $ 2,666 $ 5,026 $ 126,619 $ 9,430 $ 12,374
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 8,153 -- --
Dividends reinvested........................ 578 89 870 569 671 381
Cost of shares redeemed..................... (4,720) (3,395) (7,282) (118,533) (5,173) (3,716)
-------- -------- --------- --------- --------- --------
Change in net assets from Class A Share
transactions.............................. $ 25,587 $ (640) $ (1,386) $ 16,808 $ 4,928 $ 9,039
======== ======== ========= ========= ========= ========
CLASS B SHARES:
Proceeds from shares issued................. $ 2,207 $ 1,030 $ 890 $ 2,630 $ 5,098 $ 6,156
Proceeds from shares issued in connection
with acquisition.......................... -- -- -- 386 -- --
Dividends reinvested........................ 64 16 230 135 332 80
Cost of shares redeemed..................... (607) (55) (1,152) (704) (1,420) (333)
-------- -------- --------- --------- --------- --------
Change in net assets from Class B Share
transactions.............................. $ 1,664 $ 991 $ (32) $ 2,447 $ 4,010 $ 5,903
======== ======== ========= ========= ========= ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued...................................... 7,886 3,560 10,686 19,600 17,457 10,266
Issued in connection with acquisition....... -- -- -- 10,936 -- --
Issued in connection with conversion........ -- -- -- -- 20,926 --
Reinvested.................................. 15 94 206 768 67 296
Redeemed.................................... (2,166) (2,989) (15,059) (12,260) (9,247) (6,200)
-------- -------- --------- --------- --------- --------
Change in Fiduciary Shares.................. 5,735 665 (4,167) 19,044 29,203 4,362
======== ======== ========= ========= ========= ========
CLASS A SHARES:
Issued...................................... 3,018 269 482 11,297 951 1,231
Issued in connection with acquisition....... -- -- -- 775 -- --
Reinvested.................................. 59 10 83 54 68 39
Redeemed.................................... (480) (344) (697) (11,265) (522) (373)
-------- -------- --------- --------- --------- --------
Change in Class A Shares.................... 2,597 (65) (132) 861 497 897
======== ======== ========= ========= ========= ========
CLASS B SHARES:
Issued...................................... 225 105 85 215 515 617
Issued in connection with acquisition....... -- -- -- 36 -- --
Reinvested.................................. 7 1 22 12 34 8
Redeemed.................................... (62) (5) (110) (68) (144) (34)
-------- -------- --------- --------- --------- --------
Change in Class B Shares.................... 170 101 (3) 195 405 591
======== ======== ========= ========= ========= ========
</TABLE>
- ------------
(a) Previously named the Government ARM Fund.
Continued
41
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
TREASURY & AGENCY
GOVERNMENT BOND FUND INCOME BOND FUND FUND
------------------------ ------------------------ -----------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED JANUARY 20, 1997
JUNE 30, JUNE 30, JUNE 30, JUNE 30, THROUGH JUNE 30,
1997 1996 1997 1996 1997(a)
---------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued...................... $ 217,351 $ 135,419 $ 210,985 $ 154,901 $ 6,235
Proceeds from shares issued in connection with
acquisition.................................... -- 273,384 -- -- --
Proceeds from shares issued in connection with
conversion..................................... -- -- 132,470 -- 113,243
Dividends reinvested............................. 1,826 7,234 3,766 12,601 --(b)
Cost of shares redeemed.......................... (181,374) (128,141) (142,285) (109,230) (9,231)
--------- --------- --------- --------- ---------
Change in net assets from Fiduciary Share
transactions................................... $ 37,803 $ 287,896 $ 204,936 $ 58,272 $ 110,247
========= ========= ========= ========= =========
CLASS A SHARES:
Proceeds from shares issued...................... $ 9,184 $ 307,157 $ 7,637 $ 6,470 $ 94
Proceeds from shares issued in connection with
acquisition.................................... -- 26,507 -- -- --
Dividends reinvested............................. 1,575 647 647 391 --(b)
Cost of shares redeemed.......................... (15,371) (278,122) (4,192) (3,302) --
--------- --------- --------- --------- ---------
Change in net assets from Class A Share
transactions................................... $ (4,612) $ 56,189 $ 4,092 $ 3,559 $ 94
========= ========= ========= ========= =========
CLASS B SHARES:
Proceeds from shares issued...................... $ 2,918 $ 9,312 $ 5,936 $ 4,798 $ 80
Proceeds from shares issued in connection with
acquisition.................................... -- 1,973 -- -- --
Dividends reinvested............................. 480 200 344 114 --(b)
Cost of shares redeemed.......................... (2,599) (954) (1,601) (558) --(b)
--------- --------- --------- --------- ---------
Change in net assets from Class B Share
transactions................................... $ 799 $ 10,531 $ 4,679 $ 4,354 $ 80
========= ========= ========= ========= =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued........................................... 22,536 16,246 22,470 16,245 627
Issued in connection with acquisition............ -- 27,974 -- -- --
Issued in connection with conversion............. -- -- 14,063 -- 11,324
Reinvested....................................... 190 735 403 1,318 --(b)
Redeemed......................................... (18,817) (12,833) (15,133) (11,460) (927)
--------- --------- --------- --------- ---------
Change in Fiduciary Shares....................... 3,909 32,122 21,803 6,103 11,024
========= ========= ========= ========= =========
CLASS A SHARES:
Issued........................................... 956 28,902 814 680 9
Issued in connection with acquisition............ -- 2,711 -- -- --
Reinvested....................................... 164 66 69 41 --(b)
Redeemed......................................... (1,593) (28,451) (448) (347) --
--------- --------- --------- --------- ---------
Change in Class A Shares......................... (473) 3,228 435 374 9
========= ========= ========= ========= =========
CLASS B SHARES:
Issued........................................... 302 749 628 500 8
Issued in connection with acquisition............ -- 202 -- -- --
Reinvested....................................... 50 20 36 12 --(b)
Redeemed......................................... (270) (99) (169) (58) --(b)
--------- --------- --------- --------- ---------
Change in Class B Shares......................... 82 872 495 454 8
========= ========= ========= ========= =========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Dollar and share amounts are less than 1,000.
Continued
42
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to the following percentages of the Funds' average
net assets: 0.60% of the Income Bond Fund, the Intermediate Bond Fund and the
Limited Volatility Bond Fund; 0.55% of the Ultra Short-Term Income Fund;
0.45% of the Government Bond Fund; and 0.40% of the Treasury & Agency Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
the first $1.5 billion of Trust net assets (excluding the Investor Growth
Fund, the Investor Growth & Income Fund, the Investor Conservative Growth
Fund and the Investor Balanced Fund (the "Investor Funds") and the Treasury
Only Money Market Fund and the Government Money Market Fund--the
"Institutional Money Market Funds"); 0.18% on the next $0.5 billion of Trust
net assets (excluding the Investor Funds and the Institutional Money Market
Funds); and 0.16% of Trust net assets (excluding the Investor Funds and the
Institutional Money Market Funds) over $2 billion. The Advisor also serves as
Sub-Administrator to each fund of the Trust, pursuant to an agreement between
the Administrator and the Advisor. Pursuant to this agreement, the Advisor
performs many of the Administrator's duties, for which the Advisor receives a
fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A and Class B Shares are subject to a distribution
and shareholder services plan (the "Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Plans, the Trust will pay the Distributor a fee
of 0.35% of the average daily net assets of Class A Shares of each of the
Funds and 1.00% of the average daily net assets of the Class B Shares of each
of the Funds. Currently, the Distributor has voluntarily agreed to limit
payments under the Plans to 0.25% of average daily net assets of the Class A
Shares of each Fund, 0.75% of average daily net assets of the Class B Shares
of Ultra Short-Term Income Fund, Limited Volatility Bond Fund and Treasury &
Agency Fund and 0.90% of average daily net assets of Intermediate Bond Fund,
Government Bond Fund and Income Bond Fund. Up to 0.25% of the fees payable
under the Plans may be used as compensation for shareholder services by the
Distributor and/or financial institutions and intermediaries. Fees paid under
the Plans may be applied by the Distributor toward (i) compensation for its
services in connection with distribution assistance or provision of
shareholder services; or (ii) payments to financial institutions and
intermediaries such as banks (including affiliates of the Adviser), brokers,
dealers and other institutions, including the Distributor's affiliates and
subsidiaries as compensation for services or reimbursement of expenses
incurred in connection with distribution assistance or provision of
shareholder services. Fiduciary Class Shares of each Fund are offered without
distribution fees. For the period ended June 30, 1997, the Distributor
received $952,230 from commissions earned on sales of Class A Shares and
redemptions of Class B Shares, of which the Distributor re-allowed $936,799
to affiliated broker-dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
43
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the period ended June 30, 1997, fees in
the following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
12B-1 FEES
INVESTMENT WAIVED
ADVISORY FEES ADMINISTRATION ------------------
WAIVED FEES WAIVED CLASS A CLASS B
------------- -------------- ------- -------
<S> <C> <C> <C> <C>
Ultra Short-Term Income Fund......................... $ 343 $ 96 $13 $ 5
Limited Volatility Bond Fund......................... 1,831 -- 21 15
Intermediate Bond Fund............................... 1,092 -- 15 8
Government Bond Fund................................. 195 220 37 11
Income Bond Fund..................................... 1,291 -- 12 9
Treasury & Agency Fund............................... 99 68 -- --
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the period
ended June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OTHER SECURITIES
--------------------- ---------------------
PURCHASES SALES PURCHASES SALES
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Ultra Short-Term Income Bond Fund..................... $ 103,208 $ 55,715 $ 32,312 $ 7,013
Limited Volatility Bond Fund.......................... 236,987 337,634 149,624 100,204
Intermediate Bond Fund................................ 356,607 175,250 147,606 40,473
Government Bond Fund.................................. 461,056 424,490 -- --
Income Bond Fund...................................... 273,442 191,748 299,740 154,985
Treasury & Agency Fund................................ 60,025 63,239 -- --
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risk in excess of the
amounts reflected in the Statement of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in the
particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates, an
illiquid secondary market for the instruments or inability of counterparties
to perform under the terms of the contract. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuations in
securities.
7. REORGANIZATIONS:
The Trust entered an Agreement and Plan of Reorganization ("Reorganization")
with Paragon pursuant to which all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. The Paragon Short-Term Government
Fund and the Paragon Intermediate-Term Bond Fund transferred their assets and
liabilities to the Limited Volatility Bond Fund and the Government Bond Fund,
respectively. The Reorganization, which qualified as a tax-free exchange for
Federal income tax purposes, was completed on March 25, 1996 following
approval by shareholders of Paragon at a special shareholder meeting. The
following is a summary of shares outstanding, net assets, net asset value per
share and unrealized appreciation immediately before and after the
Reorganization (amounts in thousands except net asset value):
Continued
44
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
<TABLE>
<CAPTION> AFTER
BEFORE REORGANIZATION REORGANIZATION
----------------------- -----------------
PARAGON
SHORT-TERM LIMITED LIMITED
GOVERNMENT VOLATILITY VOLATILITY
FUND BOND FUND BOND FUND
---------- --------- --------------
<S> <C> <C> <C>
Shares...................................................... 12,208 39,898 51,646
Net Assets.................................................. $123,673 $420,044 $543,717
Net Asset Value:
Fiduciary................................................. $ 10.53 $ 10.53
Class A................................................... $ 10.13 $ 10.52 $ 10.52
Class B................................................... $ 10.13 $ 10.59 $ 10.59
Unrealized Appreciation (Depreciation)...................... $ (785) $ 4,397 $ 3,612
</TABLE>
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
--------------------------- --------------
PARAGON
INTERMEDIATE-
TERM BOND GOVERNMENT GOVERNMENT
FUND BOND FUND BOND FUND
------------- ---------- --------------
<S> <C> <C> <C>
Shares.................................................... 29,536 44,653 75,540
Net Assets................................................ $ 301,865 $436,393 $738,258
Net Asset Value:
Fiduciary............................................... $ 9.77 $ 9.77
Class A................................................. $ 10.22 $ 9.78 $ 9.78
Class B................................................. $ 10.25 $ 9.77 $ 9.77
Unrealized Appreciation................................... $ 2,883 $ 5,934 $ 8,817
</TABLE>
Additionally, the Limited Volatility Bond Fund and the Government Bond Fund
had capital loss carryforwards from Paragon of approximately $1,106,000 and
$3,757,000, respectively.
8. CONVERSION OF COMMON TRUST FUNDS:
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
VALUE
SHARES NET ASSETS PER SHARE UNREALIZED
ISSUED CONVERTED ISSUED APPRECIATION
------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Income Bond Fund....................................... 14,063 $132,470 $ 9.42 $4,511
Intermediate Bond Fund................................. 20,926 $207,582 $ 9.92 $1,740
Treasury & Agency Fund................................. 11,324 $113,243 $10.00 $1,909
</TABLE>
Continued
45
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30,1997
9. FEDERAL TAX INFORMATION (UNAUDITED):
At June 30, 1997 the following Funds have capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD (000) EXPIRES
------------------ -------
<S> <C> <C>
Ultra Short-Term Income Fund........................................... $2,283 2003
Ultra Short-Term Income Fund........................................... 1,065 2004
Ultra Short-Term Income Fund........................................... 682 2005
Limited Volatility Bond Fund........................................... 197 2000
Limited Volatility Bond Fund........................................... 165 2001
Limited Volatility Bond Fund........................................... 443 2002
Limited Volatility Bond Fund........................................... 2,720 2003
Limited Volatility Bond Fund........................................... 3,301 2004
Limited Volatility Bond Fund........................................... 651 2005
Intermediate Bond Fund................................................. 222 2000
Intermediate Bond Fund................................................. 845 2001
Intermediate Bond Fund................................................. 1,321 2002
Intermediate Bond Fund................................................. 1,980 2003
Intermediate Bond Fund................................................. 530 2005
Government Bond Fund................................................... 2,565 2002
Government Bond Fund................................................... 10,809 2003
Government Bond Fund................................................... 5,314 2004
Income Bond Fund....................................................... 50,654 2003
Income Bond Fund....................................................... 1,963 2004
</TABLE>
Under current tax law, capital losses realized after October 31 may be deferred
and treated as occurring on the first day of the following fiscal year. The
following deferred losses will be treated as arising on the first day of the
fiscal year ended June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
POST-OCTOBER
CAPITAL LOSSES (000)
--------------------
<S> <C>
Ultra Short-Term Income Fund................................... $ 37
Limited Volatility Bond Fund................................... 3,705
Intermediate Bond Fund......................................... 384
Government Bond Fund........................................... 2,425
Income Bond Fund............................................... 2,089
</TABLE>
Continued
46
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
------------------------------------------------------
FIDUCIARY
------------------------------------------------------
YEARS ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................... $ 9.79 $ 9.84 $ 9.85 $ 10.03 $ 10.00
-------- ------- ------- -------- --------
Investment Activities
Net investment income................................... 0.62 0.62 0.55 0.36 0.17
Net realized and unrealized gains (losses) from
investments
and futures........................................... 0.05 (0.07) (0.05) (0.15) 0.03
-------- ------- ------- -------- --------
Total from Investment Activities...................... 0.67 0.55 0.50 0.21 0.20
-------- ------- ------- -------- --------
Distributions
Net investment income................................... (0.59) (0.60) (0.48) (0.37) (0.17)
In excess of net investment income...................... -- -- (0.03) (0.02) --
-------- ------- ------- -------- --------
Total Distributions................................... (0.59) (0.60) (0.51) (0.39) (0.17)
-------- ------- ------- -------- --------
NET ASSET VALUE,
END OF PERIOD........................................... $ 9.87 $ 9.79 $ 9.84 $ 9.85 $ 10.03
======== ======= ======= ======== ========
Total Return.............................................. 7.14% 5.71% 5.14% 2.16% 4.93%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $114,413 $57,276 $51,050 $139,593 $154,413
Ratio of expenses to average net assets................. 0.35% 0.45% 0.61% 0.65% 0.58%(b)
Ratio of net investment income to average net assets.... 6.02% 6.20% 5.18% 3.70% 4.71%(b)
Ratio of expenses to average net assets*................ 0.81% 1.06% 1.01% 0.81% 1.03%(b)
Ratio of net investment income to average net assets*... 5.56% 5.59% 4.78% 3.54% 4.26%(b)
Portfolio Turnover (c).................................. 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 2, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
47
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
--------------------------------------------------
CLASS A
--------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------ ------ ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......................................... $ 9.78 $ 9.83 $ 9.84 $ 10.03 $10.00
------- ------ ------ ------- -------
Investment Activities
Net investment income........................................ 0.58 0.58 0.52 0.36 0.14
Net realized and unrealized gains (losses) from investments
and futures................................................ 0.09 (0.06) (0.06) (0.17) 0.03
------- ------ ------ ------- -------
Total from Investment Activities........................... 0.67 0.52 0.46 0.19 0.17
------- ------ ------ ------- -------
Distributions
Net investment income........................................ (0.58) (0.57) (0.46) (0.34) (0.14)
In excess of net investment income........................... -- -- (0.01) (0.04) --
------- ------ ------ ------- -------
Total Distributions........................................ (0.58) (0.57) (0.47) (0.38) (0.14)
------- ------ ------ ------- -------
NET ASSET VALUE,
END OF PERIOD................................................ $ 9.87 $ 9.78 $ 9.83 $ 9.84 $10.03
------- ------ ------ ------- ------
Total Return (Excludes Sales Charge)........................... 7.00% 5.42% 4.84% 1.95% 4.78%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................ $29,643 $3,969 $4,631 $19,053 $3,106
Ratio of expenses to average net assets...................... 0.61% 0.70% 0.86% 0.89% 0.81%(b)
Ratio of net investment income to average net assets......... 5.78% 5.95% 4.88% 3.54% 4.47%(b)
Ratio of expenses to average net asset*...................... 1.17% 1.41% 1.36% 1.14% 1.34%(b)
Ratio of net investment income to average net asset*......... 5.22% 5.24% 4.38% 3.29% 3.95%(b)
Portfolio Turnover (c)....................................... 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on March 10, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
48
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
--------------------------------------
CLASS B
--------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------ ------ ------ --------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................................... $ 9.76 $ 9.84 $ 9.86 $ 9.98
------ ------ ------ -------
Investment Activities
Net investment income................................................... 0.54 0.52 0.47 0.12
Net realized and unrealized gains (losses) from investments and
futures............................................................... 0.05 (0.07) (0.04) (0.11)
------ ------ ------ -------
Total from Investment Activities...................................... 0.59 0.45 0.43 0.01
------ ------ ------ -------
Distributions
Net investment income................................................... (0.54) (0.53) (0.45) (0.12)
In excess of net investment income...................................... -- -- -- (0.01)
------ ------ ------ -------
Total Distributions................................................... (0.54) (0.53) (0.45) (0.13)
------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD........................................................... $ 9.81 $ 9.76 $ 9.84 $ 9.86
====== ====== ====== =======
Total Return (Excludes Sales Charge)...................................... 6.22% 4.63% 4.77% (0.09)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $2,818 $1,144 $ 160 $ 15
Ratio of expenses to average net assets................................. 1.07% 1.20% 1.31% 1.41% (c)
Ratio of net investment income to average net assets.................... 5.18% 5.45% 4.91% 3.49% (c)
Ratio of expenses to average net assets*................................ 1.81% 2.06% 1.96% 1.83% (c)
Ratio of net investment income to average net assets*................... 4.44% 4.59% 4.26% 3.07% (c)
Portfolio Turnover (d).................................................. 70.36% 67.65% 2.91% 242.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
49
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................... $ 10.42 $ 10.53 $ 10.33 $ 10.87 $ 10.72
-------- -------- -------- -------- --------
Investment Activities
Net investment income................................. 0.63 0.64 0.60 0.54 0.61
Net realized and unrealized gains (losses) from
investments
and futures......................................... 0.05 (0.11) 0.19 (0.45) 0.25
-------- -------- -------- -------- --------
Total from Investment Activities.................... 0.68 0.53 0.79 0.09 0.86
-------- -------- -------- -------- --------
Distributions
Net investment income................................. (0.63) (0.64) (0.59) (0.55) (0.62)
In excess of net investment income.................... -- -- -- (0.02) --
Net realized gains.................................... -- -- -- (0.06) (0.09)
-------- -------- -------- -------- --------
Total Distributions................................. (0.63) (0.64) (0.59) (0.63) (0.71)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD......................................... $ 10.47 $ 10.42 $ 10.53 $ 10.33 $ 10.87
======== ======== ======== ======== ========
Total Return............................................ 6.75% 5.13% 7.96% 0.79% 8.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................... $563,979 $604,916 $410,746 $447,394 $397,820
Ratio of expenses to average net assets............... 0.51% 0.51% 0.52% 0.50% 0.56%
Ratio of net investment income to average net
assets.............................................. 6.06% 6.06% 5.82% 5.10% 5.70%
Ratio of expenses to average net assets*.............. 0.81% 0.82% 0.85% 0.85% 0.90%
Ratio of net investment income to average net
assets*............................................. 5.76% 5.75% 5.49% 4.75% 5.36%
Portfolio Turnover (a)................................ 66.61% 75.20% 76.43% 30.61% 40.28%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
50
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 10.41 $ 10.52 $ 10.32 $ 10.87 $ 10.72
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.61 0.63 0.56 0.52 0.59
Net realized and unrealized gains (losses) from investments
and futures.............................................. 0.05 (0.13) 0.21 (0.46) 0.24
------- ------- ------- ------- -------
Total from Investment Activities......................... 0.66 0.50 0.77 0.06 0.83
------- ------- ------- ------- -------
Distributions
Net investment income...................................... (0.61) (0.61) (0.56) (0.51) (0.59)
In excess of net investment income......................... -- -- (0.01) (0.04) --
Net realized gains......................................... -- -- -- (0.06) (0.09)
------- ------- ------- ------- -------
Total Distributions...................................... (0.61) (0.61) (0.57) (0.61) (0.68)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 10.46 $ 10.41 $ 10.52 $ 10.32 $ 10.87
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)......................... 6.47% 4.86% 7.67% 0.49% 8.04%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $20,055 $21,343 $12,516 $15,216 $15,719
Ratio of expenses to average net assets.................... 0.76% 0.76% 0.77% 0.75% 0.76%
Ratio of net investment income to average net assets....... 5.81% 5.81% 5.57% 4.92% 5.35%
Ratio of expenses to average net assets*................... 1.16% 1.17% 1.20% 1.20% 1.27%
Ratio of net investment income to average net assets*...... 5.41% 5.40% 5.14% 4.47% 4.84%
Portfolio Turnover (a)..................................... 66.61% 75.20% 76.43% 30.61% 40.28%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
51
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
--------------------------------------
CLASS B
--------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------ ------ ------ --------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................................... $10.49 $10.60 $10.40 $10.78
------ ------ ------ ------
Investment Activities
Net investment income................................................... 0.55 0.55 0.53 0.17
Net realized and unrealized gains (losses) from investments and
futures............................................................... 0.04 (0.10) 0.19 (0.37)
------ ------ ------ ------
Total from Investment Activities...................................... 0.59 0.45 0.72 (0.20)
------ ------ ------ ------
Distributions
Net investment income................................................... (0.55) (0.56) (0.52) (0.15)
In excess of net realized gains......................................... -- -- -- (0.03)
------ ------ ------ ------
Total Distributions................................................... (0.55) (0.56) (0.52) (0.18)
------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD........................................................... $10.53 $10.49 $10.60 $10.40
====== ====== ====== ======
Total Return (Excludes Sales Charge)...................................... 5.74% 4.28% 7.18% (1.81)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $4,920 $4,923 $2,906 $1,974
Ratio of expenses to average net assets................................. 1.20% 1.26% 1.28% 1.26%(c)
Ratio of net investment income to average net assets.................... 5.21% 5.31% 5.10% 4.39%(c)
Ratio of expenses to average net assets*................................ 1.81% 1.82% 1.86% 1.86%(c)
Ratio of net investment income to average net assets*................... 4.60% 4.75% 4.52% 3.79%(c)
Portfolio Turnover (d).................................................. 66.61% 75.20% 76.43% 30.61%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
52
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
------------------------------------------------------
FIDUCIARY
------------------------------------------------------
YEARS ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................... $ 9.84 $ 10.01 $ 9.72 $ 10.51 $ 10.09
-------- -------- -------- ------- -------
Investment Activities
Net investment income................................... 0.65 0.66 0.66 0.60 0.63
Net realized and unrealized gains (losses) from
investments
and futures........................................... 0.08 (0.17) 0.29 (0.67) 0.42
-------- -------- -------- ------- -------
Total from Investment Activities...................... 0.73 0.49 0.95 (0.07) 1.05
-------- -------- -------- ------- -------
Distributions
Net investment income................................... (0.65) (0.66) (0.66) (0.60) (0.63)
In excess of net investment income...................... -- -- -- (0.02) --
Net realized gains...................................... -- -- -- (0.10) --
-------- -------- -------- ------- -------
Total Distributions................................... (0.65) (0.66) (0.66) (0.72) (0.63)
-------- -------- -------- ------- -------
NET ASSET VALUE,
END OF PERIOD........................................... $ 9.92 $ 9.84 $ 10.01 $ 9.72 $ 10.51
======== ======== ======== ======= =======
Total Return.............................................. 7.68% 4.95% 10.15% (0.74)% 10.67%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $522,423 $230,812 $191,216 $98,483 $44,252
Ratio of expenses to average net assets................. 0.54% 0.54% 0.56% 0.32% 0.39%
Ratio of net investment income to average net assets.... 6.63% 6.56% 6.88% 6.04% 6.14%
Ratio of expenses to average net assets*................ 0.81% 0.87% 0.99% 0.87% 1.17%
Ratio of net investment income to average net assets*... 6.36% 6.23% 6.45% 5.49% 5.36%
Portfolio Turnover (a).................................. 55.91% 101.06% 99.71% 85.62% 21.51%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
53
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
------------------------------
CLASS A
------------------------------
YEARS ENDED JUNE 30,
------------------------------
1997 1996 1995(a)
------- ------- --------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................... $ 9.87 $ 10.04 $ 9.45
------- ------- ------
Investment Activities
Net investment income......................................................... 0.63 0.64 0.37
Net realized and unrealized gains (losses) from investments and futures....... 0.08 (0.17) 0.59
------- ------- ------
Total from Investment Activities............................................ 0.71 0.47 0.96
------- ------- ------
Distributions
Net investment income......................................................... (0.63) (0.64) (0.37)
------- ------- ------
Total Distributions......................................................... (0.63) (0.64) (0.37)
------- ------- ------
NET ASSET VALUE,
END OF PERIOD................................................................. $ 9.95 $ 9.87 $10.04
======= ======= ======
Total Return (Excludes Sales Charge)............................................ 7.40% 4.77% 10.29%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................................. $18,763 $13,706 $4,941
Ratio of expenses to average net assets....................................... 0.78% 0.79% 0.83%(c)
Ratio of net investment income to average net assets.......................... 6.35% 6.31% 6.64%(c)
Ratio of expenses to average net assets*...................................... 1.16% 1.22% 1.66%(c)
Ratio of net investment income to average net assets*......................... 5.97% 5.88% 5.81%(c)
Portfolio Turnover (d)........................................................ 55.91% 101.06% 99.71
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced operations November 30, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
54
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
------------------------------
CLASS B
------------------------------
YEARS ENDED JUNE 30,
------------------------------
1997 1996 1995(a)
------- ------- --------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................... $ 9.83 $ 10.01 $ 9.45
------- ------- ------
Investment Activities
Net investment income......................................................... 0.56 0.58 0.23
Net realized and unrealized gains (losses) from investments and futures....... 0.09 (0.18) 0.56
------- ------- ------
Total from Investment Activities............................................ 0.65 0.40 0.79
------- ------- ------
Distributions
Net investment income......................................................... (0.56) (0.58) (0.23)
------- ------- ------
Total Distributions......................................................... (0.56) (0.58) (0.23)
------- ------- ------
NET ASSET VALUE,
END OF PERIOD................................................................. $ 9.92 $ 9.83 $10.01
======= ======= ======
Total Return (Excludes Sales Charge)............................................ 6.83% 4.10% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................................. $10,152 $ 6,077 $ 266
Ratio of expenses to average net assets....................................... 1.44% 1.44% 1.51%(c)
Ratio of net investment income to average net assets.......................... 5.71% 5.66% 6.15%(c)
Ratio of expenses to average net assets*...................................... 1.81% 1.87% 2.34%(c)
Ratio of net investment income to average net assets*......................... 5.34% 5.23% 5.31%(c)
Portfolio Turnover (d)........................................................ 55.91% 101.06% 99.71%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on November 30, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
55
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-------------------------------------------------------
FIDUCIARY
-------------------------------------------------------
YEARS ENDED JUNE 30,
-------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................... $ 9.56 $ 9.81 $ 9.35 $ 10.15 $ 10.00
-------- -------- -------- -------- -------
Investment Activities
Net investment income.................................. 0.62 0.62 0.62 0.51 0.20
Net realized and unrealized gains (losses) from
investments and futures.............................. 0.13 (0.25) 0.46 (0.77) 0.15
-------- -------- -------- -------- -------
Total from Investment Activities..................... 0.75 0.37 1.08 (0.26) 0.35
-------- -------- -------- -------- -------
Distributions
Net investment income.................................. (0.62) (0.62) (0.61) (0.50) (0.20)
In excess of net investment income..................... -- -- (0.01) (0.02) --
In excess of net realized gains........................ -- -- -- (0.02) --
-------- -------- -------- -------- -------
Total Distributions.................................. (0.62) (0.62) (0.62) (0.54) (0.20)
-------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD.......................................... $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.15
======== ======== ======== ======== =======
Total Return............................................. 8.10% 3.81% 12.04% (2.73)% 9.03%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $724,423 $677,326 $379,826 $209,692 $52,152
Ratio of expenses to average net assets................ 0.62% 0.68% 0.71% 0.68% 0.69%(b)
Ratio of net investment income to average net assets... 6.45% 6.34% 6.65% 5.13% 5.43%(b)
Ratio of expenses to average net assets*............... 0.68% 0.69% 0.73% 0.71% 1.05%(b)
Ratio of net investment income to average net
assets*.............................................. 6.39% 6.33% 6.63% 5.10% 5.07%(b)
Portfolio Turnover (c)................................. 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on February 8, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
56
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 9.56 $ 9.81 $ 9.35 $ 10.17 $ 10.22
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.60 0.60 0.61 0.48 0.17
Net realized and unrealized gains (losses) from investments
and futures.............................................. 0.13 (0.25) 0.45 (0.79) (0.05)
------- ------- ------- ------- -------
Total from Investment Activities......................... 0.73 0.35 1.06 (0.31) 0.12
------- ------- ------- ------- -------
Distributions
Net investment income...................................... (0.60) (0.60) (0.59) (0.47) (0.17)
In excess of net investment income......................... -- -- (0.01) (0.02) --
In excess of net realized gains............................ -- -- -- (0.02) --
------- ------- ------- ------- -------
Total Distributions...................................... (0.60) (0.60) (0.60) (0.51) (0.17)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.17
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)......................... 7.83% 3.58% 11.84% (3.16)% 5.35%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $34,727 $38,800 $ 8,130 $ 1,690 $ 840
Ratio of expenses to average net assets.................... 0.87% 0.93% 0.97% 0.92% 0.95%(b)
Ratio of net investment income to average net assets....... 6.20% 6.09% 6.46% 4.84% 5.56%(b)
Ratio of expenses to average net assets*................... 1.03% 1.04% 1.09% 1.05% 1.44%(b)
Ratio of net investment income to average net assets*...... 6.04% 5.98% 6.34% 4.71% 5.07%(b)
Portfolio Turnover (c)..................................... 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on March 6, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
57
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
----------------------------------------
CLASS B
----------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------
1997 1996 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................. $ 9.56 $ 9.81 $ 9.35 $ 10.04
------- ------- ------- -------
Investment Activities
Net investment income................................................ 0.54 0.54 0.55 0.18
Net realized and unrealized gains (losses) from investments and
futures............................................................ 0.13 (0.25) 0.46 (0.69)
------- ------- ------- -------
Total from Investment Activities................................... 0.67 0.29 1.01 (0.51)
------- ------- ------- -------
Distributions
Net investment income................................................ (0.54) (0.54) (0.55) (0.16)
In excess of net investment income................................... -- -- -- (0.02)
------- ------- ------- -------
Total Distributions................................................ (0.54) (0.54) (0.55) (0.18)
------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD........................................................ $ 9.69 $ 9.56 $ 9.81 $ 9.35
======= ======= ======= =======
Total Return (Excludes Sales Charge)................................... 7.14% 2.95% 11.20% (4.99)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................... $11,729 $10,782 $ 2,513 $ 656
Ratio of expenses to average net assets.............................. 1.52% 1.58% 1.62% 1.52%(c)
Ratio of net investment income to average net assets................. 5.55% 5.44% 5.76% 4.60%(c)
Ratio of expenses to average net assets*............................. 1.68% 1.69% 1.74% 1.63%(c)
Ratio of net investment income to average net assets*................ 5.39% 5.33% 5.64% 4.49%(c)
Portfolio Turnover (d)............................................... 60.53% 62.70% 106.14% 377.78%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
58
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................... $ 9.33 $ 9.54 $ 9.23 $ 10.43 $ 10.18
-------- -------- -------- -------- --------
Investment Activities
Net investment income................................. 0.64 0.65 0.64 0.54 0.66
Net realized and unrealized gains (losses) from
investments and futures............................. 0.09 (0.21) 0.35 (0.74) 0.38
-------- -------- -------- -------- --------
Total from Investment Activities.................... 0.73 0.44 0.99 (0.20) 1.04
-------- -------- -------- -------- --------
Distributions
Net investment income................................. (0.64) (0.65) (0.64) (0.57) (0.66)
Net realized gains.................................... -- -- (0.04) (0.43) (0.13)
-------- -------- -------- -------- --------
Total Distributions................................. (0.64) (0.65) (0.68) (1.00) (0.79)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD......................................... $ 9.42 $ 9.33 $ 9.54 $ 9.23 $ 10.43
======== ======== ======== ======== ========
Total Return............................................ 8.10% 4.62% 11.29% (2.54)% 10.62%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................... $730,754 $520,239 $474,124 $560,071 $483,291
Ratio of expenses to average net assets............... 0.60% 0.59% 0.59% 0.53% 0.56%
Ratio of net investment income to average net
assets.............................................. 6.85% 6.76% 6.94% 5.35% 6.44%
Ratio of expenses to average net assets*.............. 0.80% 0.81% 0.86% 0.85% 0.90%
Ratio of net investment income to average net
assets*............................................. 6.65% 6.54% 6.67% 5.03% 6.10%
Portfolio Turnover (a)................................ 55.18% 95.52% 262.25% 131.04% 143.52%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
59
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 9.32 $ 9.54 $ 9.22 $ 10.43 $ 10.16
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.62 0.63 0.61 0.52 0.63
Net realized and unrealized gains (losses) from investments
and futures.............................................. 0.09 (0.23) 0.36 (0.75) 0.41
------- ------- ------- ------- -------
Total from Investment Activities......................... 0.71 0.40 0.97 (0.23) 1.04
------- ------- ------- ------- -------
Distributions
Net investment income...................................... (0.62) (0.62) (0.60) (0.55) (0.64)
In excess of net investment income......................... -- -- (0.01) -- --
Net realized gains......................................... -- -- (0.04) (0.43) (0.13)
------- ------- ------- ------- -------
Total Distributions...................................... (0.62) (0.62) (0.65) (0.98) (0.77)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 9.41 $ 9.32 $ 9.54 $ 9.22 $ 10.43
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)......................... 7.85% 4.26% 10.90% (2.33)% 10.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $14,325 $10,127 $ 6,796 $ 5,347 $ 7,064
Ratio of expenses to average net assets.................... 0.85% 0.84% 1.01% 0.78% 0.77%
Ratio of net investment income to average net assets....... 6.59% 6.51% 6.57% 5.25% 6.12%
Ratio of expenses to average net assets*................... 1.15% 1.16% 1.38% 1.20% 1.26%
Ratio of net investment income to average net assets*...... 6.29% 6.19% 6.20% 4.83% 5.63%
Portfolio Turnover (a)..................................... 55.18% 95.52% 262.25% 131.04% 143.52%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
60
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
---------------------------------------
CLASS B
---------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------
1997 1996 1995 1994(a)
------- ------ ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................... $ 9.40 $ 9.62 $ 9.29 $ 9.97
------- ------ ------- -------
Investment Activities
Net investment income................................................. 0.56 0.56 0.56 0.17
Net realized and unrealized gains (losses) from investments and
futures............................................................. 0.09 (0.21) 0.38 (0.70)
------- ------ ------- -------
Total from Investment Activities.................................... 0.65 0.35 0.94 (0.53)
------- ------ ------- -------
Distributions
Net investment income................................................. (0.56) (0.57) (0.57) (0.15)
Net realized gains.................................................... -- -- (0.04) --
------- ------ ------- -------
Total Distributions................................................. (0.56) (0.57) (0.61) (0.15)
------- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD......................................................... $ 9.49 $ 9.40 $ 9.62 $ 9.29
======= ====== ======= =======
Total Return (Excludes Sales Charge).................................... 7.15% 3.65% 10.63% (5.29)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................................... $10,873 $6,110 $ 1,887 $ 723
Ratio of expenses to average net assets............................... 1.50% 1.49% 1.49% 1.45%(c)
Ratio of net investment income to average net assets.................. 5.95% 5.86% 6.16% 5.20%(c)
Ratio of expenses to average net assets*.............................. 1.80% 1.81% 1.86% 1.84%(c)
Ratio of net investment income to average net assets*................. 5.65% 5.54% 5.80% 4.81%(c)
Portfolio Turnover (d)................................................ 55.18% 95.52% 262.25% 131.04%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 17, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
61
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY & AGENCY FUND
--------------------------------------------------------
FIDUCIARY CLASS A CLASS B
---------------- ---------------- ----------------
JANUARY 20, 1997 JANUARY 20, 1997 JANUARY 20, 1997
THROUGH THROUGH THROUGH
JUNE 30, JUNE 30, JUNE 30,
1997 (a) 1997 (a) 1997 (a)
---------------- ---------------- ----------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................... $ 10.00 $10.00 $10.00
-------- ------ ------
Investment Activities
Net investment income.................................... 0.28 0.29 0.26
Net realized and unrealized gains (losses) from
investments and futures................................ (0.01) (0.02) (0.01)
-------- ------ ------
Total from Investment Activities....................... 0.27 0.27 0.25
-------- ------ ------
Distributions
Net investment income.................................... (0.28) (0.29) (0.26)
-------- ------ ------
NET ASSET VALUE,
END OF PERIOD............................................ $ 9.99 $ 9.98 $ 9.99
======== ====== ======
Total Return (Excludes Sales Charge) (b)................... 2.78% 2.78% 2.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $110,084 $ 94 $ 80
Ratio of expenses to average net assets (c).............. 0.45% 0.71% 1.23%
Ratio of net investment income to average net assets
(c).................................................... 6.44% 6.47% 6.30%
Ratio of expenses to average net assets* (c)............. 0.78% 1.15% 1.81%
Ratio of net investment income to average net assets*
(c).................................................... 6.11% 6.03% 5.72%
Portfolio Turnover (d)................................... 54.44% 54.44% 54.44%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
62
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Ultra Short-Term Income Fund (formally the Government ARM Fund), the Limited
Volatility Bond Fund, the Intermediate Bond Fund, the Government Bond Fund, the
Income Bond Fund and the Treasury & Agency Fund (six series of The One Group
Family of Mutual Funds), including the schedules of portfolio investments, as of
June 30, 1997, and the related statements of operations, statements of changes
in net assets and the financial highlights for each period presented except as
noted in the next paragraph. These financial statements and financial highlights
are the responsibility of The One Group Family of Mutual Funds' management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
The financial highlights for the year ended June 30, 1993 for the Intermediate
Bond Fund were audited by other auditors whose report dated August 25, 1993
expressed an unqualified opinion on the financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above, except as noted in the second paragraph present fairly, in all material
respects, the financial position of the Ultra Short-Term Income Fund, the
Limited Volatility Bond Fund, the Intermediate Bond Fund, the Government Bond
Fund, the Income Bond Fund and the Treasury & Agency Fund as of June 30, 1997,
the results of their operations, the changes in their net assets and the
financial highlights for the periods indicated herein, in conformity with
generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
63
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (99.8%):
Alabama (0.1%):
$ 500 Docks Department, Facilities
Revenue, 7.30%, 10/1/01, Callable
10/1/98 @102, BIG................. $ 528
--------
Alaska (0.2%):
1,000 Anchorage, GO, 6.00%, 10/1/10,
FGIC.............................. 1,081
--------
Arizona (2.7%):
1,000 Educational Loan Marketing Corp.,
AMT, 7.30%, 9/1/03, Callable
9/1/99 @102, MBIA................. 1,054
1,000 Educational Loan Marketing Corp.,
AMT, 7.35%, 9/1/04, Callable
9/1/99 @102, MBIA................. 1,054
775 Educational Loan Marketing Corp.,
AMT, 7.38%, 9/1/05, Callable
9/1/99 @102, MBIA................. 815
1,105 Maricopa County Development
Authority, Multifamily Housing,
5.65%, 1/1/09, Callableb 1/1/07
@101.............................. 1,112
1,280 Maricopa County Development
Authority, Multifamily Housing,
6.05%, 7/1/17, Callable 1/1/07
@101.............................. 1,288
1,000 Northern Arizona University, 6.50%,
6/1/10, FGIC...................... 1,137
700 Phoenix Industrial Development
Authority, 6.00%, 12/1/10,
Callable 12/1/03 @102............. 705
2,835 Phoenix Airport Revenue, AMT, Series
D, 6.00%, 7/1/06, MBIA............ 3,055
2,060 Pima County, Arizona Industrial
Development Authority, 5.45%,
4/1/10, Callable 4/1/07 @102,
MBIA.............................. 2,096
--------
12,316
--------
Arkansas (0.7%):
1,195 Sebastian County, Community Junior
College, 5.30%, 4/1/09, Callable
4/1/07 @101, AMBAC................ 1,209
1,060 Sebastian County, Community Junior
College, 5.35%, 4/1/10, Callable
4/1/07 @101, AMBAC................ 1,068
1,000 State Capital Appreciation, Series
97A, 0.00%, 6/1/14................ 392
585 State Development Authority, Single
Family Mortgage Revenue, Series G,
5.50%, 1/1/10..................... 596
--------
3,265
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California (5.6%):
$ 2,000 ABAG Finance Authority for Nonprofit
Corp., Multi-Family Housing
Revenue, AMT, 5.70%, 11/1/26,
Callable 11/1/06 @100............. $ 2,060
1,945 ABAG Finance Authority, Multi-Family
Housing Revenue, AMT, 6.75%,
4/20/07, GNMA..................... 2,115
500 Castaic Lake Water Agency,
Certificates Partnership, Water
System Improvement Project, 7.00%,
8/1/04, Callable 8/1/00 @102,
MBIA.............................. 550
1,000 Escondido Multifamily Housing,
Series 97B, 5.40%, 1/1/27,
Mandatory Put 7/1/07 @100......... 1,013
1,250 Housing Finance Agency Revenue, AMT,
Series G, 5.70%, 8/1/07, Callable
8/1/05 @102, MBIA................. 1,290
290 Housing Finance Agency Revenue, Home
Mortgage, Series F, 7.00%, 8/1/02,
Callable 2/1/00 @102.............. 303
1,750 Riverside County, CA, 5.75%,
6/1/09............................ 1,871
3,000 Sacramento Municipal Utility
District, 5.40%, 11/15/06,
Callable 11/15/03 @102, FSA....... 3,087
1,000 San Francisco City & County
Airports, Common International
Airport Revenue, 6.30%, 5/1/11,
Callable 5/1/02 @102, AMBAC....... 1,075
5,000 San Francisco City & County
Utilities, 5.00%, 11/1/17,
Callable 11/1/06 @101.5........... 4,758
1,000 Southern Public Power Authority,
Transmission Project, Revenue,
0.00%, 7/1/15, MBIA............... 369
1,000 State, 7.00%, 10/1/07............... 1,180
5,975 State Public Works, Department of
Corrections, Bridge Lease, 5.50%,
1/1/14, Callable 1/1/06 @102,
AMBAC............................. 6,025
--------
25,696
--------
Colorado (10.7%):
3,290 Arapahoe County, Capital
Improvements, Project E-470,
0.00%, 8/31/03.................... 2,412
1,135 Arapahoe County, School District #
001 Englewood, 0.00%, 11/1/09..... 600
1,580 Boulder County, Revenue, NCAR
Project, 6.90%, 12/1/07, Callable
12/1/01 @101...................... 1,729
</TABLE>
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 1,000 Denver City & County, Airport
Revenue, AMT, 6.75%, 11/15/13,
Callable 11/15/02 @102, MBIA...... $ 1,086
2,000 Denver City & County, Airport
Revenue, Series B, AMT, 5.75%,
11/15/09, Callable 11/15/06 @102,
MBIA.............................. 2,066
2,645 Denver City & County, Airport
Revenue, Series B, AMT, 7.50%,
11/15/25, Callable 11/15/97
@102.............................. 2,724
9,750 Denver City & County, School
District # 1, GO, 0.00%,
12/1/06........................... 6,077
1,000 Denver City & County, School
District, No. 001, GO Refunding,
6.50%, 12/1/10.................... 1,137
3,000 El Paso County, School District,
7.13%, 12/1/19, Callable 12/1/07
@125.............................. 3,693
1,135 Health Facilities Authority Revenue,
6.40%, 1/1/10, Callable 1/1/07
@101.............................. 1,150
825 Highlands Ranch Metropolitan
District Co., 5.75%, 9/1/10,
AMBAC............................. 877
1,750 Highlands Ranch Metropolitan
District Co., 5.75%, 9/1/12,
AMBAC............................. 1,853
370 Housing Finance Authority, 5.25%,
5/1/05............................ 372
3,250 Housing Finance Authority Series 97
B-3, 6.80%, 11/1/28, Callable
5/1/07 @105....................... 3,569
275 Housing Finance Authority, AMT,
5.63%, 5/1/04..................... 281
3,220 Housing Finance Authority, GO,
Series A, 6.40%, 8/1/06, Callable
8/1/02 @102, MBIA................. 3,363
800 Housing Finance Authority,
Refunding, Single Family, Series
D, 5.65%, 12/1/04, Callable 5/1/03
@100.............................. 818
805 Housing Finance Authority, Single
Family Program, Series F, AMT,
6.75%, 12/1/04.................... 831
500 Jefferson County, Partnership,
6.45%, 12/1/04, Callable 12/1/02
@102, MBIA........................ 550
3,000 Meridian Metropolitan District,
7.50%, 12/1/11, Callable 12/1/01
@101.............................. 3,297
1,000 Mountain Village Metropolitan
District, San Miguel County, GO,
8.10%, 12/1/11, Callable 12/1/02
@101.............................. 1,125
4,500 Northern Colorado Water Conservancy,
6.00%, 12/1/15, Callable 7/10/97
@100.............................. 4,507
1,620 Pueblo County, Single Family
Mortgage Revenue, 6.40%, 11/1/13,
Callable 11/1/04 @102............. 1,691
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 1,065 Student Obligation, 6.00%, 9/1/01... $ 1,108
740 Student Obligation Bond Authority,
Student Loan Revenue, AMT, 7.25%,
9/1/05, Callable 9/01/00 @100..... 772
1,250 Summit County, School District No.
1, Refunding, 6.75%, 12/1/04,
FGIC.............................. 1,411
--------
49,099
--------
Connecticut (2.3%):
1,000 Bridgeport, Refunding, 6.50%,
9/1/08, AMBAC..................... 1,128
1,575 Series A, 5.30%, 5/15/10, Callable
5/15/06 @101...................... 1,586
2,475 State GO, Series B, 6.00%,
10/1/05........................... 2,684
1,015 State Health & Educational
Facilities, Series 97E, 5.50%,
7/1/09, Callable 7/1/07 @102...... 1,020
1,765 State Housing Finance Authority,
6.70%, 11/15/12, Callable 11/15/02
@102.............................. 1,864
2,000 State Resource Recovery Authority,
5.75%, 11/15/07, MBIA............. 2,134
--------
10,416
--------
Florida (5.7%):
410 Broward County, Florida Resource
Recovery Revenue, North, 7.95%,
12/1/08, Callable 12/1/99 @103.... 447
435 Broward County, Florida Resource
Recovery Revenue, South, 7.95%,
12/1/08, Callable 12/1/99 @103.... 474
1,300 Broward County, Housing Authority,
5.55%, 7/1/09, Callable 7/1/06
@102.............................. 1,317
2,000 Broward County, Housing Finance
Authority, Single Family Mortgage
Revenue, AMT, 5.00%, 10/1/29,
Callable 4/1/07 @102.............. 2,037
1,500 Cape Coral Special Obligation
Revenue Water Improvements,
Special Assessment - Water
Utility, 6.38%, 6/1/09, Callable
6/1/02 @102, FSA.................. 1,620
420 Cape Coral, Split Obligations, Waste
Revenue, 6.25%, 6/1/06, Callable
6/1/02 @102, FSA.................. 456
1,070 Clay County, Housing Finance
Authority Revenue, Single Family
Mortgage, AMT, 6.25%, 9/1/13,
Callable 3/1/05 @102.............. 1,106
</TABLE>
Continued
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
$ 1,370 Clay County, Housing Financial
Authority Revenue, Single Family
Mortgage, AMT, 6.20%, 9/1/11,
Callable 3/1/05 @102.............. $ 1,413
2,010 Clay County, Housing Financial
Authority, AMT, 5.25%, 10/1/07,
Callable 4/1/07 @102.............. 2,017
1,000 Dade County, Aviation Revenue,
Series A, 6.00%, 10/1/08, Callable
10/1/05 @102, AMBAC............... 1,084
1,155 Department of Corrections,
Okeechobee Correctional Facility,
6.00%, 3/1/06, Callable 3/1/05
@102, AMBAC....................... 1,251
2,000 Escambia County, Housing Finance
Authority, Multifamily Housing
Revenue, 5.75%, 4/1/04, Callable
12/30/03 @100, GNMA............... 2,038
1,185 Indian River County, Hospital
Revenue, 5.95%, 10/1/09, Callable
1/1/07 @102, FSA.................. 1,266
1,285 Indian River County, Hospital
Revenue, 6.00%, 10/1/10, Callable
1/1/07 @102, FSA.................. 1,368
260 Manatee County, Housing Finance
Authority Mortgage Revenue, 6.38%,
11/1/05........................... 263
560 Manatee County, Housing Finance
Authority Revenue, 6.75%,
11/1/13........................... 588
1,000 Orlando Water and Electricity
Revenue, 8.00%, 4/1/03............ 1,175
1,500 Pinellas County Housing, AMT, Series
A, 6.85%, 3/1/29, Callable 3/1/07
@102.............................. 1,593
6,300 Plantation Water & Sewer Revenue,
0.00%, 3/1/07, MBIA............... 3,744
830 Tampa Capital Improvement Program,
Series B, 8.38%, 10/1/18, Callable
10/1/98 @100...................... 863
555 Tampa Water & Sewer Revenue, 0.00%,
10/1/05........................... 366
--------
26,486
--------
Georgia (0.9%):
1,500 Atlanta Airport Facilities, 6.50%,
1/1/08, AMBAC..................... 1,697
1,000 Atlanta Airport Facilities Revenue,
Series A, 6.50%, 1/1/07, AMBAC.... 1,124
1,215 Columbus Water & Sewer Revenue,
6.30%, 5/1/06, Callable 11/1/02
@102, FGIC........................ 1,318
--------
4,139
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Hawaii (1.4%):
$ 1,000 Honolulu City & County, GO, 5.60%,
4/1/08............................ $ 1,047
1,000 Honolulu City & County, GO, Series
A, 5.60%, 4/1/07, FSA............. 1,053
3,500 Honolulu City & County, GO, Series
A, 7.35%, 7/1/08.................. 4,173
--------
6,273
--------
Idaho (1.5%):
965 Housing Agency, Single Family
Mortgages, Series D1, 5.90%,
7/1/06............................ 996
1,745 Student Loan Fund Marketing
Association, Inc., 6.40%, 10/1/99,
GSL............................... 1,775
1,050 Student Loan Fund Marketing
Association, Inc., Student Loan
Revenue, 6.25%, 4/1/98............ 1,057
705 Student Loan Fund Marketing
Association, Inc., Student Loan
Revenue, AMT, 5.88%, 4/1/99....... 715
1,300 University of Idaho, University
Revenue, 5.75%, 4/1/06, FSA....... 1,387
1,060 University of Idaho, University
Revenue, 5.50%, 4/1/13, Callable
4/1/07 @101, MBIA................. 1,076
--------
7,006
--------
Illinois (7.3%):
3,500 Chicago Board of Education, 5.80%,
12/1/17, Callable 12/1/07 @102,
AMBAC............................. 3,565
1,000 Chicago Metro Water Reclamation
District - Greater Chicago Capital
Improvements, GO, 7.25%,
12/1/12........................... 1,211
4,245 Chicago Metro Water Reclamation
District - Greater Chicago Capital
Improvements, GO, 6.25%, 12/1/14,
Callable 12/1/05 @100............. 4,541
3,045 Chicago Park District, GO, 6.35%,
11/15/08, Callable 11/15/05 @102,
MBIA.............................. 3,352
2,585 Chicago Water Revenue, 6.50%,
11/1/10, FGIC..................... 2,904
1,770 Chicago, Single Family Mortgage
Revenue, 0.00%, 10/1/09, Callable
4/1/98 @48.84, MBIA............... 757
1,450 Chicago, Single Family Mortgage
Revenue, 0.00%, 10/1/09, Callable
10/1/05 @78.60, MBIA.............. 660
</TABLE>
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Illinois, continued:
$ 7,000 Development Finance Authority,
Pollution Control Revenue, 7.25%,
6/1/11, Callable 6/1/01 @102...... $ 7,596
935 Evanston Residential Mortgage,
6.38%, 1/1/09, Callable 7/1/02
@102, AMBAC....................... 984
555 Health Facilities Authority Revenue,
7.90%, 8/15/03, Callable 8/1/97
@102, MBIA........................ 568
1,645 Health Facilities Authority Revenue,
6.13%, 11/15/07, Callable 11/15/04
@102, MBIA........................ 1,779
1,500 Health Facilities Authority Revenue,
6.75%, 1/1/10, Callable 1/1/00
@102, FGIC........................ 1,594
2,500 Student Assistance, Student Loan
Revenue, AMT, Series M, 6.60%,
3/1/07, Callable 3/1/02 @102...... 2,647
1,350 Winnebago County, School District No
122, Harlem-Loves Park, Refunding,
6.35%, 6/1/07, FGIC............... 1,506
--------
33,664
--------
Indiana (3.2%):
2,150 Brownsburg Indiana Building, 5.50%,
2/1/15, Callable 2/1/07 @102,
MBIA.............................. 2,140
500 Columbus Sewer Works Revenue, 7.10%,
2/15/00........................... 534
1,000 Fort Wayne Hospital Authority,
Parkview Memorial Hospital
Project, Series A, 7.50%,
11/15/11, Callable 11/15/99 @102,
FGIC.............................. 1,082
705 Fremont Middle School Building
Corp., 6.60%, 9/15/04, Prerefunded
3/15/02 @101, AMBAC............... 775
700 Health Facility Financing Authority,
Hospital Revenue, Lutheran
Hospital Indiana, 7.25%, 2/15/06,
Callable 3/15/02 @101, AMBAC...... 747
500 Indiana State University, 6.90%,
8/1/03, Callable 8/1/00 @102...... 546
2,855 Indianapolis Economic Development
Revenue, Knob-in-the-Woods
Project, 6.38%, 12/1/04, Manadtory
Put 12/1/04 @100.................. 3,085
500 Lawrence Township School District,
6.75%, 1/5/05..................... 558
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Indiana, continued:
$ 1,500 New Albany Floyd County, Indiana
School Building, 6.20%, 7/1/03.... $ 1,625
1,500 New Albany Floyd County, Indiana
School Building, 6.20%, 7/1/04.... 1,633
1,000 Noblesville Hamilton County,
Building, 7.00%, 2/1/13,
Prerefunded 2/1/01 @102........... 1,104
1,000 State Vocational Technical College
Building Facilities Fee, 6.50%,
7/1/07, Callable 1/1/05 @102,
AMBAC............................. 1,120
--------
14,949
--------
Iowa (1.4%):
700 Des Moines Water Revenue, Series B,
5.50%, 12/1/04, Callable 12/1/01
@100.............................. 721
1,710 Finance Authority, 6.35%, 7/1/09,
Callable 1/1/03 @102, AMBAC....... 1,791
1,000 Finance Authority, Private College
Revenue, 5.75%, 12/1/08, MBIA..... 1,063
880 Finance Authority, Single Family
Mortgage, Series F, 6.15%, 7/1/04,
Callable 1/1/03 @102, AMBAC....... 903
500 Sioux City Iowa Water Revenue,
6.05%, 6/1/06, Callable 6/1/00
@100.............................. 515
1,500 Student Loan Liquidity Corp.,
Student Loan Revenue, Series C,
6.50%, 12/1/99, AMBAC............. 1,564
--------
6,557
--------
Kansas (0.4%):
1,750 Wichita Hospital Revenue, St.
Francis Regional Hospital, 6.25%,
10/1/10, Callable 10/1/02 @102,
MBIA.............................. 1,865
--------
Kentucky (1.2%):
845 Campbell & Kenton Counties,
Sanitation District #1, 6.50%,
8/1/05, ETM....................... 859
2,855 Junction City, Kentucky College
Revenue, 5.88%, 4/1/17, Callable
4/1/07 @102....................... 2,929
1,000 Kenton County, Public Properties
Corp., 5.63%, 12/1/12, Callable
12/1/06 @101...................... 1,015
2,000 Owensboro Electric Light & Power
Revenue, 0.00%, 1/1/09, Callable
1/1/98 @33.44, BIG................ 648
--------
5,451
--------
</TABLE>
Continued
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana (1.4%):
$ 246 Housing Agency Mortgage Revenue,
7.80%, 12/1/09, Callable 6/1/04
@105, GNMA........................ $ 275
1,710 Jefferson Parish Louisiana Home
Mortgage, AMT, Series A, 5.45%,
12/1/08........................... 1,733
2,000 Public Facilities Authority Revenue,
AMT, 6.75%, 9/1/06, Callable
9/1/02 @102....................... 2,121
2,000 St. Charles Parish Pollution
Control, 8.25%, 6/1/14, Callable
6/1/99 @103....................... 2,169
--------
6,298
--------
Maine (0.1%):
535 State Street Housing Preservation
Corp., 100 State Street Project,
7.20%, 1/1/02..................... 566
--------
Maryland (0.3%):
1,150 Anne Arundel County, GO, Series B,
AMT, 7.70%, 3/15/06, Callable
3/15/99 @102...................... 1,232
650 Prince Georges County, Maryland
Housing Authority, 0.00%, 9/1/08,
ETM............................... 364
--------
1,596
--------
Massachusetts (2.1%):
1,650 Beverly Massachusetts, 6.60%,
3/15/09, Callable 3/15/04 @102,
FSA............................... 1,824
760 Education Loan Authority, AMT,
7.25%, 1/1/09, Callable 1/1/01
@102.............................. 815
860 Health & Educational Facilities,
6.13%, 7/1/04, Callable 7/1/02
@102.............................. 911
2,030 State Port Authority Revenue,
Special Facilities, US Air
Project, Series A, AMT, 5.50%,
9/1/10, MBIA...................... 2,038
2,400 State, GO, Series C, 6.00%,
8/1/09............................ 2,605
1,465 Worcester, GO, Series A, 6.10%,
5/1/08, Callable 5/1/05 @102,
MBIA.............................. 1,590
--------
9,783
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Michigan (1.0%):
$ 780 Detroit Convention Facilities,
5.25%, 9/30/12, Callable 9/30/03
@102.............................. $ 744
2,000 State Hospital Finance Authority
Revenue, Mercy Mount Clemens
Corp., 6.25%, 5/15/11, Callable
5/15/01 @102...................... 2,091
1,500 State Hospital Finance Authority,
Series A, 8.10%, 10/1/13, Callable
10/1/05 @102...................... 1,725
--------
4,560
--------
Minnesota (0.3%):
1,500 Northern Municipal Power Agency,
Minnesota Electric, Series A,
5.90%, 1/1/07, Callable 1/1/03
@102, AMBAC....................... 1,599
--------
Mississippi (0.3%):
1,475 Home Corp., Single Family Series D,
5.25%, 7/1/12, Callable 7/1/07
@105, FNMA/GNMA................... 1,591
--------
Missouri (3.0%):
1,895 Carthage Waterworks & Wastewater
Treatment Systems, 6.30%, 7/1/09,
Callable 7/1/04 @101, MBIA........ 2,060
1,520 Fort Zumwalt School District, 5.20%,
3/1/09, Callable 3/1/07 @100,
AMBAC............................. 1,523
1,735 Fort Zumwalt School District, 5.30%,
3/1/10, Callable 3/1/07 @100,
AMBAC............................. 1,737
1,480 Kansas City Industrial Development
Authority, Multifamily Housing
Revenue, Series A, AMT, 5.63%,
7/1/05............................ 1,527
1,430 Kansas City Municipal Corp. Revenue,
5.40%, 1/15/08, Callable 1/15/06
@101, AMBAC....................... 1,473
2,500 St. Louis Convention & Sports
Complex, 5.50%, 8/15/13, Callable
8/15/03 @102, MBIA................ 2,505
2,955 St. Louis Land Clearance
Redevelopment Authority Housing
Revenue, 5.95%, 7/1/22, Mandatory
Put 4/1/07 @100, FNMA............. 3,099
--------
13,924
--------
Montana (0.3%):
1,370 Montana Long Range Bombing Project,
Series 96D, 5.25%, 8/1/16,
Callable 8/1/06 @100.............. 1,367
--------
</TABLE>
Continued
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Nebraska (0.5%):
$ 2,250 Higher Education Loan Program,
Series A-6, AMT, 5.90%, 6/1/03.... $ 2,317
--------
Nevada (2.9%):
1,025 Douglas County, School District,
Series A, 5.90%, 6/1/08, Callable
6/1/02 @101, FGIC................. 1,073
2,000 Las Vegas, Sewer Revenue, 6.60%,
10/1/12, Callable 4/1/02 @102,
FGIC.............................. 2,214
500 Municipal Bond Bank Project #32,
7.00%, 8/1/05, ETM................ 576
1,000 Municipal Bond Bank Project #20-23A,
7.00%, 7/1/01, ETM................ 1,044
3,010 Washoe County, School District, GO,
6.13%, 8/1/07, Callable 8/1/02
@101, MBIA........................ 3,194
5,000 Washoe County, Water Facilities
Revenue, Sierra Pacific Power,
AMT, 6.65%, 6/1/17, Callable
12/1/02 @102, MBIA................ 5,398
--------
13,499
--------
New Hampshire (0.3%):
1,225 Higher Education & Health Facilities
Authority Revenue, 6.25%, 1/1/06,
Callable 7/1/04 @102.............. 1,312
--------
New Jersey (0.4%):
1,630 South Brunswick Township, 6.40%,
8/1/07, Callable 8/1/05 @100,
FGIC.............................. 1,798
--------
New Mexico (2.9%):
104 Albuquerque, 7.65%, 8/15/07, FGIC... 106
1,000 Albuquerque Apartment Revenue, AMT,
6.50%, 7/1/11, Callable 7/1/00
@105, AMBAC....................... 1,086
3,000 Albuquerque Gross Receipts Tax,
5.38%, 7/1/01, Callable 7/1/99
@100, MBIA........................ 3,044
1,195 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.45%, 4/1/99, AMBAC......... 1,232
2,070 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.55%, 4/1/00, AMBAC......... 2,161
5,455 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.85%, 4/1/05, Callable
4/1/02 @102, AMBAC................ 5,816
--------
13,445
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
New York (2.1%):
$ 1,815 Islip Resource Recovery, Series D,
6.15%, 7/1/05, AMBAC.............. $ 1,978
1,500 Metropolitan Transportation, 6.38%,
7/1/10, Callable 7/1/02 @102,
FGIC.............................. 1,626
2,950 Monroe County, 6.10%, 3/1/08,
Callable 3/1/01 @102, MBIA........ 3,121
1,395 Nassau County, 5.63%, 8/1/03,
FGIC.............................. 1,475
1,655 State Dorm Authorized Revenue Bond,
5.25%, 5/15/09.................... 1,695
--------
9,895
--------
North Dakota (3.0%):
1,000 Bismarck North Dakota Infrastructure
Project, 8.60%, 10/1/02, Callable
10/1/97 @100...................... 1,010
345 Fargo District Building Authority,
5.88%, 4/15/08, Callable 4/15/05
@100.............................. 351
1,100 Grand Forks Health Care System,
5.30%, 8/15/10, Callable 8/15/07
@102, MBIA........................ 1,091
3,700 Grand Forks Health Care System,
5.60%, 8/15/17, Callable 8/15/07
@102, MBIA........................ 3,673
6,050 Grand Forks Sales Tax Revenue Bond,
5.10%, 12/15/10, Callable 12/15/07
@100.............................. 6,054
630 Housing Finance Agency, AMT, 6.25%,
7/1/09, Callable 7/1/04 @102...... 644
1,270 Water Development, 5.70%, 7/1/17,
Callable 7/1/07 @100; AMBAC....... 1,273
--------
14,096
--------
Ohio (1.9%):
1,000 Cuyahoga County, Hospital Revenue,
University Hospital Health System,
Series 96B, 6.00%, 1/15/05........ 1,075
1,600 Eaton Industrial Development, Baxter
International Project, 6.50%,
12/1/12, Callable 12/1/02 @102.... 1,714
500 Hamilton Waterworks Water Utility
Improvement, 6.40%, 10/15/07,
Callable 10/15/01 @102, MBIA...... 543
700 Olentangy Local School District,
5.05%, 12/1/09, Callable 12/1/07
@100.............................. 697
</TABLE>
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,270 Olentangy Local School District,
5.15%, 12/1/10, Callable 12/1/07
@100.............................. $ 1,264
1,500 State Higher Educational Facilities,
5.15%, 5/15/10, Callable 5/15/07
@102, MBIA........................ 1,494
2,000 State Higher Educational Facilities,
5.25%, 11/1/16, Callable 11/1/06
@101.............................. 1,960
--------
8,747
--------
Oklahoma (0.6%):
2,500 IDR, 6.25%, 8/15/12, Callable
8/15/05 @102, AMBAC............... 2,685
--------
Oregon (2.4%):
2,350 Jackson County, School District #5
Ashland, GO, 5.70%, 6/1/07, FSA... 2,505
1,000 Lane County, School District #52
Bethel, GO, 6.00%, 6/1/06, FSA.... 1,086
3,630 Marion County, Oregon, 5.50%,
10/1/05, AMBAC.................... 3,804
1,435 Port of Portland Airport Revenue,
Series 7-A, 6.75%, 7/1/09,
Callable 7/1/01 @101, MBIA........ 1,557
2,075 Washington County, School District
No. 88, GO, 6.10%, 6/1/05,
Callable 12/15/04 @100, FSA....... 2,253
--------
11,205
--------
Pennsylvania (4.4%):
3,500 Allegheny County, GO, 0.00%,
2/15/02, MBIA..................... 3,829
3,200 Dauphin County, Industrial
Development Authority, Pollution
Control Revenue, 6.00%, 1/1/08,
Callable 7/10/97 @100, MBIA....... 3,202
1,500 Hospital Revenue Bond, 6.40%,
1/1/06, Callable 1/1/05 @102,
AMBAC............................. 1,653
2,750 Indiana County, Industrial
Development Authority, Pollution
Control Revenue, 6.00%, 6/1/06,
MBIA.............................. 2,980
1,000 McKeesport Area School District,
Series B, 0.00%, 10/1/01.......... 819
2,350 Philadelphia Airport Revenue, Series
A, AMT, 5.50%, 6/15/05, AMBAC..... 2,445
2,500 Philadelphia Water & Waste, 5.65%,
6/15/12, Callable 6/15/03 @102,
FGIC.............................. 2,506
3,000 Southeastern Pennsylvania
Transportation, 5.38%, 3/1/17,
Callable 3/1/07 @102, FGIC........ 2,967
--------
20,401
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Puerto Rico (0.1%):
$ 400 Tourism Financing Authority, 5.90%,
7/1/08, Callable 1/1/05 @102,
MBIA.............................. $ 429
--------
Rhode Island (1.6%):
1,000 Housing & Mortgage Financial Corp.,
Series 15-B, 6.20%, 10/1/06,
Callable 4/1/04 @102, MBIA........ 1,043
1,015 Providence, Refunding, 5.25%,
1/15/08, Callable 1/15/07 @101,
FSA............................... 1,022
1,305 Providence, Refunding, 5.35%,
1/15/09, Callable 1/15/07 @101,
FSA............................... 1,311
3,985 State Capital Development, Series
97A, 5.00%, 8/1/09, Callable
8/1/07 @101, MBIA................. 3,933
--------
7,309
--------
South Carolina (1.6%):
1,760 Greenville School Public Facilities,
5.60%, 3/1/10..................... 1,815
1,045 Hilton Head Island, GO, 5.50%,
8/1/09, MBIA...................... 1,092
250 Piedmont, Municipal Power Agency,
Electric Revenue, Series A, 6.55%,
1/1/16, Callable 1/1/98 @100...... 251
2,250 State Electric Expansion System,
5.88%, 7/1/18, Callable 7/10/97
@100.............................. 2,251
825 State Public Service, 5.88%, 7/1/18,
Callable 7/10/97 @100, MBIA....... 825
1,000 York County, School District #3, GO,
5.40%, 3/1/08, Callable 3/1/06
@101, FSA......................... 1,035
--------
7,269
--------
South Dakota (1.8%):
350 Building Authority, 10.50%, 9/1/00,
ETM............................... 366
3,675 Health & Educational Facility
Authority Revenue, St. Luke's
Midland Regional Medical, 6.63%,
7/1/11, Callable 7/1/01 @102,
MBIA.............................. 3,945
250 State Lease Revenue, Series A,
6.48%, 9/1/05, FSA................ 275
925 Student Loan Assistance Corp.,
Series A, 8.00%, 8/1/98, Callable
8/1/97 @102....................... 965
2,745 Student Loan Assistance Corp.,
Student Loan Revenue, Series B,
AMT, 7.63%, 8/1/06, Callable
8/1/99 @102, MBIA................. 2,901
--------
8,452
--------
</TABLE>
Continued
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee (1.5%):
$ 1,050 Chattanooga-Hamilton County,
Hospital Authority, Hospital
Revenue, 5.63%, 10/1/09, FSA...... $ 1,099
2,000 Housing Development, 6.20%, 7/1/18,
Callable 7/1/05 @102.............. 2,074
1,330 Metropolitan Government Nashville &
Davidson County, 7.00%, 1/1/14.... 1,347
1,460 Nashville & Davidson County, H & E,
5.10%, 7/1/09, Callable 7/1/07
@101.............................. 1,459
1,000 Trenton Industrial Development
Revenue, Series A, 5.40%,
10/1/02........................... 1,001
--------
6,980
--------
Texas (9.1%):
2,800 Austin Housing Finance Corp., Single
Family Mortgage Revenue, AMT,
0.00%, 12/1/11.................... 1,254
1,000 Austin Utility Systems Revenue,
0.00%, 5/15/08, MBIA.............. 573
5,000 Coastal Bend Health Facilities,
Incarnate World Health Services,
5.93%, 11/15/13, Callable 11/15/02
@102, AMBAC....................... 5,088
3,600 Grand Prairie Health Facilities
Refunding, Dallas/Fort Worth
Medical Center Project, 6.50%,
11/1/04, AMBAC.................... 3,972
3,300 Grand Prairie Health Facilities
Refunding, Dallas/Fort Worth
Medical Center Project, 6.88%,
11/1/10, AMBAC.................... 3,693
5,000 Harris County, Capital Appreciation,
Toll Road, Sub-Lien A, GO, 0.00%,
8/15/03, MBIA..................... 3,733
3,700 Harris County, Capital Appreciation,
Toll Road, Sub-Lien A, GO, 0.00%,
8/15/05, MBIA..................... 2,471
1,455 Health Facilities Development Corp.
Hospital Revenue, All Saints
Episcopal Hospital, 6.25%,
8/15/12, Callable 8/15/03 @102,
MBIA.............................. 1,549
1,085 Housing Agency Residential
Development Revenue, Series D,
AMT, 8.40%, 1/1/21, Callable
7/1/97 @102....................... 1,133
3,000 Panhandle Plains Texas Higher
Education Inc., AMT, 5.55%,
3/1/05............................ 3,052
1,000 Red River Authority, Pollution
Control Revenue, AMT, 6.88%,
4/1/17, Callable 4/1/02 @102...... 1,076
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 1,500 San Antonio Electric & Gas, 6.50%,
2/1/12, Callable 2/1/99 @101.5.... $ 1,558
600 San Antonio Electric & Gas,
Refunding, Series B, 7.00%,
2/1/09, Callable 2/1/99 @101.5.... 628
1,000 San Antonio Electric & Gas, Series
B, 7.00%, 2/1/09, Callable 2/1/99
@101.5............................ 1,055
345 Southeast Texas Housing Financial
Corp., AMT, Series B, 6.75%,
5/1/10............................ 355
1,330 State Higher Education Coordinating
Board, Student Loan, AMT, 7.45%,
10/1/06, Callable 10/1/01 @102.... 1,423
1,020 Texas Tech University Revenues,
5.95%, 2/15/13, Callable 2/15/05
@100, AMBAC....................... 1,058
3,000 Turnpike Authority Dallas Northway,
5.13%, 1/1/10, Callable 1/1/04
@102, AMBAC....................... 2,978
2,200 United Independent School District,
5.25%, 8/15/14, Callable 8/15/06
@100.............................. 2,164
3,000 University of Texas, Series 96 B,
4.88%, 8/15/10, Callable 8/15/06
@102.............................. 2,898
--------
41,711
--------
Utah (0.8%):
2,000 Intermountain Power Agency, Power
Supply Revenue, Series B, 6.50%,
7/1/09, MBIA...................... 2,259
1,385 State Housing Finance Authority,
AMT, 6.35%, 7/1/12, Callable
1/1/05 @102....................... 1,428
--------
3,687
--------
Vermont (0.4%):
415 Housing Finance Agency Single
Family, Series 4, 5.90%, 11/1/03,
Callable 11/1/02 @102............. 427
1,500 University of Vermont & State
Agricultural College, Series 1973
A, 5.80%, 7/1/13, Callable 8/1/97
@101.............................. 1,512
--------
1,939
--------
Virginia (1.2%):
3,905 State Housing Development Authority,
Commonwealth Mortgage, Series A,
AMT, 6.80%, 7/1/06, AMBAC......... 4,152
1,340 State Housing Development Authority,
Commonwealth Mortgage, Series J,
6.65%, 7/1/10, Callable 1/1/05
@102%............................. 1,407
--------
5,559
--------
</TABLE>
Continued
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Washington (3.1%):
$ 1,830 Chelan County, Washington Public
Utilities Revenue, 5.90%, 7/1/13,
Mandatory Put 7/1/03 @102......... $ 1,863
1,360 King County, School District #400,
GO, 6.50%, 12/1/08................ 1,542
1,084 Kitsap County, Consolidated Housing,
7.00%, 8/20/08, GNMA.............. 1,176
1,000 Seattle Light & Power Revenue,
6.00%, 8/1/13, Callable 8/1/02
@102.............................. 1,026
1,000 Seattle Solid Waste, Series B,
7.00%, 5/1/03, Callable 5/1/99
@102, BIG......................... 1,065
3,000 Snohomish County, Public Utility
District #001, Electric Revenue,
6.00%, 1/1/13, Callable 1/1/03
@102, FGIC........................ 3,101
700 State Certificates Partnership,
Series A, 6.80%, 4/1/06, Callable
4/1/01 @102....................... 750
3,500 State Nuclear Project #1, Series A,
6.00%, 7/1/08, AMBAC.............. 3,753
--------
14,276
--------
West Virginia (1.5%):
1,500 Board of Regents Revenue, Series A,
5.90%, 4/1/04, ETM................ 1,557
2,495 Harrison County, Community Split
Obligation, Series A, 6.25%,
5/15/10........................... 2,757
500 School Building Authority Revenue
Capital Improvement, Series B,
6.95%, 7/1/03, Prerefunded 7/1/00
@102, MBIA........................ 546
2,000 State Housing Development Fund,
Housing Finance, AMT, 7.20%,
11/1/20, Callable 5/1/02 @102..... 2,122
--------
6,982
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Wisconsin (0.4%):
$ 1,500 Center District Tax Revenue Capital
Appreciation, Senior Dedicated,
Series A, 0.00%, 12/15/18, MBIA... $ 452
500 Mukwonago School District, 5.80%,
3/1/07, Prerefunded 3/1/02 @100,
AMBAC............................. 528
1,000 State, Series A, 6.30%, 5/1/07,
Prerefunded 5/1/02 @100........... 1,080
--------
2,060
--------
Wyoming (1.2%):
875 Community Development Authority
Single Family Mortgage, Series A,
7.25%, 6/1/07, Callable 6/1/01
@102.............................. 910
600 State Farm Lane Board Capital
Facilities Revenue Refunding,
6.00%, 10/1/05, Callable 10/1/02
@102.............................. 640
2,200 Student Loan Corp., Student Loan
Revenue, AMT, 4.00%, 12/1/05*..... 2,200
400 Student Loan Corp., Student Loan
Revenue, AMT, Series A, 4.00%,
12/1/45*.......................... 400
1,395 Sweetwater County, School District
#2, Green River, GO, 7.00%,
6/1/04, MBIA...................... 1,583
--------
5,733
--------
Total Municipal Bonds 461,861
--------
INVESTMENT COMPANIES (0.8%):
3,601 Provident Municash.................. 3,601
--------
Total Investment Companies 3,601
--------
Total (Cost--$449,354) (a) $465,462
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $462,853.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $19. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $16,233
Unrealized depreciation.................................................. (144)
-------
Net unrealized appreciation.............................................. $16,089
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
Continued
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrow to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
GSL Guaranteed Student Loans
IDR Industrial Development Reveneue
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS (98.7%):
Alaska (0.8%):
$ 1,250 Home Mortgage Revenue Refunding,
8.00%, 3/1/09, Callable 3/1/02
@102, FNMA......................... $ 1,344
200 Juneau City & Boro Home Mortgage
Revenue, 8.00%, 2/1/09, Callable
2/1/02 @100, FNMA.................. 215
15 State Housing Finance Corp., Revenue,
Local Guaranteed Housing, 8.20%,
12/1/97............................ 15
8,440 State Housing Finance Corp., 0.00%,
12/1/17, Callable 6/1/07 @54,
MBIA............................... 2,514
--------
4,088
--------
Arizona (0.8%):
325 Maricopa County, Industrial
Development, Multi-Family Housing,
7.25%, 7/1/17, Callable 7/1/07
@101............................... 328
1,500 Maricopa County, Industrial
Development, Multi-Family Housing
Revenue, Series A, 6.25%, 7/1/27,
Callable 1/1/07 @101............... 1,511
30 Salt River Project, Arizona
Agriculture Improvement & Power,
6.65%, 1/1/06, Callable 7/10/97
@101.5............................. 30
8 Salt River Project, Arizona
Agriculture Improvement & Power,
9.30%, 1/1/00, Callable 7/10/97
@101.5............................. 8
10 Salt River Project, Arizona
Agriculture Improvement & Power,
6.88%, 1/1/02, Callable 7/10/97
@101.5............................. 10
10 Salt River Project, Arizona
Agriculture Improvement & Power,
7.88%, 1/1/03, Callable 7/10/97
@101.5............................. 10
5 Salt River Project, Arizona
Agriculture Improvement & Power,
8.25%, 1/1/05...................... 5
10 Salt River Project, Arizona
Agriculture Improvement & Power,
7.15%, 1/1/05, Callable 1/1/98
@101.5............................. 10
2,000 University of Northern Arizona,
University Revenue, 5.00%, 6/1/11,
Callable 6/1/07 @101, FGIC......... 1,969
--------
3,881
--------
Arkansas (2.8%):
365 Drew County, Public Facilities Board,
7.90%, 8/1/11, Callable 8/1/03
@103, FNMA......................... 393
159 Drew County, Public Facilities Board,
7.75%, 8/1/11, Callable 2/1/04
@100............................... 170
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arkansas, continued:
$ 546 Jacksonville, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.90%, 1/1/11,
Callable 7/1/03 @103............... $ 595
275 Jacksonville, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.75%, 1/1/11,
Callable 7/1/05 @103............... 296
1,000 Jefferson County, PCR, Power & Light
Co. Project, 6.13%, 10/1/07,
Callable 4/1/06 @100, BIG.......... 1,001
247 Lonoke County, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.38%, 4/1/11,
Callable 4/1/03 @103............... 266
659 Lonoke County, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, Series A-2,
7.90%, 4/1/11, FNMA................ 715
1,000 Paragould, Hospital Revenue, 6.38%,
10/1/17, Callable 10/1/06 @102..... 1,024
1,309 Pope County, Residential Facilities,
Housing Board Mortgage Revenue,
Series B, 7.75%, 9/1/11, Callable
8/1/02 @102, FHA................... 1,403
1,500 State Capital Appreciation, College
Savings, Series 97A, 0.00%,
6/1/16............................. 516
2,000 State Capital Appreciation, College
Savings, Series A, 0.00%, 6/1/15... 734
2,040 State Development Authority Revenue
Refunding, 8.00%, 8/15/11, Callable
8/15/01 @103....................... 2,192
3,650 State Development Finance Authority
Revenue, 0.00%, 6/1/15............. 1,263
90 State Development Finance Authority
Revenue, 7.70%, 12/1/14, Callable
12/1/97 @102....................... 92
915 State Development Finance Authority
Revenue, Single Family Housing,
7.75%, 4/1/21, Callable 4/1/99
@102, GNMA......................... 951
529 Stuttgart Public Facilities Board
Revenue, Series A-2, 7.90%, 9/1/11,
Callable 9/1/03 @103............... 577
262 Stuttgart Public Facilities Board
Revenue, Series B, 7.75%, 9/1/11,
Callable 3/1/06 @103............... 285
1,000 Texarkana, Public Facilities Board,
Waterworks Revenue, 5.40%, 9/1/15,
Callable 9/1/07 @100, FGIC......... 997
--------
13,470
--------
</TABLE>
Continued
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California (3.1%):
$ 1,255 Fairfield, Water Revenue, 0.00%,
4/1/15, Callable 4/1/05 @56.7,
AMBAC.............................. $ 458
1,080 Housing Finance Agency Revenue, Home
Mortgage, AMT, 7.50%, 2/1/23,
Callable 8/1/05 @102, FHA.......... 1,177
220 Housing Finance Agency Revenue, Home
Mortgage, Series B-1, AMT, 5.65%,
2/1/16, Callable 8/1/04 @102,
FHA................................ 223
25 Housing Finance Agency Revenue, Home
Mortgage, Series C, AMT, 7.45%,
8/1/11, Callable 8/1/01 @102....... 26
680 Housing Finance Agency Revenue, Local
or Guaranteed Housing, Series B,
8.63%, 8/1/15, Callable 8/1/00
@100, MBIA......................... 713
640 Housing Finance Agency Revenue,
Series H, AMT, 6.80%, 8/1/19,
Callable 8/1/04 @102, FHA.......... 663
870 Housing Finance Agency Revenue,
Single Family Housing, Series F,
7.88%, 8/1/19, Callable 8/1/98
@102............................... 901
1,000 Oakland, Revenue Refunding, Series A,
7.60%, 8/1/21, Callable 8/1/98
@102, FGIC......................... 1,056
855 Redondo Beach, Redevelopment Agency,
Residential Mortgage Revenue,
Series B, 6.25%, 6/1/11, Callable
6/1/03 @100........................ 866
470 Rural Home Mortgage Financing
Authority Revenue, Single Family
Mortgage Revenue, AMT, 5.50%,
2/1/06, GNMA....................... 481
350 Rural Home Mortgage Financing
Authority Revenue, Single Family
Mortgage Revenue, AMT, 7.25%,
12/1/24, Callable 12/1/04 @103,
GNMA............................... 374
1,355 Rural Home Mortgage Financing
Authority, AMT, 5.30%, 11/1/05..... 1,380
810 Rural Home Mortgage Financing
Authority, AMT, 7.55%, 11/1/26..... 915
805 Rural Home Mortgage Financing
Authority, AMT, 7.75%, 5/1/27...... 911
2,135 Sacramento, Municipal Utility
District, Electric Revenue, Series
P, 6.00%, 7/1/15, Callable 7/10/97
@100............................... 2,136
1,180 San Joaquin Hills Toll Road, 0.00%,
1/1/14............................. 441
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California, continued:
$ 4,435 San Joaquin Hills Toll Road, 0.00%,
1/1/16............................. $ 1,456
1,105 State Department of Veterans'
Affairs, AMT, 7.38%, 8/1/12,
Callable 7/10/97 @102.............. 1,129
--------
15,306
--------
Colorado (14.9%):
5,250 Arapahoe County, Highway Revenue,
Series C, 0.00%, 8/31/15, Callable
8/31/05 @48.6...................... 1,619
5,030 Aurora, Single Family Mortgage
Revenue, Series A2, 0.00%, 9/1/15,
Prerefunded 3/1/13 @75.2........... 1,608
2,315 Brush Creek Metropolitan District,
GO, Refunding, 6.70%, 11/15/09,
Callable 11/15/03 @101............. 2,476
1,410 Central City Water Revenue, GO, Water
Utility Improvements, 7.40%,
12/1/07, Prerefunded 12/1/02
@100............................... 1,601
400 Central City Water Revenue, GO, Water
Utility Improvements, 8.63%,
9/15/11, Prerefunded 9/15/02
@100............................... 422
655 Central City Water Revenue, GO, Water
Utility Improvements, 7.50%,
12/1/12, Prerefunded 12/1/02
@100............................... 747
3,700 Colorado Springs Airport Revenue,
AMT, 6.90%, 1/1/12, Callable 1/1/03
@102, MBIA......................... 4,036
1,000 Denver City & County, Airport
Revenue, AMT, 6.75%, 11/15/13,
Callable 11/15/02 @102, MBIA....... 1,086
2,500 Denver City & County, Airport
Revenue, AMT, 5.63%, 11/15/08,
Callable 11/15/06 @102, MBIA....... 2,582
9,850 Denver City & County, Residual
Revenue, 0.00%, 7/10/14, Callable
7/1/01 @39.6....................... 2,951
1,250 Eagle's Nest Metropolitan District,
GO, Refunding, 6.50%, 11/15/17,
Callable 11/15/97 @107............. 1,307
236 El Paso County, Home Mortgage, Series
C, 8.30%, 9/20/18, Callable 12/1/97
@100............................... 259
1,280 El Paso County, Single Family
Mortgage Revenue, 0.00%, 9/1/15,
ETM................................ 459
2,500 Englewood, Multi-Family Housing,
Marks Apartment Revenue, 6.65%,
12/1/26, Callable 12/1/06 @102..... 2,616
</TABLE>
Continued
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 1,415 Englewood, Multi-Family Housing,
Marks Apartment Revenue, Series B,
6.00%, 12/15/18, Callable 12/15/03
@100, LOC: Citibank................ $ 1,410
1,685 Housing Finance Authority, GO, 6.80%,
8/1/14, Callable 8/1/02 @102....... 1,759
2,560 Housing Finance Authority,
Multi-Family Mortgage Revenue,
Series B, 6.00%, 10/1/25, Callable
8/18/97 @101.5, FHA................ 2,079
165 Housing Finance Authority,
Multi-Family Revenue, AMT, 5.75%,
10/1/06, Callable 4/1/06 @102...... 171
875 Housing Finance Authority,
Multi-Family Revenue, Series A,
9.00%, 10/1/25, Callable 10/1/00
@100, FHA.......................... 883
285 Housing Finance Authority, Series A,
6.90%, 5/1/01...................... 300
2,500 Housing Finance Authority, Series
B-2, AMT, 7.00%, 5/1/26, Callable
5/1/07 @105........................ 2,737
3,550 Housing Finance Authority, Single
Family, 7.45%, 11/1/27, Callable
5/1/06 @105........................ 4,012
890 Housing Finance Authority, Single
Family Program, Series B, 6.13%,
5/1/13, Callable 11/1/04 @103,
FHA................................ 913
830 Housing Finance Authority, Single
Family Program, Series B, 7.50%,
11/1/24, Callable 11/1/04 @105,
FHA................................ 924
215 Housing Finance Authority, Single
Family Program, Series B-2, 6.90%,
8/1/17, Callable 2/1/01 @102,
FHA................................ 223
420 Housing Finance Authority, Single
Family Program, Series D-1, 6.60%,
8/1/17, Callable 8/1/01 @102,
FHA................................ 427
2,000 Housing Finance Authority, Single
Family Program, Series D-1, 7.38%,
6/1/26, Callable 12/1/05 @105...... 2,204
730 Housing Finance Authority, Single
Family Program, Series E, AMT,
6.25%, 12/1/09, Callable 12/1/04
@103............................... 758
415 Housing Finance Authority, Single
Family Program, Sub Series A, AMT,
6.50%, 12/1/02..................... 430
9,500 Housing Finance Authority, Single
Family Revenue, AMT, 7.25%, 5/1/27,
Callable 5/1/07 @105............... 10,465
970 Housing Finance Authority, Single
Family Revenue, Series 95C, 7.45%,
6/1/17, Callable 6/1/05 @105....... 1,092
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 490 Housing Finance Authority, Single
Family Revenue, Series A, 0.00%,
9/1/14, FHA........................ $ 81
425 Housing Finance Authority, Single
Family Revenue, Series A-3, AMT,
6.50%, 11/1/23, Callable 5/1/02
@102............................... 437
3,500 Housing Finance Authority, Single
Family Revenue, Series C-1, AMT,
7.55%, 11/1/27, Callable 11/1/06
@102............................... 3,905
1,155 Jefferson County, Single Family
Revenue, Refunding, Series A,
8.88%, 10/1/13, Callable 4/1/01
@103, MBIA......................... 1,238
7,525 Meridian Metropolitan District,
7.50%, 12/1/11, Callable 12/1/01
@101............................... 8,270
1,500 Mesa County, Residual Revenue
Refunding, 0.00%, 12/1/11, ETM..... 694
1,030 Mountain Village Metropolitan
District, San Miguel County, GO,
7.95%, 12/1/03, Callable 12/1/02
@101............................... 1,159
2,555 Mountain Village Metropolitan
District, San Miguel County, GO,
8.10%, 12/1/11, Callable 12/1/02
@101............................... 2,873
--------
73,213
--------
Connecticut (0.0%):
200 State Housing Mortgage, Series A,
7.63%, 11/15/17, Callable 8/1/97
@102.5............................. 205
--------
Delaware (0.0%):
930 New Castle County, Single Family
Mortgage Revenue, 0.00%, 11/1/16,
FGIC............................... 139
--------
Florida (5.9%):
1,250 Brevard County, Housing Finance
Authority, Single Family Mortgage
Revenue, AMT, 6.13%, 9/1/09,
Callable 9/1/04 @102............... 1,276
4,510 Duval County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series C, 7.35%, 7/1/24,
Callable 9/1/00 @103, FGIC......... 4,814
565 Escambia County, Housing Finance
Authority, Single Family Revenue,
AMT, 6.60%, 10/1/12, Callable
4/1/05 @102, GNMA.................. 579
495 Housing Finance Agency, Home
Ownership Revenue, 7.50%, 9/1/14,
Callable 9/1/00 @102, GNMA......... 523
3,000 Lee County, Housing Finance
Authority, Single Family Revenue,
AMT, 7.20%, 3/1/27, Callable 3/1/07
@105............................... 3,298
</TABLE>
Continued
33
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
$ 1,000 Leon County, Housing Finance
Authority, Multi-County Program,
Series B, AMT, 7.30%, 1/1/28....... $ 1,109
1,845 Manatee County, Housing Finance
Authority, Mortgage Revenue, 8.38%,
5/1/25, Callable 5/1/04 @105....... 2,079
1,850 Manatee County, Housing Finance
Authority, Mortgage Revenue, AMT,
7.20%, 5/1/28, Callable 3/1/07
@105, GNMA......................... 2,036
790 Orange County, Housing Finance
Authority, Mortgage Revenue, Series
A, AMT, 7.25%, 9/1/19, Callable
3/1/01 @103........................ 833
800 Orange County, Housing Finance
Authority, Mortgage Revenue, Series
A, AMT, 7.38%, 9/1/24, Callable
3/1/01 @103, FHA................... 849
1,155 Palm Beach County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series A, AMT, 6.38%,
10/1/06, Callable 10/1/04 @102..... 1,190
2,500 Pinellas County, Housing Finance
Authority, Single Family Mortgage
Revenue, Multi-County, Series A,
6.35%, 2/1/17, Callable 2/1/05
@102............................... 2,579
3,205 Pinellas County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series 95-A, AMT, 6.25%,
8/1/12, Callable 2/1/05 @102....... 3,312
2,305 Polk County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series A, AMT, 7.88%,
9/1/22, Callable 3/1/00 @103....... 2,443
1,320 Santa Rosa Bay Bridge Authority,
0.00%, 7/1/08...................... 692
1,625 Santa Rosa Bay Bridge Authority,
0.00%, 7/1/09...................... 785
500 State Finance Department, 6.25%,
7/1/09, Callable 7/1/02 @101,
MBIA............................... 536
--------
28,933
--------
Georgia (2.4%):
2,500 Cobb County, Housing Authority, Pass
through Certificates, Signature
Series B, 9.00%, 10/1/10........... 2,587
785 De Kalb County, Housing Authority
Revenue, 6.40%, 5/1/05, Callable
5/1/04 @100........................ 813
5,000 De Kalb County, Housing Authority
Revenue, Multi-Family Housing,
7.05%, 1/1/39, Callable 1/1/08
@104, FHA.......................... 5,378
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Georgia, continued:
$ 835 De Kalb County, Housing Authority
Revenue, Single Family Housing,
AMT, 7.65%, 6/1/18, Callable 6/1/04
@100, GNMA......................... $ 881
1,765 Fulton County, Housing Authority
Revenue, Multi-Family Housing,
Series A, AMT, 6.30%, 7/1/16,
Callable 7/1/06 @102............... 1,800
--------
11,459
--------
Idaho (1.1%):
1,500 Housing & Financial Assistance,
Single Family Mortgage, Series D,
AMT, 6.45%, 7/1/14, Callable 1/1/06
@102, FHA.......................... 1,556
2,155 Housing & Financial Assistance,
Single Family Mortgage, Series H,
AMT, 6.05%, 7/1/14, Callable 1/1/07
@102, FHA.......................... 2,182
325 Housing Agency, Single Family
Mortgage, AMT, 6.30%, 7/1/24,
Callable 1/1/03 @102............... 331
190 Housing Agency, Single Family
Mortgage, Series A-2, AMT, 6.55%,
7/1/24, Callable 1/1/03 @102....... 196
1,075 Housing Finance Assignment, Single
Family Mortgage Revenue, Series
97E-2, AMT, 5.95%, 7/1/14, Callable
1/1/07 @101.5...................... 1,084
--------
5,349
--------
Illinois (4.0%):
5,890 Addison Alton Electric Public
Improvements Revenue, Sub Series 1,
0.00%, 7/1/11, Callable 7/1/04
@62................................ 2,494
215 Aurora Kane & DuPage Counties, Single
Family Mortgage Revenue, Series A,
AMT, 7.95%, 10/1/25, GNMA.......... 237
355 Aurora, Single Family Mortgage
Revenue Refunding, Series B, AMT,
8.05%, 9/1/25, Callable 9/1/04
@105............................... 397
3,315 Bolingbrook Mortgage Revenue, Capital
Appreciation, Sub Series 1, 0.00%,
1/1/11, Callable 1/1/00 @48.6...... 1,242
1,765 Chicago, Residential Mortgage
Revenue, 0.00%, 10/1/09, Callable
4/1/98 @48.84, MBIA................ 755
1,500 Chicago, Single Family Mortgage
Revenue, AMT, 7.63%, 9/1/27,
Callable 6/15/06 @105, GNMA........ 1,686
</TABLE>
Continued
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Illinois, continued:
$ 2,000 Chicago, Single Family Mortgage
Revenue, Series 97-A, AMT, 7.25%,
9/1/28, Callable 9/1/07 @105,
GNMA............................... $ 2,198
3,455 Chicago, Single Family Mortgage
Revenue, Series A, AMT, 7.00%,
9/1/27, Callable 3/1/06 @105....... 3,786
790 Danville, Single Family Mortgage
Revenue Refunding, 7.30%, 11/1/10,
Callable 11/1/03 @102.............. 834
3,530 Freeport Single Family Mortgage
Revenue, 0.00%, 8/1/10, Callable
10/1/01 @49........................ 1,244
730 Housing Development Authority,
Resident Mortgage Revenue, Series
A, AMT, 7.35%, 8/1/10, Callable
8/1/01 @102........................ 765
1,915 Housing Development Authority,
Residential Mortgage Revenue,
Series A, 0.00%, 2/1/17............ 264
4,685 Moline, Mortgage Revenue, Capital
Appreciation, Sub Series 1, 0.00%,
5/1/11, Callable 5/1/05 @65........ 1,768
1,040 Quincy, Single Family Mortgage
Revenue Refunding, 6.88%, 3/1/10,
Callable 3/1/04 @102............... 1,092
455 Rock Island, Residential Mortgage
Revenue Refunding, 7.70%, 9/1/08,
Callable 9/1/02 @102............... 486
--------
19,248
--------
Indiana (1.5%):
2,250 Marion County, Hospital Authority
Revenue, 6.50%, 9/1/13, Callable
9/1/99 @102........................ 2,431
1,000 State Housing Finance Authority,
Single Family Mortgage Revenue,
Series A-2, AMT, 6.45%, 7/1/14,
Callable 7/1/05 @102, FHA.......... 1,041
695 State Housing Finance Authority,
Single Family Mortgage Revenue,
Series B-2, AMT, 7.80%, 1/1/22,
Callable 7/1/00 @102, GNMA......... 732
3,130 State Toll Finance Authority, Toll
Road Revenue, 6.00%, 7/1/15,
Callable 7/1/97 @100............... 3,133
--------
7,337
--------
Iowa (1.6%):
650 Davenport, Home Ownership Mortgage
Revenue Refunding, 7.90%, 3/1/10,
Callable 9/1/04 @102............... 691
1,105 Finance Authority, Multi-Family
Revenue, AMT, 7.15%, 12/1/09....... 1,184
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Iowa, continued:
$15,025 Finance Authority, Single Family
Mortgage Revenue, 0.00%, 9/1/16,
AMBAC.............................. $ 1,786
2,535 Finance Authority, Single Family
Revenue Mortgage Backed Securities
Program, Series C, 6.40%, 7/1/19,
Callable 1/1/05 @102, GNMA......... 2,636
615 Finance Authority, Single Family
Revenue, AMT, 7.90%, 11/1/22,
Callable 11/1/99 @102, GNMA........ 645
885 Salix, PCR, Gas & Electric Project,
5.75%, 6/1/03, Callable 1/1/98
@100............................... 890
--------
7,832
--------
Kansas (2.5%):
470 Finney County, Single Family Mortgage
Revenue, 8.95%, 10/1/09, Callable
10/1/97 @100....................... 471
860 Ford County, Single Family Mortgage
Revenue, 7.90%, 8/1/10, Callable
8/1/02 @103, FHA................... 926
2,080 Johnson County, Single Family
Mortgage Revenue, 7.10%, 5/1/12,
Callable 5/1/04 @103............... 2,252
545 Labette County, Single Family
Mortgage Revenue, Series A, 8.40%,
12/1/11, Callable 12/1/97 @100..... 579
390 Olathe & Labette County, Single
Family Mortgage Revenue, Series
A-I, AMT, 8.10%, 8/1/23, Callable
2/1/05 @105........................ 434
2,400 Reno & Labette County, Single Family
Mortgage Revenue, Series A, 0.00%,
12/1/15, ETM, FGIC................. 849
530 Reno County, Single Family Mortgage
Revenue, Series B, 8.70%, 9/1/11,
Callable 9/1/01 @103............... 569
445 Sedgwick & Shawnee County, Single
Family Revenue, Series B, 8.05%,
5/1/14, GNMA....................... 488
465 Sedgwick & Shawnee County, Single
Family Revenue, Series B-2, 7.80%,
5/1/14, Callable 11/1/04 @103...... 508
470 Sedgwick & Shawnee County, Single
Family Revenue, Series C-2, 7.80%,
11/1/24, Callable 11/1/04 @105,
GNMA............................... 521
</TABLE>
Continued
35
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kansas, continued:
$ 2,180 Sedgwick County, Mortgage Loan
Revenue, Series B, AMT, 7.80%,
6/1/22, Callable 6/1/00 @103,
AMBAC, GNMA........................ $ 2,309
735 Sedgwick County, Mortgage Loan
Revenue, Series C, 8.63%, 11/1/18,
Callable 11/1/97 @103, GNMA........ 761
2,120 Shawnee County, Single Family
Mortgage Revenue, 0.00%, 10/1/16,
Callable 10/1/01 @23, MBIA......... 300
1,070 Wichita, Single Family Mortgage
Revenue, Series A, 7.10%, 9/1/09,
Callable 3/1/03 @103............... 1,120
--------
12,087
--------
Kentucky (0.5%):
590 Housing Corp. Revenue, Series D, AMT,
6.13%, 7/1/22, Callable 7/1/98
@100............................... 600
1,760 Meade County, PCR, Olin Corp.
Project, 6.00%, 7/1/07, Callable
8/1/97 @100........................ 1,769
--------
2,369
--------
Louisiana (1.3%):
230 Calcasieu Parish, Public
Transportation Authority Revenue,
6.38%, 11/1/02..................... 238
900 Calcasieu Parish, Single Family
Mortgage Revenue, Series 92B,
0.00%, 5/1/13, Callable 11/1/02
@49................................ 302
865 Iberia Home Mortgage Authority,
Single Family Mortgage Revenue
Refunding, 7.38%, 1/1/11, Callable
1/1/01 @100........................ 932
5,000 New Orleans, 0.00%, 9/1/14, AMBAC.... 1,932
1,080 New Orleans, Home Mortgage Authority,
Special Obligation Refunding,
6.25%, 1/15/11..................... 1,171
89 Public Facilities Authority Revenue,
Single Family Mortgage, 7.50%,
10/1/15, Callable 4/15/98 @100..... 96
1,462 Public Facilities Authority Revenue,
Single Family Mortgage, Series C,
8.45%, 12/1/12, Callable 10/1/01
@101, FHA.......................... 1,553
180 St. Mary Public Finance Authority,
Single Family Revenue, Series A,
7.63%, 3/25/12, Callable 10/25/98
@100............................... 197
--------
6,421
--------
Maine (0.5%):
1,750 State Housing Authority, AMT, 6.10%,
11/15/16, Callable 11/15/06 @102... 1,773
810 State Housing Authority, Housing
Finance Revenue, Series I, AMT,
0.00%, 11/1/10, Callable 11/1/06
@80.2.............................. 387
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Maine, continued:
$ 535 State Housing Authority, Housing
Finance Revenue, Series I, AMT,
0.00%, 11/1/11, Callable 11/1/06
@75.3.............................. $ 239
260 State Housing Authority, Series D-5,
AMT, 6.90%, 11/15/01, Callable
5/15/01 @102....................... 271
--------
2,670
--------
Maryland (0.3%):
1,240 Maryland Community Development,
Multifamily Housing Revenue, Series
E, AMT, 6.85%, 5/15/25, Callable
5/15/04 @102, GNMA................. 1,304
--------
Massachusetts (0.7%):
170 State Housing Finance Agency, Single
Family Housing Revenue, AMT, 7.00%,
12/1/23, Callable 6/1/01 @102...... 173
1,020 State Housing Finance Agency, Single
Family Housing Revenue, AMT, 7.13%,
6/1/25, Callable 6/1/02 @102....... 1,083
1,920 State Port Authority Revenue, 7.13%,
7/1/12, Callable 8/1/97 @100.5..... 1,934
--------
3,190
--------
Michigan (1.2%):
620 Mount Clemens Housing Corp, Multi-
Family Housing Revenue, Series A,
6.25%, 6/1/03...................... 650
1,000 Riverview Community School District,
5.25%, 5/1/14, Callable 5/1/04
@102, AMBAC........................ 980
1,640 State Housing Development Authority,
Home Improvement, Series B, AMT,
7.65%, 12/1/12, Callable 12/1/99
@102, FHA.......................... 1,702
1,395 State Housing Development Authority,
Single Family Mortgage Revenue,
7.50%, 6/1/15, Callable 1/1/99
@100.75............................ 1,465
880 State Housing Development Authority,
Single Family Mortgage Revenue,
Series A, 7.70%, 12/1/16, Callable
6/1/99 @102........................ 899
--------
5,696
--------
Minnesota (0.2%):
2,950 Minneapolis Mortgage Revenue, 0.00%,
10/1/12, Callable 10/1/05 @100..... 1,107
--------
</TABLE>
Continued
36
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Mississippi (2.2%):
$ 1,000 Higher Education Assistance Corp.,
Student Loan Revenue, AMT, 6.60%,
1/1/05, Callable 7/1/02 @102....... $ 1,053
915 Higher Education Assistance Corp.,
Student Loan Revenue, Series C,
AMT, 6.05%, 9/1/07, Callable 9/1/02
@102............................... 947
1,440 Higher Education, Student Loan
Revenue, Series 92C, AMT, 6.50%,
7/1/04, Callable 7/1/02 @102....... 1,523
1,390 Home Corp., Single Family Revenue,
7.10%, 12/1/10, Callable 3/1/98
@100............................... 1,444
2,000 Home Corp., Single Family Revenue,
Series B, AMT, 7.90%, 3/1/25,
Callable 3/1/05 @106, GNMA......... 2,220
2,000 Home Corp., Single Family Revenue,
Series F, AMT, 7.55%, 12/1/27,
Callable 12/1/06 @105, GNMA,
FNMA............................... 2,220
1,440 Housing Finance Corp., Single Family
Mortgage Revenue, AMT, 8.25%,
10/15/18, Callable 10/15/99 @102,
FGIC............................... 1,512
--------
10,919
--------
Missouri (2.3%):
645 Grandview Industrial Development
Authority, Multi-Family Housing
Revenue, 9.25%, 5/15/08, Callable
5/15/04 @103....................... 639
2,295 Jackson County, Industrial
Development Authority, Multi-Family
Housing Revenue, 10.00%, 3/1/10.... 2,311
1,000 Jefferson City, Missouri School
District, Series A, 6.70%,
3/1/11............................. 1,153
1,415 State Housing Development, Common
Mortgage Revenue, Single Family,
AMT, 7.38%, 8/1/23, Callable 2/1/01
@102, GNMA......................... 1,497
910 State Housing Development, Common
Mortgage Revenue, Single Family,
AMT, 7.25%, 9/1/26, Callable 3/1/06
@105, GNMA......................... 1,003
1,995 State Housing Development, Common
Mortgage Revenue, Single Family,
Series A, AMT, 7.20%, 9/1/26,
Callable 9/1/06 @105, GNMA......... 2,180
2,000 State Housing Development, Common
Mortgage Revenue, Single Family,
Series D, AMT, 7.10%, 9/1/27,
Callable 1/1/07 @102, GNMA......... 2,167
--------
10,950
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Montana (0.3%):
$ 1,551 Greenwood Plaza Housing, Inc.,
10.43%, 1/1/22, Callable 1/1/98
@102.5, FHA........................ $ 1,606
--------
Nebraska (0.2%):
2,725 Finance Authority, Single Family
Mortgage Revenue, 0.00%, 12/15/13,
FHA................................ 525
235 Finance Authority, Single Family
Mortgage Revenue, AMT, 6.35%,
3/15/06, Callable 9/15/02 @102..... 242
--------
767
--------
Nevada (2.0%):
1,500 Housing Division, Single Family
Mortgage, Series C, AMT, 6.60%,
4/1/14, Callable 4/1/06 @102....... 1,566
430 Housing Division, Single Family
Program, Series B-1, 6.20%,
10/1/15, Callable 4/1/04 @102...... 441
1,255 Housing Division, Single Family
Program, Series B-2, AMT, 7.90%,
10/1/21, Callable 4/1/00 @102...... 1,312
890 Housing Finance Authority, Single
Family Mortgage Revenue, Series Sub
B-1, AMT, 6.00%, 4/1/10, Callable
4/1/07 @102........................ 903
5,000 Washoe County, Water Facilities
Revenue, Sierra Pacific Power, AMT,
6.65%, 6/1/17, Callable 12/1/02
@102, MBIA......................... 5,398
--------
9,620
--------
New Hampshire (1.5%):
7,000 Higher Educational & Health
Facilities, 6.13%, 10/1/13,
Callable 10/1/03 @102.............. 7,065
--------
New Jersey (0.5%):
545 State Higher Education Assistance
Authority, Student Loan Revenue,
Series A, AMT, 7.00%, 7/1/05,
Callable 7/1/01 @102............... 575
935 State Housing & Mortgage Finance
Agency Revenue, 7.38%, 10/1/17,
Callable 10/1/99 @102, MBIA........ 980
710 State Housing & Mortgage Finance
Agency, Home Mortgage Revenue,
8.38%, 4/1/17, Callable 4/1/98
@103, MBIA......................... 741
--------
2,296
--------
</TABLE>
Continued
37
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
New Mexico (1.7%):
$ 335 Bernalillo County, Multi-Family
Housing Revenue, Sub Series A2,
7.00%, 11/1/08, Callable 11/1/03
@103............................... $ 337
1,000 Educational Assistance Foundation,
Student Loan Program, AMT, 6.20%,
11/1/08, Callable 11/01/06 @102.... 1,038
600 Educational Assistance Foundation,
Student Loan Program, AMT, 6.30%,
11/1/09, Callable 11/1/06 @102..... 623
645 Hobbs, Single Family Mortgage Revenue
Refunding, 8.75%, 7/1/11, Callable
11/1/98 @100....................... 717
1,140 Las Cruces, Housing Development
Corp., Multi-family Revenue Refund
Mortgage, Series A, 6.40%, 10/1/19,
Callable 4/1/02 @102............... 1,158
170 Las Cruces, Housing Development
Corp., Multi-family Revenue Refund
Mortgage, Sub-Series B, 9.00%,
10/1/03............................ 175
395 Mortgage Finance Authority, Single
Family Mortgage Refunding, Series
A-2, 6.85%, 7/1/12, Callable 7/1/02
@102............................... 415
1,695 Mortgage Finance Authority, Single
Family Mortgage Refunding, Series
A-2, 6.90%, 7/1/24, Callable 7/1/02
@102............................... 1,772
890 Mortgage Finance Authority, Single
Family Mortgage Revenue, Series 95,
AMT, 6.45%, 7/1/25, Callable 1/1/06
@102, GNMA......................... 912
1,000 Mortgage Finance Authority, Single
Family Mortgage, AMT, 6.05%,
7/1/16, Callable 7/1/07 @102,
GNMA............................... 1,015
290 Mortgage Finance Authority, Single
Family Mortgage, Series A, AMT,
7.80%, 3/1/21, Callable 9/1/99
@102, FHA.......................... 303
--------
8,465
--------
New York (0.8%):
1,395 Mortgage Agency Revenue, Homeowner
Mortgage, AMT, 7.75%, 10/1/23,
Callable 4/1/01 @102............... 1,476
2,500 New York City, Industrial Development
Agency Revenue, Japan Airlines,
AMT, 6.00%, 11/1/15, Callable
11/1/04 @102, FHA.................. 2,586
--------
4,062
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
North Carolina (1.0%):
$ 1,700 Housing Finance Agency, Single Family
Revenue, Series O, AMT, 7.60%,
3/1/21, Callable 1/1/98 @101....... $ 1,769
475 Municipal Power Agency, Series B,
6.00%, 1/1/20, Callable 7/10/97
@100, MBIA......................... 475
1,025 University of North Carolina, Series
A, 5.30%, 5/15/12, Callable 5/15/07
@101............................... 1,003
1,425 University of North Carolina, Series
B, 5.10%, 5/15/09, Callable 5/15/07
@100............................... 1,441
--------
4,688
--------
North Dakota (0.8%):
1,585 State Housing Finance Agency, Housing
Finance Program, Series A, AMT,
6.00%, 7/1/17, Callable 1/1/07
@102............................... 1,603
505 State Housing Finance Agency, Single
Family Mortgage Revenue, Series
95A, AMT, 7.40%, 7/1/15, Callable
1/1/05 @102........................ 534
1,190 State Housing Finance Agency, Single
Family Mortgage Revenue, Series A,
AMT, 8.38%, 7/1/21, Callable 7/1/99
@103, FHA.......................... 1,251
300 Student Loan, Series D, AMT, 5.95%,
7/1/07, Callable 7/1/06 @100,
AMBAC.............................. 312
300 Student Loan, Series D, AMT, 6.15%,
7/1/09, Callable 7/1/06 @100,
AMBAC.............................. 312
--------
4,012
--------
Ohio (6.5%):
1,000 Akron, Bath, Copley, Hospital
Revenue, 7.00%, 1/1/12, ETM........ 1,157
4,500 Akron, Municipal Baseball Stadium,
0.00%, 12/1/16, Callable 12/1/06
@102............................... 3,661
2,000 Cleveland, Stadium Project, 6.00%,
11/15/08, AMBAC.................... 2,178
2,000 Cleveland, Stadium Project, 6.00%,
11/15/09, AMBAC.................... 2,168
2,000 Cleveland, Stadium Project, 5.25%,
11/15/10, Callable 11/15/07 @102,
AMBAC.............................. 2,001
2,000 Cleveland, Waterworks Revenue, Series
E, 6.00%, 1/1/17, Callable 8/1/97
@100............................... 2,005
1,000 Dayton, Special Facilities Revenue,
Emery Air Freight Corp., 6.05%,
10/1/09............................ 1,033
</TABLE>
Continued
38
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 650 East Liverpool, Hospital Authority,
Series 91B, 8.13%, 10/1/11,
Callable 10/1/01 @102.............. $ 712
1,600 Forest Hills, Local School District,
GO, 6.25%, 12/1/20, Callable
12/1/06 @102, MBIA................. 1,711
1,900 Hamilton County, Multi-Family Housing
Revenue, AMT, 7.75%, 10/1/21,
Callable 10/1/06 @102.............. 1,918
1,330 Housing Financial Agency, Single
Family Mortgage Revenue, Series A,
7.65%, 3/1/29, Callable 9/1/99
@102, GNMA......................... 1,400
1,595 Housing Financial Agency, Single
Family Mortgage Revenue, Series D,
7.00%, 9/1/11, GNMA................ 1,689
1,005 Housing Financial Agency, Single
Family Mortgage Revenue, Series D,
7.05%, 9/1/16, Callable 9/1/01
@102, GNMA......................... 1,062
2,500 State Educational Loan Revenue,
Series A-1, AMT, 5.55%, 12/1/11,
Callable 6/1/07 @102, AMBAC........ 2,513
1,000 Student Loan Funding Corp., Sub
Series A, AMT, 6.10%, 8/1/07,
Callable 8/1/03 @100............... 1,016
600 University of Akron, General Receipts
Revenue, 5.00%, 1/1/08, Callable
1/1/07 @102, AMBAC................. 599
1,000 University of Akron, General Receipts
Revenue, 5.00%, 1/1/09, Callable
1/1/07 @102, AMBAC................. 989
1,455 University of Akron, General Receipts
Revenue, 5.13%, 1/1/10, Callable
1/1/07 @102, AMBAC................. 1,443
1,000 University of Akron, General Receipts
Revenue, 5.25%, 1/1/17, Callable
1/1/07 @102, AMBAC................. 973
1,200 Westlake, City School District,
5.90%, 12/1/16, Callable 12/1/06
@102............................... 1,239
--------
31,467
--------
Oklahoma (1.3%):
2,730 Housing Finance Agency, Single Family
Revenue, AMT, 7.05%, 9/1/26,
Callable 9/1/06 @105............... 2,967
3,000 Housing Finance Agency, Single Family
Revenue, Series B-2, AMT, 7.63%,
9/1/26, Callable 3/1/06 @105....... 3,292
--------
6,259
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Oregon (0.7%):
$ 600 Eugene, Trojan Nuclear Project
Revenue, 5.90%, 9/1/09, Callable
7/10/97 @100....................... $ 600
1,545 Portland, Housing Authority,
Multi-Family Housing Revenue, AMT,
6.13%, 5/1/17, Callable 5/1/00
@100............................... 1,561
1,055 State Housing & Community Services,
Single Family Mortgage Revenue,
Series 92G, AMT, 6.80%, 7/1/27,
Callable 11/18/02 @102............. 1,104
--------
3,265
--------
Pennsylvania (2.2%):
395 Chester County, Hospital Authority
Revenue, 7.00%, 7/1/10, Callable
8/1/97 @102........................ 404
1,000 Clarion County, Hospital Authority
Revenue, 8.10%, 7/1/12, Callable
7/1/99 @102........................ 1,057
2,000 Greene County, Industrial Development
Authority, Pollution Control
Revenue, 6.10%, 2/1/07, Callable
7/10/97 @100....................... 2,001
1,280 Housing Finance Agency, Single Family
Mortgage, AMT, 6.75%, 10/1/08,
Callable 10/1/05 @102.............. 1,437
2,550 Philadelphia, Gas Works Revenue,
Series A, 6.38%, 7/1/14, Callable
7/1/03 @102........................ 2,672
1,380 Pittsburgh, Urban Redevelopment
Authority, Mortgage Revenue, Series
A, AMT, 8.35%, 10/1/14, Callable
10/1/97 @103....................... 1,428
705 Pittsburgh, Urban Redevelopment
Authority, Mortgage Revenue, Sidney
Square, Project A, AMT, 6.10%,
9/1/10, Callable 9/1/06 @102....... 735
640 Pittsburgh, Urban Redevelopment
Authority, Single Family Mortgage
Revenue, Series C, AMT, 7.88%,
12/1/16, Callable 12/1/98 @102,
GNMA............................... 668
250 Scranton-Lackawanna, Hospital
Facilities Revenue, 7.25%, 7/1/99,
Callable 7/1/98 @102, BIG.......... 263
--------
10,665
--------
</TABLE>
Continued
39
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Rhode Island (1.9%):
$ 2,630 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, AMT,
6.15%, 4/1/17, Callable 10/1/06
@102............................... $ 2,679
500 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, Series
15-B, 6.00%, 10/1/04, Callable
4/1/04 @102, MBIA.................. 513
1,000 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, Series
3A, 7.85%, 10/1/16, Callable
10/1/00 @102....................... 1,055
665 Housing & Mortgage Financial Corp.,
Homeownership Opportunity, Series
C-1, AMT, 6.80%, 10/1/23, Callable
10/1/01 @102....................... 682
4,500 State Capital Development, Series A,
5.00%, 8/1/10, Callable 8/1/07
@101, MBIA......................... 4,400
--------
9,329
--------
South Carolina (3.8%):
655 Horry County, Airport Revenue, Series
A, AMT, 5.60%, 7/1/17, Callable
7/1/07 @102, FSA................... 649
3,000 Piedmont, Municipal Power Agency,
Electric Revenue Refunding, Series
A, 6.60%, 1/1/21, Callable 1/1/98
@100............................... 3,011
5,000 Piedmont, Municipal Power Agency,
Electric Revenue Refunding, Series
B, 5.25%, 1/1/12, Callable 1/1/07
@101.5, MBIA....................... 4,930
6,175 Piedmont, Municipal Power Agency,
Electric Revenue, Series A, 6.55%,
1/1/16, Callable 1/1/98 @100....... 6,202
1,000 Resource Authority, Local Government
Program Revenue, Series A, 7.25%,
6/1/20, Callable 6/1/00 @102....... 1,068
2,500 State Housing Authority, Single
Family Mortgage, Series B, 7.00%,
7/1/11, Callable 7/1/02 @100, FHA,
VA................................. 2,555
--------
18,415
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
South Dakota (0.7%):
$ 400 Housing Development Authority,
Homeowner Mortgage, Series D-1,
AMT, 6.80%, 5/1/12, Callable 5/1/03
@102............................... $ 421
1,490 Student Loan Assistance Corp.,
Student Loan Revenue, Series B,
AMT, 7.63%, 8/1/06, Callable 8/1/99
@102, MBIA......................... 1,574
1,335 Student Loan Finance Corp., Student
Loan Revenue, Series A, AMT, 6.65%,
8/1/08, Callable 8/1/01 @102....... 1,391
--------
3,386
--------
Tennessee (1.6%):
910 Bristol, Multi-Family Home Revenue,
Shelby Heights Project, Series 97,
6.10%, 3/1/12, Callable 3/1/07
@101............................... 917
2,000 Housing Development Agency,
Homeownership Program, AMT, 7.38%,
7/1/23, Callable 7/1/01 @102....... 2,095
825 Housing Development Agency,
Homeownership Program, Series P,
7.70%, 7/1/16, Callable 7/1/00
@103............................... 869
1,305 Housing Development Agency,
Homeownership Program, Series V,
AMT, 7.65%, 7/1/22, Callable 7/1/01
@102............................... 1,372
665 La Follette, Housing Development
Corp., Mortgage Revenue Refunding,
Series A, 6.25%, 1/1/16, Callable
7/1/05 @102, MBIA, FHA............. 682
380 La Follette, Housing Development
Corp., Mortgage Revenue Refunding,
Series A, 6.37%, 1/1/20, Callable
7/1/05 @102, MBIA, FHA............. 391
1,285 Memphis Health, Educational & Housing
Revenue Refunding, 7.37%, 1/20/27,
Callable 1/20/02 @103, GNMA, FHA... 1,371
--------
7,697
--------
Texas (10.9%):
1,580 Beaumont, Housing Finance Corp.
Single Family Mortgage Revenue
Refunding, 9.20%, 3/1/12, Callable
9/1/01 @103........................ 1,757
1,765 Bexar County, Housing Finance Corp.,
Residual Revenue, GO, 0.00%,
3/1/15, Callable 1/1/99 @35.2...... 585
175 Cameron County, Housing Finance
Corp., Single Family Housing
Revenue Refunding, 6.20%, 3/1/13,
Callable 9/1/02 @103, GNMA, FNMA... 179
</TABLE>
Continued
40
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 2,500 Central Housing Finance Corp., Single
Family Mortgage Revenue, Series A,
0.00%, 9/1/16, ETM................. $ 840
4,000 Dallas-Fort Worth, Regulation Airport
Revenue, 6.10%, 11/1/07, Callable
7/1/98 @100........................ 4,007
4,225 Dallas County, Housing Finance Corp.,
Single Family Mortgage Revenue,
0.00%, 1/1/17, FGIC................ 645
1,000 Dallas County, Improvement &
Refunding, Series A, 6.50%,
8/15/09, Callable 8/15/01 @100..... 1,075
640 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue
Refunding, Series A, AMT, 8.75%,
10/1/11, Callable 10/1/00 @100,
FHA................................ 711
410 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 7.75%, 9/1/19, Callable 9/1/98
@103............................... 427
450 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 8.20%, 3/1/21, Callable 3/1/99
@103............................... 472
3,630 Fort Worth, Housing Finance Corp.,
Home Mortgage Revenue Refunding,
Series A, 8.50%, 10/1/11, Callable
10/1/00 @100....................... 3,949
1,465 Galveston, Property Finance
Authority, Single Family Mortgage
Revenue Refunding, Series A, 8.50%,
9/1/11, Callable 9/1/01 @103....... 1,586
1,000 Houston, Hotel Occupancy Tax Revenue,
Series A, 7.00%, 7/1/15, Callable
7/1/01 @100, FGIC.................. 1,096
2,365 Houston, Housing Financial Corp.,
Single Family Mortgage Revenue
Refunding, Series B-2, 0.00%,
6/1/14, Callable 12/1/06 @58....... 676
2,500 Houston, Single Family Mortgage
Revenue, Series B-1, 8.00%, 6/1/14,
Callable 12/1/06 @102.............. 2,711
855 Laredo, Housing Finance Corp., Single
Family Mortgage Revenue, AMT,
6.20%, 10/1/19, Callable 4/1/04
@103, GNMA......................... 874
730 Lubbock, Housing Finance Corp.,
Single Family Mortgage Revenue,
8.00%, 12/1/20, Callable 1/1/99
@100, GNMA......................... 745
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 1,000 Lufkin, Health Facilities Development
Corp, Health Systems Revenue
Refunding, 6.50%, 2/15/06.......... $ 1,053
600 North Texas Higher Education
Authority, Student Loan Revenue,
Series D, 6.88%, 4/1/02, Callable
4/1/00 @102, AMBAC................. 636
9,000 Nueces County, Port Corpus Christi
Authority, PCR, AMT, 6.88%, 4/1/17,
Callable 4/1/02 @102............... 9,662
7,100 Red River Authority, PCR, AMT, 6.88%,
4/1/17, Callable 4/1/02 @102....... 7,638
2,000 San Antonio, Hotel Occupancy Revenue,
0.00%, 8/15/17, FGIC............... 643
1,555 Southeast Texas Housing Finance
Corp., Residual Revenue, Series A,
0.00%, 11/1/14..................... 560
1,500 State Department of Housing &
Community Affairs, Multi-Family
Housing Revenue, Series A, 6.30%,
1/1/16, Callable 1/1/07 @102....... 1,535
510 State Department of Housing &
Community Affairs, Multi-Family
Revenue, Series A, 5.90%, 7/1/06... 519
10,060 State Department of Housing &
Community Affairs, Single Family
Revenue Refunding, Series A, 0.00%,
3/1/15, Callable 8/1/97 @30........ 3,089
2,985 State Higher Education Coordinating
Board, Student Loan Revenue, AMT,
0.00%, 10/1/25, Callable 10/1/01
@100............................... 2,668
810 State Veterans Housing Assistance,
AMT, 6.05%, 12/1/12, Callable
12/1/02 @102....................... 823
200 Travis County, Housing Finance Corp.,
Residential Mortgage Revenue,
Series A, 7.00%, 12/1/11, Callable
12/1/01 @103....................... 212
730 Travis County, Housing Finance Corp.,
Single Family Mortgage Revenue
Refunding, Series A, 6.25%, 4/1/19,
Callable 4/1/99 @100, GNMA......... 756
1,220 Winter Garden Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 6.20%, 10/1/19, Callable
4/1/99 @100, GNMA.................. 1,243
--------
53,372
--------
</TABLE>
Continued
41
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Utah (1.3%):
$ 1,725 Provo City Housing Authority, Multi
Family Revenue, 5.80%, 7/20/22,
Callable 7/20/07 @102, GNMA........ $ 1,720
1,000 State Housing Finance Agency, Single
Family Mortgage, AMT, 5.95%,
7/1/09, Callable 1/1/07 @102,
FHA................................ 1,012
1,125 State Housing Finance Agency, Single
Family Mortgage, AMT, 6.25%,
7/1/14, Callable 1/1/07 @102,
FHA................................ 1,153
2,250 State Housing Finance Agency, Single
Family Mortgage, Issue A-1, 6.00%,
7/1/14, Callable 1/1/07 @102,
FHA................................ 2,269
245 State Housing Finance Agency, Single
Family Mortgage, Series A-1, 6.90%,
7/1/12, Callable 1/1/03 @102,
FHA................................ 258
--------
6,412
--------
Virginia (1.1%):
4,700 Metropolitan Washington D.C.
Airports, Series B, AMT, 5.25%,
10/1/11, Callable 10/1/07 @101,
FGIC............................... 4,639
755 Virginia Beach Development Authority,
Multi-Family Housing Revenue, 2nd
Mortgage, Series B, 8.75%, 1/15/09,
Callable 7/15/97 @100.............. 749
--------
5,388
--------
Washington (0.6%):
2,750 State Public Power Supply, Nuclear
Project No. 2, Revenue Refunding,
Series B, 5.63%, 7/1/12, Callable
7/1/03 @102, FSA................... 2,776
--------
West Virginia (1.3%):
315 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/11............ 129
340 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/12............ 129
340 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/13............ 119
385 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/15............ 115
410 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/16............ 112
1,000 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/20............ 205
1,595 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/21............ 306
1,630 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/22............ 292
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,665 Charleston, Common Parking Facilities
Revenue, 0.00%, 12/1/23............ $ 279
8,370 Kanawha-Putnam County, Single Family
Mortgage, Series A, 0.00%, 12/1/16,
AMBAC.............................. 2,826
1,500 State Housing Development Fund,
Housing Finance, AMT, 7.20%,
11/1/20, Callable 5/1/02 @102,
FHA................................ 1,592
60 State Housing Development Fund,
Single Family Mortgage, 6.13%,
7/1/13, Callable 7/1/97 @100,
FHA................................ 60
--------
6,164
--------
Wisconsin (0.5%):
990 Housing & Economic Development, Home
Ownership Revenue, AMT, 8.00%,
3/1/21, Callable 9/1/00 @102,
FHA................................ 1,017
440 State, Series A, 7.50%, 1/1/15,
Callable 7/9/97 @101.5............. 448
1,000 State, Series A, AMT, 7.50%, 1/1/21,
Callable 7/1/00 @100............... 1,041
--------
2,506
--------
Wyoming (4.9%):
120 Community Development Authority,
Single Family Mortgage, Series A,
6.88%, 6/1/14, Callable 6/1/01
@102, FHA.......................... 123
350 Community Development Authority,
Single Family Mortgage, Series E,
AMT, 7.75%, 6/1/09, Callable
11/30/98 @100.9.................... 362
4,400 Student Loan Corp., Student Loan
Revenue, AMT, 4.00%, 12/1/05*...... 4,400
9,900 Student Loan Corp., Student Loan
Revenue, AMT, Series A, 4.00%,
12/1/45*........................... 9,899
8,900 Student Loan Corp., Student Loan
Revenue, Series A, AMT, 4.00%,
2/1/32*............................ 8,900
--------
23,684
--------
Total Municipal Bonds 480,539
--------
INVESTMENT COMPANIES (1.2%):
5,672 Provident Municash................... 5,672
--------
Total Investment Companies 5,672
--------
Total (Cost--$476,532) (a) $486,211
========
</TABLE>
Continued
42
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $486,664.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $74. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $10,279
Unrealized depreciation.................................................. (674)
-------
Net unrealized appreciation.............................................. $ 9,605
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Authority
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
LOC Letters of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
VA Veterans Administration
</TABLE>
See notes to financial statements.
43
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (98.6%):
Arizona (0.3%):
$ 1,000 Tucson & Pima County, Single Family
Mortgage Revenue, 0.00%, 12/1/14,
ETM............................... $ 378
--------
Colorado (0.6%):
2,000 El Paso County, Single Family
Mortgage Revenue, 0.00%, 9/1/15,
ETM............................... 718
--------
Kansas (0.8%):
1,600 Kansas City, Single Family Mortgage
Revenue, Series 1983 A, 0.00%,
12/1/14, ETM...................... 604
1,000 Saline County, Single Family
Mortgage Revenue, Series 1983 A,
0.00%, 12/1/15, ETM............... 354
--------
958
--------
Kentucky (95.1%):
225 Ashland Utility Refunding Revenue,
6.65%, 4/1/04, Callable 10/1/97
@102.............................. 231
1,500 Berea College Utility Revenue, AMT,
5.90%, 6/1/17, Callable 6/1/07
@102.............................. 1,515
200 Boone County, Certificates of
Participation, Public Golf, 6.35%,
11/15/02.......................... 215
200 Boone County, Certificates of
Participation, Public Golf, 6.40%,
11/15/03, Callable 11/15/02
@102.............................. 217
250 Boone County, School District
Finance Corp., School Building
Revenue, 6.70%, 9/1/06, Callable
9/1/01 @103....................... 275
310 Boone County, School District
Finance Corp., School Building
Revenue, 7.10%, 8/1/07, Callable
8/1/00 @103....................... 341
1,000 Boone County, School District
Finance Corp., School Building
Revenue, 6.70%, 9/1/07, Callable
9/1/01 @103....................... 1,097
395 Boone County, School District
Finance Corp., School Building
Revenue, 7.10%, 8/1/08, Callable
8/1/00 @103....................... 435
230 Bowling Green, Key Municipal
Projects Corp., Lease Revenue,
7.20%, 10/1/01, Callable 4/1/99
@102.............................. 245
280 Bowling Green, Key Municipal
Projects Corp., Lease Revenue,
7.40%, 10/1/04, Callable 4/1/99
@102.............................. 299
250 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 7.10%, 8/15/99,
Callable 8/15/97 @100.5........... 252
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 315 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 6.38%, 8/1/03,
ETM............................... $ 330
630 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 7.13%, 8/1/05,
ETM............................... 662
415 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/09, Callable
6/1/02 @102....................... 439
445 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/10, Callable
6/1/02 @102....................... 469
325 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/11, Callable
6/1/02 @102....................... 342
510 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/12, Callable
6/1/02 @102....................... 535
250 Danville, Hospital Revenue, Hospital
Revenue Refunding, Esphraim
McDowell Region, 6.20%, 4/1/98,
FGIC.............................. 254
345 Danville, Hospital Revenue, Hospital
Revenue Refunding, Esphraim
McDowell Region, 6.40%, 4/1/00,
FGIC.............................. 363
100 Danville, Multi-City Lease Revenue,
Metro Sewer District, 6.35%,
2/1/02, Prerefunded 2/1/01 @102,
MBIA.............................. 108
225 Danville, Multi-City Lease Revenue,
Metro Sewer District, 6.50%,
2/1/04, Prerefunded 2/1/01 @102,
MBIA.............................. 245
500 Daviess County, Hospital Revenue,
Owensboro-Daviess County, 6.00%,
8/1/04, Callable 8/1/02 @102,
MBIA.............................. 536
500 Development Finance Authority,
Hospital Revenue, Baptist
Hospital, Inc., 6.88%, 9/1/99,
ETM, BIG.......................... 528
4,500 Development Finance Authority,
Hospital Revenue, Elizabeth,
Med-A, 6.00%, 11/1/10, Callable
11/1/01 @100, FGIC................ 4,692
500 Development Finance Authority,
Pooled Loan Program, 6.80%,
12/1/97, FGIC..................... 506
500 Eastern Kentucky University,
Revenue, 6.00%, 5/1/99, AMBAC..... 516
</TABLE>
Continued
44
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 250 Eastern Kentucky University,
Revenues Construction, Educational
Buildings, Series 0, 6.70%,
5/1/07, Callable 5/1/01 @102,
AMBAC............................. $ 272
655 Fayette County, School District
Finance Corp., School Building
Refunding Revenue, 6.00%, 5/1/02,
Callable 5/1/00 @102.............. 693
1,255 Fayette County, School District
Finance Corp., School Building
Revenue, Series A, 5.35%, 1/1/13,
Callable 1/1/07 @102.............. 1,253
200 Hardin County, Water District #1,
Waterworks Refunding Revenue,
6.70%, 9/1/05, Callable 3/1/01
@102.............................. 217
180 Henderson Electric Light & Power
Revenue, 5.70%, 3/1/03, Callable
7/10/97 @100...................... 180
1,025 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series C, 6.50%, 6/1/02, GSL...... 1,098
1,500 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series C, AMT, 5.45%, 6/1/03,
GSL............................... 1,540
1,705 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series D, AMT, 7.00%, 12/1/06,
Callable 12/1/01 @102, GSL........ 1,861
760 Housing Corp. Revenue, 7.40%,
1/1/10, Callable 7/1/00 @102...... 802
500 Housing Corp. Revenue, Series A,
5.40%, 1/1/05, Callable 7/1/03
@102, FHA, FNMA, VA............... 517
500 Housing Corp. Revenue, Series A,
5.50%, 1/1/06, Callable 7/1/03
@102, FHA, FNMA, VA............... 518
500 Housing Corp. Revenue, Series A,
5.60%, 1/1/07, Callable 7/1/03
@102, FHA, FNMA, VA............... 518
400 Housing Corp. Revenue, Series B,
5.85%, 7/1/00, FHA, FNMA, VA...... 414
275 Housing Corp. Revenue, Series B,
6.20%, 7/1/03, Callable 7/1/02
@102, FHA, FNMA, VA............... 287
1,745 Housing Corp. Revenue, Series D,
5.80%, 7/1/13, Callable 7/1/06
@102.............................. 1,776
410 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 5.25%, 8/1/04, Callable
8/1/03 @102....................... 422
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 110 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 6.00%, 8/1/11, Callable
8/1/01 @100....................... $ 112
500 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 5.75%, 8/1/13, Callable
8/1/03 @102....................... 508
500 Infrastructure Authority Revenue,
Governmental Agencies Program,
Refunding Revenue, 5.40%, 8/1/06,
Callable 8/1/03 @102.............. 516
1,000 Infrastructure Authority Revenue,
Revolving Fund Program, Series E,
6.40%, 6/1/04, Callable 6/1/01
@102.............................. 1,076
710 Infrastructure Authority Revenue,
Revolving Fund Program, Series E,
6.50%, 6/1/05, Callable 6/1/01
@102.............................. 764
250 Infrastructure Authority Revenue,
Series G, 6.10%, 6/1/02........... 267
250 Interlocal School Transportation
Assoc., Equipment Lease Revenue,
6.00%, 3/1/01..................... 263
405 Interlocal School Transportation
Assoc., Equipment Lease Revenue,
6.00%, 3/1/02..................... 429
135 Jefferson County, Capital Projects,
7.70%, 6/1/01, Callable 12/1/97,
ETM............................... 151
500 Jefferson County, Capital Projects,
First Mortgage Refunding Revenue,
6.38%, 12/1/07, ETM............... 527
725 Jefferson County, Capital Projects,
Series A, 6.10%, 8/15/07, Callable
2/15/03 @102...................... 778
1,000 Jefferson County, Capital Projects,
Series A, 5.50%, 4/1/10, Callable
4/1/06 @102, AMBAC................ 1,022
1,000 Jefferson County, Capital Projects,
Series A, 5.50%, 4/1/11, Callable
4/1/06 @102, AMBAC................ 1,018
500 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.05%,
5/1/02, AMBAC..................... 533
1,000 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.10%,
5/1/03, Callable 5/1/02 @102,
AMBAC............................. 1,076
</TABLE>
Continued
45
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 300 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.20%,
5/1/04, Callable 5/1/02 @102,
AMBAC............................. $ 324
500 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.38%,
5/1/08, Callable 5/1/02 @102,
AMBAC............................. 538
930 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 5.65%,
1/1/10, Callable 1/1/07 @102...... 951
2,000 Jefferson County, Hospital Revenue,
Alliant Hospital Systems, 6.20%,
10/1/04, Callable 10/1/02 @102,
MBIA.............................. 2,171
550 Jefferson County, Pollution Control
Revenue, Louisville Gas & Electric
Co., 7.45%, 6/15/15, Callable
6/15/00 @102...................... 601
1,000 Jefferson County, School District
Finance Corp., School Building
Revenue, 6.00%, 1/1/04, Callable
7/1/02 @102, MBIA................. 1,073
625 Jefferson County, School District
Finance Corp., School Building
Revenue, 7.15%, 9/1/04,
Prerefunded 9/1/00 @103........... 694
675 Jefferson County, School District
Finance Corp., School Building
Revenue, 7.20%, 9/1/05,
Prerefunded 9/1/00 @103........... 751
1,430 Jefferson County, School District
Finance Corp., School Building
Revenue, 5.25%, 7/1/07, Callable
7/1/05 @102, MBIA................. 1,471
2,315 Junction City, College Revenue,
Centre College Project, 5.70%,
4/1/12, Callable 4/1/07 @102...... 2,394
500 Kenton County, Airport Revenue,
International, Series AR-A, AMT,
6.10%, 3/1/04, Callable 3/1/02
@101, FSA......................... 531
1,000 Kenton County, Airport Revenue,
International, Series AR-A, AMT,
6.20%, 3/1/05, Callable 3/1/02
@101, FSA......................... 1,063
500 Kenton County, Airport Revenue,
International, Series B, AMT,
5.75%, 3/1/07, Callable 3/1/03
@102, FSA......................... 524
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 500 Kenton County, Airport Revenue,
International, Series B, AMT,
5.75%, 3/1/08, Callable 3/1/03
@102, FSA......................... $ 520
380 Kenton County, Public Properties
Corp. Revenue, Community Health
Care Facilities Project, 7.00%,
10/1/06, Prerefunded 10/1/99
@102.............................. 410
200 Kenton County, School District
Finance Corp., School Building
Revenue, 6.30%, 12/1/00........... 212
100 Kenton County, School District
Finance Corp., School Building
Revenue, 6.50%, 12/1/02, Callable
12/1/01 @102...................... 110
325 Kenton County, School District
Finance Corp., School Building
Revenue Refunding, 5.25%, 7/1/07,
Callable 7/1/03 @102.............. 334
495 Kenton County, Water District,
Waterworks Revenue, District #001,
6.30%, 2/1/02, FGIC............... 532
1,015 Kenton County, Water District,
Waterworks Revenue, District #001,
6.38%, 2/1/04, Callable 2/1/02
@103, FGIC........................ 1,110
265 Lexington-Fayette Urban County
Government, Economic Development
Revenue, 7.54%, 12/1/03........... 265
300 Lexington-Fayette Urban County
Government, Educational Facilities
Revenue, Transylvania University,
7.15%, 2/1/00, Callable 2/1/99
@102, MBIA........................ 319
250 Lexington-Fayette Urban County
Government, Educational Facilities
Revenue, Transylvania University,
7.25%, 2/1/02, Callable 2/1/99
@102, MBIA........................ 265
335 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.20%, 4/1/05,
Prerefunded 4/1/02 @102........... 366
355 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.30%, 4/1/06,
Prerefunded 4/1/02 @102........... 389
</TABLE>
Continued
46
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 380 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/07,
Prerefunded 4/1/02 @102........... $ 418
405 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/08,
Prerefunded 4/1/02 @102........... 445
425 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/09,
Prerefunded 4/1/02 @102........... 467
425 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Greenspace Project Revenue,
6.75%, 12/1/05, Prerefunded
12/1/00 @102...................... 466
240 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Greenspace Project Revenue,
6.75%, 12/1/07, Prerefunded
12/1/00 @102...................... 263
350 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.70%,
2/1/02, Callable 2/1/00 @102...... 376
210 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.88%,
2/1/06, Callable 2/1/00 @102...... 225
430 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.75%,
7/1/07, Prerefunded 7/1/00 @102... 468
500 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Sewer System Revenue,
6.35%, 7/1/07, Callable 7/1/02
@102, MBIA........................ 545
240 Lexington-Fayette Urban County
Government, School Building
Revenue, 6.90%, 11/1/97........... 242
250 Lexington-Fayette Urban County
Government, School Building
Revenue, 6.85%, 6/1/01, Callable
12/1/99 @103...................... 272
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 625 Lexington-Fayette Urban County
Government, School Building
Revenue, 7.00%, 6/1/04, Callable
12/1/99 @103...................... $ 683
1,930 Lexington-Fayette Urban County
Government, Sewer System Revenue,
6.35%, 7/1/09, Callable 7/1/02
@102, MBIA........................ 2,102
935 Lexington-Fayette Urban County
Government, University of Kentucky
Alumni Assoc., Inc., 6.50%,
11/1/07, Callable 11/1/04 @102,
MBIA.............................. 1,046
1,420 Louisville & Jefferson County,
Airport Authority Revenue, AMT,
6.00%, 7/1/10, Callable 7/1/07
@102, MBIA........................ 1,504
200 Louisville & Jefferson County,
Metropolitan Sewer District, Sewer
Revenue, 6.25%, 6/1/99, ETM....... 208
300 Louisville & Jefferson County,
Metropolitan Sewer District, Sewer
Revenue, 6.90%, 5/1/01,
Prerefunded 5/1/99 @102, MBIA..... 320
825 Louisville & Jefferson County, Sewer
& Drain System Revenue, 6.40%,
5/15/08, Callable 11/15/04 @102,
AMBAC............................. 916
205 Louisville Packaging Authority
Revenue, 6.60%, 12/1/03, Callable
6/1/01 @103....................... 224
100 Louisville Public Properties Corp.
Revenue, 6.25%, 5/1/98, Callable
11/1/97 @101...................... 102
300 Louisville Public Properties Corp.
Revenue, 6.00%, 4/1/04, Callable
4/1/99 @102....................... 313
300 Louisville Public Properties Corp.
Revenue, 6.00%, 4/1/05, Callable
4/1/99 @102....................... 314
295 Louisville Public Properties Corp.,
First Mortgage Revenue, 6.15%,
12/1/05, Callable 12/1/02 @102.... 318
200 Louisville Public Properties Corp.,
First Mortgage Revenue Refunding,
6.40%, 12/1/07, Callable 12/1/02
@102.............................. 217
1,000 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.40%, 11/15/04, Callable
11/15/00 @102..................... 1,035
</TABLE>
Continued
47
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 500 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.63%, 11/15/07, Callable
11/15/00 @102..................... $ 520
1,540 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.75%, 11/15/09, Callable
11/15/00 @102..................... 1,595
1,530 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.75%, 11/15/10, Callable
11/15/00 @102..................... 1,577
2,090 McCracken County, Hospital Revenue,
Mercy Health System, 6.40%,
11/1/07, Callable 11/1/04 @102,
MBIA.............................. 2,317
1,000 McCracken County, Hospital Revenue,
Mercy Health System, Series A,
6.20%, 11/1/05, Callable 11/1/04
@102, MBIA........................ 1,096
505 McCreary County, School District
Finance Corp., School Building
Revenue, 6.60%, 10/1/08, Callable
10/1/01 @103...................... 556
215 Mercer County, School District
Finance Corp., School Building
Revenue, 6.38%, 12/1/07, Callable
12/1/01 @103...................... 231
300 Morehead State University, Housing &
Dining System Revenue, 6.10%,
11/1/05, Callable 11/1/01 @102,
AMBAC............................. 321
200 Morehead State University, Housing &
Dining System Revenue, Series M,
6.30%, 11/1/08, Callable 11/1/01
@102, AMBAC....................... 217
215 Muhlenberg County, School District
Finance Corp., School Building
Revenue, 5.85%, 8/1/09, Callable
8/1/02 @102....................... 224
750 Muhlenberg County, School District
Finance Corp., School Building
Revenue, Second Series, 5.85%,
8/1/10, Callable 8/1/02 @102...... 779
460 Murray State University Revenues,
Series G, Second Series, 5.60%,
5/1/07, Callable 5/1/03 @102...... 478
240 Murray State University, Educational
Buildings Refunding Revenue,
5.60%, 5/1/06, Callable 5/1/03
@102.............................. 250
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 530 Northern Kentucky University,
Educational Buildings Revenue,
6.10%, 5/1/06, Callable 5/1/02
@102, AMBAC....................... $ 568
300 Owensboro, Electric Light & Power
Revenue, 6.75%, 1/1/03, ETM....... 319
205 Paducah Electric Plant Board
Revenue, 6.30%, 1/1/08, Callable
1/1/01 @102, AMBAC................ 220
300 Paducah Waterworks Revenue, 6.10%,
7/1/00, MBIA...................... 316
300 Paducah Waterworks Revenue, 6.60%,
7/1/05, Callable 7/1/01 @102,
MBIA.............................. 325
1,085 Perry County, School District,
Financial Corp. School Building
Revenue, 6.25%, 7/1/09, Callable
7/1/02 @102....................... 1,157
130 Richmond Water & Gas Revenue, 5.40%,
12/1/99, ETM...................... 134
250 Richmond Water, Gas & Sewer Revenue
Refunding Bonds, 6.50%, 6/1/99,
ETM, MBIA......................... 261
410 Rowan County, School Building
Revenue, 6.35%, 6/1/03, Callable
12/1/97 @103, MBIA................ 425
330 Scott County, School District
Financial Corp., School Building
Revenue, 7.10%, 12/1/02, Callable
12/1/98 @103...................... 353
545 Shelby County, School District
Financial Corp., School Building
Revenue, 6.10%, 9/1/02, Callable
9/1/01 @103....................... 582
100 Shelby County, School District
Financial Corp., School Building
Revenue, 6.25%, 9/1/03, Callable
9/1/01 @103....................... 108
500 Shelby County, School District
Financial Corp., School Building
Revenue, 6.50%, 9/1/05, Callable
9/1/01 @103....................... 549
200 Shelby County, School District
Financial Corp., School Building
Revenue, 6.50%, 9/1/07, Callable
9/1/01 @103....................... 217
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #26, 7.40%,
6/1/00, Callable 12/1/98 @102..... 1,065
2,300 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #50, 6.00%,
2/1/10, Prerefunded 2/1/01 @100... 2,427
</TABLE>
Continued
48
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 1,475 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #53, 6.25%,
10/1/02, Callable 10/1/01 @102.... $ 1,593
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #54, 5.10%,
9/1/00............................ 1,023
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #54, 5.90%,
9/1/07, Callable 9/1/02 @102...... 1,061
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #56, 5.70%,
9/1/06, Callable 9/1/04 @102...... 1,061
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #56, 5.80%,
9/1/07, Callable 9/1/04 @102...... 1,065
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #59, 5.30%,
5/1/07, Callable 11/1/05 @102..... 1,030
1,000 State Property & Buildings
Commission Revenues, Revenue
Refunding, Project #59, 5.38%,
11/1/09, Callable 11/1/05 @102.... 1,016
275 State Property & Buildings
Commission Revenues, Revenue
Refunding, Toyota Corp., 6.40%,
11/1/01........................... 296
250 State Turnpike Authority, Economic
Development, Recovery Road
Revenue, 6.13%, 7/1/07, ETM....... 265
500 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 7.13%,
5/15/01, Prerefunded 5/15/00
@101.5............................ 545
750 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.70%,
1/1/03............................ 787
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.20%,
7/1/03, AMBAC..................... 1,032
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.40%,
7/1/05, AMBAC..................... 1,040
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 7.38%,
5/15/07, Prerefunded 5/15/00
@101.5............................ $ 1,097
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 6.50%,
7/1/08, AMBAC..................... 1,130
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.50%,
7/1/09, AMBAC..................... 1,045
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 0.00%,
1/1/10, FGIC...................... 518
2,600 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.63%,
7/1/10, Callable 7/1/05 @102,
AMBAC............................. 2,690
500 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.75%,
7/1/11, Callable 7/1/05 @102,
AMBAC............................. 520
2,750 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project S, 5.50%,
7/1/08, AMBAC..................... 2,893
250 State Turnpike Authority, Economic
Development, Toll Road Revenue
Refunding Bonds, 5.80%, 7/1/99,
ETM............................... 258
500 State Turnpike Authority, Resource
Recovery Revenue, 6.63%, 7/1/08,
ETM............................... 548
1,000 State Turnpike Authority, Resource
Recovery Revenue, 1985 Series A,
6.00%, 7/1/09, Callable 7/16/97
@100.............................. 1,001
225 State Turnpike Authority, Toll Road
Revenue Refunding, 6.13%, 7/1/08,
ETM............................... 240
535 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue, 6.30%, 5/1/02,
Callable 11/1/01 @102............. 575
1,000 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue Bonds, 6.60%,
5/1/01............................ 1,076
</TABLE>
Continued
49
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 475 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue, Southeast,
6.30%, 5/1/05, Callable 11/1/01
@102.............................. $ 511
500 University of Louisville Revenues,
Construction of Educational
Buildings, Series I, Refunding
Revenue, 5.40%, 5/1/07, Callable
5/1/03 @102....................... 517
500 University of Louisville Revenues,
Construction of Educational
Buildings, Series I, Refunding
Revenue, 5.40%, 5/1/08, Callable
5/1/03 @102....................... 512
500 University of Louisville Revenues,
Construction of Educational
Buildings, Series I, Refunding
Revenue, 5.40%, 5/1/09, Callable
5/1/03 @102....................... 508
1,000 University of Louisville,
Educational Buildings Refunding
Revenue, 5.38%, 5/1/06, Callable
5/1/03 @102....................... 1,035
330 Versailles County, Water & Sewer,
6.30%, 12/1/09, Callable 12/1/01
@103.............................. 355
305 Warren County, Water District
Revenue, 7.13%, 1/1/03, Callable
7/1/99 @103, MBIA................. 329
715 Winchester Utilities Revenue, 7.45%,
7/1/08, Prerefunded 7/1/98 @103,
MBIA.............................. 761
280 Winchester Utilities Revenue, 7.45%,
7/1/09, Prerefunded 7/1/98 @103,
MBIA.............................. 298
950 Winchester Utilities Revenue, 5.30%,
7/1/09, Callable 7/1/03 @102...... 954
--------
118,834
--------
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Louisiana (0.9%):
$ 3,000 Public Facilities Authority Revenue,
Multi-Family, Series A, 0.00%,
2/1/20, ETM....................... $ 823
1,000 Public Facilities Authority Revenue,
Series B, 0.00%, 12/1/19, ETM..... 284
--------
1,107
--------
Mississippi (0.6%):
2,500 Home Corp., Residual Revenue, 0.00%,
9/15/16, Callable 3/15/04 @ 41.6,
ETM............................... 755
--------
Texas (0.3%):
1,000 Central Housing Finance Corp.,
Single Family Mortgage Revenue,
Series A, 0.00%, 9/1/16, ETM...... 336
--------
Total Municipal Bonds 123,086
--------
INVESTMENT COMPANIES (0.3%):
342 The One Group Municipal Money Market
Fund, Fiduciary Class............. 342
--------
Total Investment Companies 342
--------
Total (Cost--$117,316) (a) $123,428
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $124,783.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $6,112
Unrealized depreciation.................................................. --
------
Net unrealized appreciation.............................................. $6,112
======
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Administration
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GSL Guaranteed Student Loans
MBIA Insured by Municipal Bond Insurance Association
VA Veterans Administration
</TABLE>
See notes to financial statements.
50
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (98.7%):
California (0.6%):
$ 1,000 Escondido Multifamily Housing
Revenue, 5.40%, 1/1/27, Callable
7/1/05 @101.5, FNMA............... $ 1,014
--------
Colorado (1.0%):
2,810 El Paso County, Single Family
Mortgage Revenue, Series A, 0.00%,
5/1/15, ETM....................... 1,028
1,890 Housing Finance Authority, Revenue,
0.00%, 9/1/14, ETM................ 724
--------
1,752
--------
Kansas (0.5%):
1,000 Kansas City, Single Family Mortgage
Revenue, Series 1983 A, 0.00%,
12/1/14, ETM...................... 378
1,390 Saline County, Single Family
Mortgage Revenue, Series 1983 A,
0.00%, 12/1/15, ETM............... 491
--------
869
--------
Massachusetts (0.7%):
1,000 State GO, 6.75, 8/1/09, Callable
8/1/01 @102, AMBAC................ 1,094
--------
Mississippi (0.6%):
3,000 Home Corp., Residual Revenue, 0.00%,
9/15/16, Callable 3/15/04 @41.6,
ETM............................... 906
--------
Missouri (0.7%):
1,000 State Health, 6.40%, 6/1/10, MBIA... 1,117
--------
Ohio (93.4%):
1,000 Adams County, GO, School District,
5.45%, 12/1/08, Callable 12/1/07
@102, MBIA........................ 1,039
1,000 Air Quality Development Authority,
Pollution Control Revenue, Ohio
Edison, 7.45%, 3/1/16, Callable
3/1/00 @102, FGIC................. 1,087
1,045 Akron Sewer Systems, 5.30%, 12/1/05,
MBIA.............................. 1,085
1,000 Akron Sewer Systems, 5.65%, 12/1/08,
Callable 12/1/06 @102, MBIA....... 1,055
820 Akron, Bath, Copley Ohio Hospital
Revenue, 4.40%, 1/1/00, AMBAC..... 821
1,000 Akron, Bath, Copley Ohio Hospital
Revenue, 7.45%, 11/15/20,
Prerefunded 11/15/00 @102, AMBAC.. 1,116
1,000 Allen County, Justice Center, 7.00%,
12/1/15, Prerefunded 12/1/01 @101,
AMBAC............................. 1,114
3,000 Bexley School District, GO, 6.50%,
12/1/16, Prerefunded 12/1/01
@102.............................. 3,294
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Big Walnut Ohio School District, GO,
7.30%, 6/1/15, Prerefunded 6/1/01
@102, AMBAC....................... $ 1,122
725 Bowling Green State University,
5.65%, 6/1/11, Callable 6/1/06
@101, AMBAC....................... 749
1,000 Butler County, Hospital Facilities,
6.75%, 11/15/10, Callable 11/15/01
@102, FGIC........................ 1,088
750 Cincinnati, GO, 6.75%, 12/1/00...... 810
2,775 Clermont County, Waterworks, 6.63%,
12/1/15, Prerefunded 12/1/01 @102,
AMBAC............................. 3,073
4,500 Cleveland Public Power System,
6.40%, 11/15/06, Callable 11/15/04
@102, MBIA........................ 5,000
3,000 Cleveland Public Power System,
0.00%, 11/15/11, MBIA............. 1,403
2,000 Cleveland Waterworks, 5.50%, 1/1/13,
MBIA.............................. 2,062
1,850 Cleveland Waterworks, Series F-92B,
6.25%, 1/1/06, Callable 1/1/02
@102, AMBAC....................... 1,986
3,750 Cleveland Waterworks, Series F-92B,
6.50%, 1/1/11, Callable 1/1/02
@102, AMBAC....................... 4,068
50 Cleveland Waterworks, Series F-92B,
6.50%, 1/1/11, Prerefunded 1/1/02
@102, AMBAC....................... 55
1,000 Cleveland, GO, 6.88%, 7/1/09,
Prerefunded 7/1/99 @102, MBIA..... 1,071
500 Cleveland, GO, 7.50%, 8/1/07,
Prerefunded 2/1/03 @100, AMBAC.... 573
1,000 Cleveland, GO, 6.38%, 7/1/12,
Callable 7/1/02 @102, MBIA........ 1,086
1,225 Columbus Municipal Airport No.
30-E-U, GO, 6.20%, 4/15/04,
Callable 4/15/01 @100............. 1,295
1,000 Columbus Sewer Improvements, GO,
6.75%, 9/15/06, Callable 9/15/01
@100.............................. 1,097
</TABLE>
Continued
51
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 2,285 Columbus Waterworks Enlargement No.
44, GO, 6.00%, 5/1/11, Callable
5/1/03 @102....................... $ 2,428
1,000 Columbus Waterworks Enlargement No.
44, GO, 6.00%, 5/1/12, Callable
5/1/03 @102....................... 1,060
1,000 Columbus, GO, 6.40%, 1/1/07,
Callable 1/1/02 @102.............. 1,088
1,000 Cuyahoga County, Hospital Revenues,
Series A, 5.50%, 1/15/10, Callable
1/15/06 @102, MBIA................ 1,024
1,000 Cuyahoga County, Jail Facilities,
GO, 7.00%, 10/1/13, Prerefunded
10/1/01 @102...................... 1,115
1,500 Cuyahoga County, Public
Improvements, GO, 6.70%, 10/1/10,
Prerefunded 10/1/99 @102.......... 1,609
1,000 Delaware County, Library District,
GO, 7.25%, 11/1/10, Prerefunded
11/1/00 @102...................... 1,113
1,000 Delaware County, Sewer, GO, 5.60%,
12/1/10, Callable 12/1/05 @101.... 1,019
1,000 Fairfield County, Hospital
Improvement Revenue,
Lancaster-Fairfield Community
Hospital, 7.10%, 6/15/21,
Prerefunded 6/15/01 @102, MBIA.... 1,115
500 Fairfield County, School District,
GO, 7.75%, 12/1/09, Callable
12/1/98 @102, AMBAC............... 536
1,290 Franklin County, Hospital Revenue,
Children's Hospital, 5.65%,
11/1/08, Callable 11/1/06 @101.... 1,354
1,065 Franklin County, Hospital Revenue,
Children's Hospital, 5.75%,
11/1/09, Callable 11/1/06 @101.... 1,117
800 Franklin County, Hospital Revenue,
Children's Hospital, 5.80%,
11/1/10, Callable 11/1/06 @101.... 836
2,000 Franklin County, Hospital Revenue,
Children's Hospital Project,
Series A, 6.50%, 5/1/07, Callable
11/1/02 @102...................... 2,158
1,000 Franklin County, Hospital Revenue,
Children's Hospital Project,
Series A, 6.60%, 11/1/11, Callable
11/1/01 @102...................... 1,102
1,000 Franklin County, Hospital Revenue,
Holy Cross Health, 7.65%, 6/1/10,
Prerefunded 6/1/00 @102, AMBAC.... 1,109
2,500 Franklin County, Hospital Revenue,
Holy Cross Health Systems, 4.15%,
6/1/16*........................... 2,500
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Franklin County, Hospital Revenue,
Riverside United, Series B, 7.60%,
5/15/20, Prerefunded 5/15/00
@102.............................. $ 1,106
1,000 Greater Cleveland Regional
Transportation Authority, GO,
5.60%, 12/1/11, Callable 12/1/06
@101, FGIC........................ 1,030
1,600 Greene County, GO, 6.25%, 12/1/09,
Callable 12/1/02 @102, AMBAC...... 1,739
1,000 Greene County, Water System, 6.85%,
12/1/11, Callable 12/1/01 @102,
AMBAC............................. 1,101
1,500 Hamilton County Electric Systems,
6.13%, 10/15/08, Callable 10/15/02
@102, FGIC........................ 1,613
1,500 Hamilton County, Building
Improvement & Refunding, Museum
Center, GO, 6.50%, 12/1/09,
Callable 12/1/01 @102............. 1,629
1,500 Hamilton County, Hospital
Facilities, Bethesda Hospital,
Series A, 6.25%, 1/1/12, Callable
1/1/03 @102....................... 1,565
1,265 Hamilton County, Hospital
Facilities, Christ Hospital,
Series B, 6.63%, 1/1/06, Callable
1/1/01 @100, FGIC................. 1,343
380 Hamilton County, Sewer System,
6.30%, 12/1/01, Prerefunded 6/1/01
@102.............................. 412
1,000 Hamilton County, Sewer System
Refunding & Improvements, Series
A, 4.30%, 12/1/98, FGIC........... 1,005
1,000 Hamilton Waterworks Water Utility
Improvement, 6.40%, 10/15/07,
Callable 10/15/01 @102, MBIA...... 1,087
1,250 Housing Finance Agency, Mortgage,
Series A-1, 6.20%, 9/1/14,
Callable 3/1/05 @102, GNMA........ 1,301
1,000 Huron County, Correctional Facility,
Issue I, GO, 5.70%, 12/1/11,
Callable 12/1/07 @102, MBIA....... 1,044
1,000 Kent State University, 6.45%,
5/1/12, Callable 5/1/02 @102,
AMBAC............................. 1,087
3,000 Lakewood Sanitation Sewer System,
Special Obligation, 6.40%,
12/1/11, Callable 12/1/01 @102.... 3,220
1,000 Logan County School District, GO,
7.10%, 12/1/12, Prerefunded
12/1/01 @101, AMBAC............... 1,118
1,000 Lorain County, Hospital Revenue,
6.00%, 9/1/05, MBIA............... 1,082
</TABLE>
Continued
52
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Lorain County, Hospital Revenue,
5.63%, 9/1/12, Callable 9/1/07
@102, MBIA........................ $ 1,027
1,000 Marysville School District, GO,
7.20%, 12/1/10, Callable 12/1/00
@102, AMBAC....................... 1,110
2,500 Middleburg Heights Hospital, 5.70%,
8/15/10, Callable 8/15/08 @102,
FSA............................... 2,611
2,000 Montgomery County, Sisters of
Charity, Series A, 6.50%, 5/15/08,
Callable 5/15/01 @102, MBIA....... 2,150
1,000 North Royalton, GO, 7.50%, 12/1/11,
Callable 12/1/00 @102............. 1,106
1,000 Northeast Ohio Regional Sewer
District Wastewater, 6.50%,
11/15/08, Prerefunded 11/15/01
@101, AMBAC....................... 1,093
980 Ohio Capital Corp. for Housing,
5.60%, 1/1/07, Callable 7/1/03
@102, MBIA........................ 1,003
710 Ohio Housing Finance, 7.50%, 9/1/10,
Callable 9/1/00 @102, GNMA........ 751
1,805 Ohio State Natural Resources, GO,
4.70%, 4/1/03..................... 1,823
1,000 Ohio State University, University &
College Improvements, 5.50%,
12/1/03, Callable 12/1/02 @102.... 1,051
500 Olentangy Local School District, GO,
7.75%, 12/1/11, BIG............... 628
565 Olmstead Falls Ohio School District,
GO, 6.85%, 12/15/11, Callable
12/15/04 @102, FGIC............... 640
500 Orrville Electric Revenue, 7.50%,
12/1/10, Callable 12/1/98 @102,
AMBAC............................. 533
1,000 Ottawa County, GO, 7.00%, 9/1/11,
Callable 9/1/01 @102, AMBAC....... 1,102
1,000 Pickerington Local School District,
GO, 7.00%, 12/1/13, Prerefunded
12/1/00 @102, AMBAC............... 1,104
2,600 Portage County, Robinson Memorial
Hospital Project, 5.63%, 11/15/07,
Callable 11/15/04 @102, MBIA...... 2,741
2,220 Rocky River City School District,
School Improvements, GO, 6.90%,
12/1/11, Callable 2/1/00 @102..... 2,441
1,000 Saint Mary's Electric Systems
Mortgage, 7.15%, 12/1/10, Callable
2/1/00 @102, AMBAC................ 1,109
1,000 Sandusky City School District, GO,
7.30%, 12/1/10, Callable 12/1/00
@102.............................. 1,101
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Shaker Heights City Schools, GO,
7.10%, 12/15/10................... $ 1,157
1,710 Springfield County, School District,
GO, 0.00%, 12/1/12, AMBAC......... 751
1,000 Springfield, GO, 6.88%, 9/1/06,
Callable 9/1/01 @102, AMBAC....... 1,100
1,000 State Building Authority, 7.35%,
4/1/09, Prerefunded 4/1/00 @102,
MBIA.............................. 1,098
2,000 State Building Authority, Adult
Correctional Building, Series A,
6.13%, 10/1/09, Callable 10/1/03
@102.............................. 2,141
1,000 State Building Authority, Adult
Correctional Building, Series A,
5.50%, 4/1/13, Callable 4/1/07
@101, AMBAC....................... 1,012
1,000 State Building Authority, Highway
Safety Building, 5.00%, 10/1/04,
AMBAC............................. 1,020
500 State Building Authority, Highway
Safety Building, 7.75% 10/1/08,
Prerefunded 10/1/98 @102.......... 533
1,000 State Building Authority, Highway
Safety Building, 5.38%, 10/1/09,
AMBAC............................. 1,022
1,000 State Building Authority, State
Correctional Facilities, Series A,
6.50%, 10/1/01.................... 1,082
1,165 State Building Authority, State
Facilities Transportation Building
Fund, Series A, 6.50%, 9/1/09,
Callable 9/1/04 @102, AMBAC....... 1,290
1,000 State Building Authority, State
Facilities, Administration
Building Funds, Series A, 5.75%,
10/1/06, Callable 10/1/04 @102,
MBIA.............................. 1,068
2,000 State Building Authority, State
Facilities, J. Rhodes, Series A,
6.38%, 6/1/07, Callable 6/1/01
@102.............................. 2,142
1,000 State Educational Loan Revenue,
Series A-1, AMT, 5.40%, 12/1/09,
Callable 6/1/07 @102, AMBAC....... 1,006
1,750 State Elementary & Secondary
Education, 5.63%, 12/1/06......... 1,852
2,510 State Fresh Water Development, GO,
5.80%, 6/1/11, Callable 6/1/05
@102, AMBAC....................... 2,618
1,000 State Higher Educational Facilities,
Case Western, 7.63%, 10/1/08,
Callable 10/1/97 @102............. 1,028
</TABLE>
Continued
53
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 State Higher Educational Facilities,
Case Western, 7.13%, 10/1/14,
Callable 10/1/00 @102............. $ 1,094
1,000 State Higher Educational Facilities,
University of Dayton, 7.25%,
12/1/12, Callable 12/1/00 @102,
FGIC.............................. 1,099
1,000 State Liquor Profits Revenue, 6.85%,
9/1/00............................ 1,076
1,000 Strongsville, GO, 6.70%, 12/1/11,
Callable 12/1/06 @102............. 1,122
800 Toledo Sewer Revenue, 6.20%,
11/15/02, AMBAC................... 866
1,000 Toledo Sewer System Revenue, 7.38%,
11/15/10, Callable 11/15/98 @102,
MBIA.............................. 1,064
1,000 Toledo, GO, 5.63%, 12/1/11, Callable
12/1/06 @102, AMBAC............... 1,035
1,000 University of Akron, General
Receipts, 5.00%, 1/1/00, LOC:
AMBAC............................. 1,017
1,000 University of Cincinnati, 7.30%,
6/1/09, Prerefunded 6/1/99 @100... 1,058
1,000 University of Cincinnati,
Certificates of Participation,
University & College Improvements,
6.75%, 12/1/09, Callable 12/1/01
@102, MBIA........................ 1,094
1,000 University of Cincinnati, General
Receipts, 5.75%, 6/1/13, Callable
6/1/06 @101....................... 1,032
1,000 University of Cincinnati, General
Receipts, Health & Hospital
Improvements, 7.10%, 6/1/10,
Callable 6/1/99 @102.............. 1,073
1,000 University of Cincinnati, General
Receipts, University & College
Improvements, 7.00%, 6/1/11,
Prerefunded 6/1/01 @102........... 1,097
1,000 University of Cincinnati, Series R2,
Refund Bonds, 6.25%, 6/1/09,
Callable 12/1/02 @102............. 1,101
1,000 Water Development Authority,
Pollution Control Facilities,
5.50%, 12/1/09, Callable 6/1/05
@101, MBIA........................ 1,030
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,500 Water Development Authority, Water
Development Revenue, 7.00%,
12/1/09, Callable 6/1/00 @102,
ETM, AMBAC........................ $ 1,729
1,000 Westerville, Minerva Park & Blendon
Joint Township, Saint Ann's
Hospital, Series B, 6.80%,
9/15/06, Callable 9/15/01 @102,
AMBAC............................. 1,115
2,750 Westerville, Minerva Park & Blendon
Joint Township, Saint Ann's
Hospital, Series B, 7.00%,
9/15/12, Callable 9/15/01 @102,
AMBAC............................. 3,126
500 Westlake Ohio Safety, GO, 7.65%,
12/1/08, Callable 12/1/98 @102.... 535
500 Wood County, 7.88%, 12/1/13,
Prerefunded 12/1/98 @102, AMBAC... 536
1,000 Worthington City School District,
GO, 7.45%, 12/1/12, Prerefunded
12/1/99 @102, MBIA................ 1,094
--------
152,951
--------
Texas (0.5%):
2,500 Southeast Texas Housing Financial
Corp., 0.00%, 9/1/17, ETM, MBIA... 791
--------
Washington (0.7%):
1,000 State, Series A & AT-6, GO, 6.25%,
2/1/11............................ 1,109
--------
Total Municipal Bonds 161,603
--------
INVESTMENT COMPANIES (1.2%):
766 Fidelity Ohio Tax Free Money Market
Fund.............................. 766
1,116 The One Group Ohio Municipal Money
Market Fiduciary Class............ 1,116
--------
Total Investment Companies 1,882
--------
Total (Cost--$153,990) (a) $163,485
========
</TABLE>
Continued
54
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $163,602.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $38. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $9,457
Unrealized depreciation.................................................. --
------
Net unrealized appreciation.............................................. $9,457
======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements.The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at June 30, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
55
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (98.9%):
Louisiana (98.9%):
$ 1,165 Ascension Parish, Gravity Drain,
Sales & Use Tax, 5.40%, 12/1/07,
Callable 12/1/06 @100, FGIC....... $ 1,211
1,230 Ascension Parish, Gravity Drain,
Sales & Use Tax, 5.50%, 12/1/08,
Callable 12/1/06 @100, FGIC....... 1,275
2,500 Bastrop, Industrial Development
Board, Pollution Control Revenue
Refunding, International Paper Co.
Project, 6.90%, 3/1/07, Callable
3/1/02 @102....................... 2,727
700 Baton Rouge, Public Improvements
Sales & Use Tax, 6.85%, 8/1/00,
Callable 8/1/99 @102, AMBAC....... 748
800 Baton Rouge, Public Improvements
Sales & Use Tax, 6.90%, 8/1/01,
Callable 8/1/99 @102, AMBAC....... 854
765 Baton Rouge, Public Improvements
Sales & Use Tax, 6.38%, 8/1/09,
Callable 8/1/01 @101.5, FSA....... 821
2,000 Baton Rouge, Public Improvements
Sales & Use Tax, Series A, 6.00%,
8/1/04, Callable 8/1/01 @101.5,
FSA............................... 2,122
700 Bossier City, Public Improvements
Sales & Use Tax, Revenue
Refunding, 5.05%, 11/01/11,
Callable 11/1/07 @100, FGIC....... 689
805 Bossier City, Public Improvements
Sales & Use Tax, Revenue
Refunding, Series ST, 6.20%,
11/1/07, Callable 11/1/01 @102,
AMBAC............................. 863
400 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/06, Callable 11/1/99
@101.5, FGIC...................... 430
400 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/07, Callable 11/1/99
@101.5, FGIC...................... 430
550 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/08, Callable 11/1/99
@101.5, FGIC...................... 591
1,415 Caddo Parish, GO, Refunding, 5.25%,
2/1/06, Callable 2/1/05 @100,
MBIA.............................. 1,453
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 750 Caddo Parish, GO, Refunding, 5.25%,
2/1/08, Callable 2/1/05 @100,
MBIA.............................. $ 761
470 Caddo Parish, Industrial
Developement Board, Wal-Mart
Stores, Inc. Project, 5.95%,
11/1/07, Callable 11/1/97
@101.5............................ 478
500 Calcasieu Parish, School District
#22, Ward 3, Series A, GO, 7.10%,
2/1/01, Callable 2/1/99 @100,
BIG............................... 521
1,500 De Soto Parish, Pollution Control
Revenue, International Paper Co.
Project--Series A, 5.05%,
12/1/02........................... 1,539
910 East Baton Rouge Parish, Sales & Use
Tax, 5.80%, 2/1/09, Callable
2/1/05 @101.5, FGIC............... 959
2,280 East Baton Rouge Parish, Sales & Use
Tax, Series A, 8.00%, 2/1/02,
FGIC.............................. 2,604
1,085 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.15%, 2/1/05,
Callable 2/1/03 @101.5............ 1,105
500 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.80%, 2/1/07,
Callable 2/1/05 @101.5, FGIC...... 534
1,000 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.10%, 2/1/07,
Callable 2/1/06 @101.5, FGIC...... 1,017
845 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.80%, 2/1/08,
Callable 2/1/05 @101.5, FGIC...... 896
1,280 East Baton Rouge, Mortgage Finance
Authority, Single Family Mortgage,
Series B, 5.45%, 10/1/03, GNMA.... 1,293
500 East Baton Rouge, Parish Sales & Use
Tax, 7.10%, 2/1/99, MBIA.......... 522
500 East Baton Rouge, Parish Sales & Use
Tax, 7.10%, 2/1/00, Callable
2/1/99 @101.5, MBIA............... 530
1,390 Greater Baton Rouge Parking
Authority, East Baton Rouge Parish
Revenue, 6.38%, 7/1/03, Callable
7/10/97 @100...................... 1,393
1,560 Houma Utilities Revenue, 6.13%,
1/1/07, Callable 1/1/02 @102,
FGIC.............................. 1,671
510 Housing Finance Agency, Mortgage
Revenue, Series D-2, AMT, 6.10%,
12/1/11, Callable 12/1/06 @102.... 514
665 Housing Finance Agency, Mortgage
Revenue, Single Family A-1, 5.70%,
6/1/15, Callable 6/1/05 @102...... 677
</TABLE>
Continued
56
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,205 Iberia Home Mortgage Authority,
Single Family Mortgage Revenue
Refunding, 7.38%, 1/1/11, Callable
7/1/03 @103....................... $ 1,299
400 Jefferson Parish, Construction
Waterworks, District #2, 7.25%,
1/15/00, Callable 7/15/97 @100.... 406
2,180 Jefferson Parish, Drain Sales Tax
Revenue, 6.50%, 11/1/06, Callable
11/1/01 @100, AMBAC............... 2,341
315 Jefferson Parish, Home Mortgage
Authority, Single Family Mortgage
Revenue Refunding, Sub-Series B,
4.50%, 6/1/13, Callable 12/1/03
@102.............................. 312
500 Jefferson Parish, Refunding, GO,
7.10%, 9/1/97, FGIC............... 503
500 Jefferson Parish, Refunding, GO,
7.40%, 9/1/99, Callable 9/1/97
@100, FGIC........................ 503
250 Jefferson Parish, Refunding, GO,
7.70%, 9/1/02, Callable 9/1/97
@100, FGIC........................ 252
2,500 Jefferson Parish, School Board Sales
& Use Tax, Revenue Refunding,
6.05%, 2/1/02, MBIA............... 2,666
1,270 Jefferson Parish, School Board Sales
& Use Tax, Revenue Refunding,
6.15%, 2/1/03, Callable 2/1/02
@102, MBIA........................ 1,370
6,500 Jefferson Parish, School Board Sales
& Use Tax, Revenue Refunding,
6.25%, 2/1/08, Callable 2/1/02
@102, MBIA........................ 7,020
4,920 Jefferson, Sales Tax District
Special, Tax Revenue Refunding,
Series A, 6.75%, 12/1/06, Callable
12/1/02 @100, FGIC................ 5,389
880 Kenner, Sales & Use Tax Revenue
Refunding, 5.75%, 6/1/06, Callable
6/1/02 @103, FGIC................. 929
1,000 Lafayette Parish, Refunding, GO,
7.80%, 3/1/01, Callable 3/1/98
@102, FGIC........................ 1,043
750 Lafourche Parish, Hospital Service,
District #3, Hospital Revenue,
5.50%, 10/1/04, Callable 10/1/03
@102.............................. 754
650 Lafourche Parish, Water District #1,
Water Revenue Refunding, 5.63%,
1/1/01............................ 670
500 Lincoln Parish, School District #1,
Ruston Refunding, 6.20%, 3/1/03,
Callable 3/1/01 @100, MBIA........ 526
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,465 Lincoln Parish, School District #1,
Ruston Refunding, 6.40%, 3/1/05,
Callable 3/1/01 @100, MBIA........ $ 1,558
1,000 Louisiana State University &
Agriculture & Mechanical College,
University Revenues, 6.00%,
7/1/07, Callable 7/1/06 @102,
MBIA.............................. 1,081
1,120 Louisiana State University &
Agriculture & Mechanical College,
University Revenues, 5.50%,
7/1/13, Callable 7/1/06 @102,
MBIA.............................. 1,124
1,220 Monroe Parish, Special School
District, GO, 8.00%, 3/1/01,
MBIA.............................. 1,366
1,300 Monroe Parish, Special School
District, GO, 7.00%, 3/1/02,
MBIA.............................. 1,436
1,390 Monroe Parish, Special School
District, GO, 7.00%, 3/1/03,
MBIA.............................. 1,556
1,230 Monroe Parish, Special School
District, GO, 5.35%, 3/1/05,
FGIC.............................. 1,275
1,320 Monroe Parish, Special School
District, GO, 5.35%, 3/1/06,
Callable 3/1/05 @100, FGIC........ 1,364
550 New Orleans, GO, Public Improvement,
5.85%, 11/1/07, Callable 11/1/05
@100, FGIC........................ 583
1,000 New Orleans, GO, Refunding, 5.88%,
10/1/11, Callable 10/1/05 @101,
AMBAC............................. 1,039
3,250 New Orleans, GO, Refunding, 0.00%,
9/1/17, AMBAC..................... 1,042
1,000 Ouachita Parish, Hospital Service
District #1, Glenwood Regional
Medical Center, 5.70%, 5/15/16,
Callable 5/15/10 @100, FSA........ 1,015
2,525 Ouachita Parish, Hospital Service
District #1, Glenwood Regional
Medical Center, Health Care
Revenue, 7.50%, 7/1/06, Callable
7/1/01 @102....................... 2,845
2,000 Ouachita Parish, West School
District, Refunding, Series A,
6.50%, 3/1/03, Callable 3/1/01
@102, FSA......................... 2,182
2,695 Ouachita Parish, West School
District, Refunding, Series A, GO,
6.65%, 3/1/05, Callable 3/1/01
@102, FSA......................... 2,929
1,655 Ouachita Parish, West School
District, Refunding, Series A, GO,
6.70%, 3/1/06, Callable 3/1/01
@102, FSA......................... 1,799
1,440 Plaquemines Parish, GO, Refunding,
6.40%, 8/1/04, Callable 8/1/01
@102, AMBAC....................... 1,566
</TABLE>
Continued
57
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 420 Plaquemines Parish, Sales & Use Tax,
6.70%, 12/1/08, Callable 12/1/01
@102.............................. $ 449
410 Plaquemines Parish, Sales & Use Tax,
6.70%, 12/1/09, Callable 12/1/01
@102.............................. 436
605 Plaquemines Parish, School Board,
Sales & Use Tax, 6.65%, 3/1/05,
Callable 3/1/02 @102.............. 658
2,280 Public Facilities Authority Revenue,
Alton Ochsner Medical Foundation,
Series A, 6.30%, 5/15/04, Callable
5/15/02 @102, MBIA................ 2,473
1,000 Public Facilities Authority Revenue,
Alton Ochsner Medical Project,
Series B, 5.75%, 5/15/11, Callable
5/15/02 @100, MBIA................ 1,020
1,000 Public Facilities Authority Revenue,
Indexed Caps, 5.88%, 2/15/11,
Callable 2/15/03 @102, FGIC....... 1,040
1,000 Public Facilities Authority Revenue,
Lafayette General Medical Center
Project, Hospital Revenue, 6.05%,
10/1/04, Callable 10/1/02 @102,
FSA............................... 1,075
1,960 Public Facilities Authority Revenue,
Loyola University, 6.60%, 4/1/05,
Callable 4/1/02 @102.............. 2,150
2,525 Public Facilities Authority Revenue,
Loyola University Project, 5.63%,
10/1/10, Callable 10/1/07 @102,
MBIA.............................. 2,615
500 Public Facilities Authority Revenue,
Loyola University Project, Series
A, 7.20%, 10/1/00, Callable
10/1/99 @102...................... 540
1,135 Public Facilities Authority Revenue,
Mary Bird Perkins Cancer Center,
5.50%, 1/1/04, FSA................ 1,182
5,000 Public Facilities Authority Revenue,
Multi-Family, Series A, 0.00%,
2/1/20, ETM....................... 1,371
500 Public Facilities Authority Revenue,
Our Lady of Lake Regional, Series
C, Healthcare Revenue, 5.70%,
12/1/04, Callable 12/1/01 @102,
MBIA.............................. 525
7,500 Public Facilities Authority Revenue,
Series B, 0.00%, 12/1/19, ETM..... 2,132
110 Public Facilities Authority Revenue,
Sisters of Mercy, 7.38%, 6/1/09,
Callable 6/1/99 @102.............. 118
2,145 Public Facilities Authority Revenue,
Tulane University, 6.25%, 7/15/06,
Callable 7/15/01 @102............. 2,286
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 735 Public Facilities Authority Revenue,
Tulane University, 5.55%, 10/1/07,
Callable 10/1/06 @102, AMBAC...... $ 775
1,605 Public Facilities Authority Revenue,
Tulane University, 5.75%, 10/1/09,
Callable 10/1/06 @102, AMBAC...... 1,693
300 Public Facilities Authority Revenue,
Tulane University, Series A,
7.50%, 5/15/00, Callable 5/15/98
@102.............................. 315
325 Public Facilities Authority Revenue,
Tulane University, Series A1,
5.80%, 2/15/04, Callable 2/15/03
@102, FGIC........................ 345
170 Public Facilities Authority Revenue,
Tulane University, Series B,
7.20%, 8/15/98, Callable 8/15/97
@102.............................. 174
300 Public Facilities Authority Revenue,
Tulane University, Series C,
7.20%, 8/15/98, Callable 8/15/97
@102.............................. 307
500 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 6.00%,
10/1/10, FSA...................... 534
500 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 7.20%,
10/1/97, FGIC..................... 504
1,235 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 6.85%,
10/1/05, Callable 10/1/02 @102.... 1,386
730 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 5.40%,
10/1/05, Callable 10/1/04 @102,
FGIC.............................. 757
1,715 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 5.50%,
10/1/06, Callable 10/1/04 @102,
FGIC.............................. 1,788
500 Rapides Parish, Consolidated School
District #62, GO, 7.25%, 4/1/00,
Callable 4/1/99 @100, MBIA........ 526
670 Rapides Parish, School District #11,
Rigolette--Series 1990, GO, 6.90%,
2/1/01, Callable 2/1/00 @100,
FGIC.............................. 711
</TABLE>
Continued
58
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,475 Rapides Parish, School District #11,
Rigolette--Series 1990, GO, 6.95%,
2/1/02, Callable 2/1/00 @100,
FGIC.............................. $ 1,563
2,350 Saint Charles Parish, School
District #1, GO, 6.45%, 3/1/06,
Callable 3/1/02 @100, AMBAC....... 2,520
480 Shreveport, GO, 6.20%, 3/1/02,
Callable 3/1/01 @100, AMBAC....... 507
500 Shreveport, GO, 6.70%, 2/1/03,
Prerefunded 2/1/00 @100, AMBAC.... 530
480 Shreveport, GO, 5.90%, 2/1/07,
Callable 2/1/03 @100.............. 501
930 Shreveport, Water & Sewer Revenue,
Series A, 7.75%, 12/1/02, FGIC.... 1,073
500 Shreveport, Water & Sewer Revenue,
Series A, 6.25%, 12/1/03, FGIC.... 546
1,000 South Port Community, Port Revenue
Refunding, Cargill, Inc. Project,
5.85%, 4/1/17, Callable 4/1/07
@102.............................. 1,016
750 St. Charles Parish, Public
Improvements Sales Tax, Refunding,
6.60%, 11/1/07, Callable 11/1/99
@102.............................. 795
870 St. John Baptist Parish, School
District #1, GO, 6.25%, 3/1/05,
Callable 3/1/02 @100.............. 914
750 St. Landry Parish, Consolidated
School District #1, GO, 6.10%,
5/1/07, Callable 5/1/01 @100,
MBIA.............................. 783
1,815 St. Tammany Parish, Hospital
Service, District #1, Hospital
Revenue, 6.30%, 7/1/07, Callable
7/1/02 @102....................... 1,914
300 St. Tammany Parish, Refunding, GO,
7.40%, 3/1/98, FGIC............... 307
1,000 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/02, Callable 12/1/99 @102,
FGIC.............................. 1,066
1,000 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/03, Callable 12/1/99 @102,
FGIC.............................. 1,069
750 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/05, Callable 12/1/99 @102,
FGIC.............................. 799
400 St. Tammany Parish, School District
#12, GO, 6.50%, 3/1/04, Callable
3/1/01 @100, FGIC................. 424
1,665 Stadium & Exposition District, Hotel
Occupancy, Tax & Stadium Revenue,
5.65%, 7/1/07, Callable 7/1/04
@102, FGIC........................ 1,758
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 3,020 State Energy & Power Authority,
Power Project Revenue Refunding--
Rodemacher Unit #2, 6.75%, 1/1/08,
Callable 1/1/01 @102, FGIC........ $ 3,276
800 State Gas & Fuels Tax Revenue,
Series A, 7.20%, 11/15/99......... 850
1,500 State Gas & Fuels Tax Revenue,
Series A, 7.25%, 11/15/04,
Callable 11/15/99 @102............ 1,619
2,750 State GO, 7.10%, 9/1/03, Callable
9/1/00 @102, FSA.................. 3,022
4,000 State GO, Refunding, Series A,
6.00%, 8/1/04, FGIC............... 4,316
2,875 State GO, Refunding, Series A,
5.80%, 08/01/10, MBIA............. 3,070
3,000 State GO, Refunding, Series B,
5.63%, 8/1/13, MBIA............... 3,116
3,000 State GO, Series A, 6.50%, 4/15/06,
FGIC.............................. 3,356
430 State GO, Series A, 6.00%, 5/1/08,
Callable 5/1/04 @102, AMBAC....... 461
500 State GO, Series A, 6.10%, 5/1/11,
Callable 5/1/04 @102, AMBAC....... 530
400 State Offshore Terminal Authority,
Deepwater Port Revenue, Refunding,
1st Stage, Series B, 6.00%,
9/1/01............................ 418
600 State Offshore Terminal Authority,
Deepwater Port Revenue, Refunding,
1st Stage, Series B, 6.10%,
9/1/02............................ 634
1,325 State Offshore Terminal Authority,
Deepwater Port Revenue, Refunding,
1st Stage, Series B, 6.25%,
9/1/04............................ 1,424
150 Sulphur Public Improvements, Sales &
Use Tax, Series B, 6.00%, 3/1/00,
Callable 9/1/97 @100, MBIA........ 150
615 Sulphur Public Improvements, Sales &
Use Tax, Series B, 6.00%, 3/1/01,
Callable 9/1/97 @100, MBIA........ 617
1,435 Tangipahoa Parish, Consolidated
School District #1, Refunding, GO,
6.15%, 12/1/07, Callable 12/1/02
@100.............................. 1,521
1,250 Tangipahoa Parish, Hospital Service
District #1, Hospital Revenue
Refunding, 6.13%, 2/1/14, Callable
2/1/04 @102, AMBAC................ 1,309
1,285 Terrebonne Parish, Hospital Service
District #1, Hospital Revenue
Refunding, Terrebonne General
Medical Center Project, 7.40%,
4/1/03, Callable 4/1/98 @102,
BIG............................... 1,339
</TABLE>
Continued
59
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 500 Terrebonne Parish, Waterworks
District #1, Water Revenue, 5.75%,
11/1/08, Callable 11/1/03 @102,
FGIC.............................. $ 527
690 Terrebonne Parish, Waterworks
District #1, Water Revenue
Refunding, 5.70%, 11/1/06,
Callable 11/1/03 @102, FGIC....... 732
555 Vermilion Parish, Hospital Service,
District #2, Health Care Revenue
Refunding, Series A, 6.35%,
5/1/00, MBIA...................... 585
--------
Total Municipal Bonds 163,813
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (0.2%):
$ 339 The One Group Municipal Money Market
Fund, Fiduciary Class............. $ 339
--------
Total Investment Companies 339
--------
Total (Cost--$157,802) (a) $164,152
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $165,671.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $6,355
Unrealized depreciation.................................................. (5)
------
Net unrealized appreciation.............................................. $6,350
======
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FSA Insured by Federal Security Assurance
GO General Obligation
GNMA Government National Mortgage Association
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
60
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS (98.5%):
Arizona (0.5%):
$ 500 Flagstaff, GO, 8.50%, 7/1/97, FGIC... $ 500
-------
Hawaii (0.4%):
400 Hawaii State, GO, Series B, 8.13%,
2/1/00............................. 436
-------
Ohio (0.9%):
500 Columbus, GO, 8.13%, 5/1/04.......... 602
250 Public Community Facilities, Higher
Education Cap, Series II-B, 5.38%,
11/1/00, AMBAC..................... 259
-------
861
-------
Puerto Rico (1.1%):
1,000 Puerto Rico Industrial Tourist
Educational, Medical and
Environmental Control Facilities,
Auxilio Mutuo Hospital Obligation
Group, 5.80%, 7/1/06, Callable
1/1/05 @102, MBIA.................. 1,077
-------
Rhode Island (0.2%):
200 State Construction Capital
Development, GO, Series B, 6.00%,
5/15/98............................ 204
-------
Virginia (0.2%):
200 State Public School Authority
Revenue, Series A, 6.30%, 8/1/01... 215
-------
West Virginia (95.2%):
515 Berkeley County, Building Community,
Hospital Revenue, City Hospital
Project, 5.25%, 11/1/97............ 517
200 Berkeley County, Building Community,
Hospital Revenue, City Hospital
Project, 5.40%, 11/1/98............ 203
1,000 Berkeley County, Building Community,
Hospital Revenue, City Hospital
Project, 6.50%, 11/1/09, Callable
11/1/02 @102....................... 1,057
1,000 Berkeley County, Education Board, GO,
5.50%, 4/1/01...................... 1,036
800 Berkeley County, Education Board, GO,
5.55%, 4/1/02...................... 833
900 Berkeley County, Education Board, GO,
5.60%, 4/1/03...................... 942
500 Berkeley County, Education Board, GO,
5.00%, 6/1/08, Callable 6/1/05
@100, FGIC......................... 501
1,525 Brooke Pleasants Tyler Wetzed
Counties, Single Family Mortgage
Revenue, 7.40%, 8/15/10, ETM....... 1,824
225 Cabell County, Education Board, GO,
6.10%, 5/1/99, MBIA................ 233
1,000 Cabell County, Education Board, GO,
4.20%, 5/1/99...................... 998
150 Cabell County, Education Board, GO,
6.20%, 5/1/00, MBIA................ 158
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,000 Cabell County, Education Board, GO,
5.00%, 5/1/00...................... $ 1,016
1,670 Cabell County, Education Board, GO,
6.60%, 5/1/04, MBIA................ 1,861
1,500 Cabell County, Education Board, GO,
6.00%, 5/1/06, MBIA................ 1,630
100 Charles Town Residential Mortgage,
Revenue, Series A, 5.40%, 9/1/02... 103
100 Charles Town Residential Mortgage,
Revenue, Series A, 5.55%, 3/1/03... 103
105 Charles Town Residential Mortgage,
Revenue, Series A, 5.70%, 9/1/04,
Callable 3/1/03 @102............... 109
1,555 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/17....... 414
1,570 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/18....... 392
1,570 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/19....... 367
1,000 Charleston Building Community,
Parking Facility Revenue,
Charleston Town Center, 6.00%,
12/1/10............................ 1,009
1,010 Charleston Parking Revenue, Series B,
6.75%, 6/1/08, Callable 12/1/04
@102............................... 1,129
500 Clarksburg Water Revenue, Asset
Guaranty, 5.00%, 9/1/97............ 501
790 Fairmont Waterworks, 5.30%, 7/1/09,
Callable 7/1/07 @102, MBIA......... 799
925 Fairmont Waterworks, 5.50%, 7/1/12,
Callable 7/1/07 @102, MBIA......... 937
2,500 Harrison County, Board of Education,
GO, 6.40%, 5/1/07, FGIC............ 2,805
2,000 Harrison County, Community Special
Obligation, Series A, 6.25%,
5/15/10, ETM....................... 2,210
1,500 Harrison County, Education Board, GO,
6.30%, 5/1/05, FGIC................ 1,652
95 Huntington Residential Mortgage
Revenue Refunding, 6.30%, 9/1/98... 98
735 Jackson County, Residential Mortgage
Revenue, 7.38%, 6/1/10, Callable
12/1/97 @100, FGIC, ETM............ 863
1,000 Kanawha County, Community Building
Revenue, Charleston Hospital,
7.50%, 11/1/08, Prerefunded 11/1/99
@102, AMBAC........................ 1,092
</TABLE>
Continued
61
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 2,910 Kanawha Mercer Nicholas Counties
Single Family Mortgage Revenue,
0.00%, 2/1/15, Prerefunded 2/1/14
@89.8.............................. $ 1,051
4,435 Kanawha-Putnam County, Single Family
Mortgage, Series A, 0.00%, 12/1/16,
AMBAC, ETM......................... 1,497
1,696 Keyser Housing Corp. Mortgage
Revenue, 7.25%, 4/1/21, Callable
7/24/97 @101.5, FHA................ 1,722
265 Marion County, Single Family Mortgage
Revenue, 7.05%, 8/1/98, FGIC,
ETM................................ 274
1,065 Marion County, Single Family Mortgage
Revenue, 7.38%, 8/1/11, FGIC,
ETM................................ 1,265
150 Marshall County, Special Obligation,
5.60%, 5/15/98, ETM................ 152
500 Marshall County, Special Obligation,
6.50%, 5/15/10, ETM................ 555
1,000 Monongalia County, Board of
Education, GO, 7.00%, 4/1/03,
MBIA............................... 1,124
440 Monongalia County, Board of
Education, GO, 7.00%, 4/1/04,
MBIA............................... 500
300 Monongalia County, Board of
Education, GO, 7.00%, 4/1/05,
MBIA............................... 344
610 Morgantown Waterworks & Sewer System,
4.40%, 10/1/97, FGIC............... 611
1,295 Parkersburg Waterworks & Sewer System
Revenue, 5.50%, 3/1/10, Callable
9/1/06 @102, FSA................... 1,331
1,335 Parkersburg Waterworks & Sewer System
Revenue, 5.50%, 9/1/10, Callable
9/1/06 @102, FSA................... 1,373
2,610 Pleasants County, Pollution Control
Revenue, Monongahela Power, 6.38%,
11/1/07, Callable 7/24/97 @100..... 2,612
1,000 Pleasants County, Pollution Control
Revenue, Potomac Power, 6.15%,
5/1/15, Callable 5/1/05 @102,
MBIA............................... 1,057
1,750 Pleasants County, Pollution Control
Revenue, Potomac Power, 6.15%,
5/1/15, Callable 5/1/05 @102,
AMBAC.............................. 1,845
1,000 Pleasants County, Pollution Control
Revenue, West Penn Power, 6.15%,
5/1/15, Callable 5/1/05 @102,
AMBAC.............................. 1,057
200 Raleigh Fayette & Nicholas Counties,
Special Obligation, 5.40%,
8/1/97............................. 200
1,000 School Building Authority Revenue
Capital Improvement, 6.00%, 7/1/98,
MBIA............................... 1,021
1,500 School Building Authority Revenue
Capital Improvement, 5.25%, 7/1/99,
MBIA............................... 1,533
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,750 School Building Authority Revenue
Capital Improvement, 6.25%, 7/1/01,
MBIA............................... $ 1,873
1,000 School Building Authority Revenue
Capital Improvement, 5.50%, 7/1/11,
Callable 7/1/07 @102, AMBAC........ 1,020
800 School Building Authority Revenue
Capital Improvement, Series B,
6.80%, 7/1/00, MBIA................ 858
1,000 School Building Authority Revenue
Capital Improvement, Series B,
6.90%, 7/1/02, Callable 7/1/00
@102, MBIA......................... 1,090
500 School Building Authority Revenue
Capital Improvement, Series B,
6.95%, 7/1/03, Prerefunded 7/1/00
@102, MBIA......................... 546
200 School Building Authority Revenue
Capital Improvement, Series B,
6.75%, 7/1/06, MBIA................ 228
1,000 School Building Authority Revenue
Capital Improvement, Series B,
6.00%, 7/1/12, Callable 7/1/02
@100, MBIA......................... 1,044
500 State Building Common Lease Revenue,
6.70%, 7/1/02, Callable 7/1/00
@102, MBIA......................... 544
1,000 State Building, Series A, 5.25%,
7/1/08, Callable 7/1/07 @102,
MBIA............................... 1,020
1,000 State Building, Series A, 5.25%,
7/1/09, Callable 7/1/07 @102,
MBIA............................... 1,009
1,000 State College Revenues, 5.10%,
4/1/99, AMBAC...................... 1,017
250 State GO, 5.25%, 3/1/01, Callable
7/24/97 @100....................... 250
200 State GO, 5.70%, 6/1/01, Callable
7/24/97 @100....................... 201
1,200 State GO, 6.10%, 6/1/03, Callable
7/24/97 @101....................... 1,213
1,085 State GO, Series A, 5.00%, 2/1/98.... 1,092
250 State GO, Series A, 5.20%, 2/1/99.... 254
300 State GO, Series A, 5.30%, 2/1/00.... 308
600 State GO, Series A, 5.40%, 2/1/01.... 621
2,500 State GO, Series A, 5.50%, 2/1/02.... 2,607
1,000 State GO, Series B, AMT, 5.80%,
11/1/11, Callable 11/1/06 @102,
FGIC............................... 1,051
1,000 State GO, Series B, AMT, 5.85%,
11/1/12, Callable 11/1/06 @102,
FGIC............................... 1,051
200 State Hospital Finance Authority,
Hospital Revenue, 6.80%, 8/1/97,
FSA................................ 200
</TABLE>
Continued
62
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- -------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 100 State Hospital Finance Authority,
Hospital Revenue, 6.80%, 8/1/98,
FSA................................ $ 103
625 State Hospital Finance Authority,
Hospital Revenue, 5.50%, 1/1/02,
MBIA............................... 650
500 State Hospital Finance Authority,
Hospital Revenue, 5.70%, 1/1/04,
Callable 1/1/02 @102, MBIA......... 527
500 State Hospital Finance Authority,
Hospital Revenue, 7.00%, 8/1/04,
Callable 8/1/99 @102, FSA.......... 532
2,350 State Hospital Finance Authority,
Hospital Revenue, 5.10%, 6/1/06,
Callable 6/1/03 @102, MBIA......... 2,386
1,000 State Hospital Finance Authority,
Hospital Revenue, 5.13%, 9/1/06,
Callable 9/1/05 @102, MBIA......... 1,019
1,000 State Hospital Finance Authority,
Hospital Revenue, 7.00%, 8/1/09,
Callable 8/1/99 @102, FSA.......... 1,065
150 State Housing Development, 6.60%,
11/1/97, FHA....................... 151
140 State Housing Development, 5.50%,
11/1/98, FHA....................... 143
450 State Housing Development, 7.00%,
5/1/99, Callable 11/1/97 @102,
FHA................................ 462
200 State Housing Development, 6.90%,
7/1/99, FHA........................ 201
190 State Housing Development, 6.30%,
11/1/03, Callable 5/1/02 @103,
FHA................................ 201
195 State Housing Development, 6.40%,
5/1/04, Callable 5/1/02 @103,
FHA................................ 206
205 State Housing Development, 6.40%,
11/1/04, Callable 5/1/02 @103,
FHA................................ 217
500 State Housing Development, 7.38%,
11/1/05, Callable 11/1/97 @102,
FHA................................ 514
245 State Housing Development, 6.75%,
11/1/10, Callable 5/1/02 @103,
FHA................................ 258
315 State Housing Development, 6.75%,
5/1/11, Callable 5/1/02 @103,
FHA................................ 331
1,000 State Housing Development, 7.40%,
11/1/11, Callable 11/1/97 @102,
FHA................................ 1,029
320 State Housing Development, 6.75%,
11/1/11, Callable 5/1/02 @103,
FHA................................ 336
1,000 State Housing Development, 7.40%,
11/1/13, Callable 11/1/97 @102,
FHA................................ 1,029
500 State Housing Development, 7.40%,
11/1/13, Callable 11/1/97 @102,
FHA, AMBAC......................... 513
1,000 State Housing Development, 5.80%,
5/1/17, Callable 5/1/07 @102....... 1,008
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 25 State Housing Development Fund,
Single Family Mortgage, 6.13%,
7/1/13, Callable 7/1/97 @100....... $ 25
1,500 State University Revenue, 5.75%,
4/1/03, AMBAC...................... 1,592
1,500 State University Revenue, 5.75%,
4/1/04, Callable 4/1/03 @102,
AMBAC.............................. 1,597
1,000 State University Revenue, 6.00%,
4/1/07, Callable 4/1/03 @102,
AMBAC.............................. 1,073
1,000 State University Revenue, 6.00%,
4/1/12, Callable 4/1/03 @102,
AMBAC.............................. 1,049
130 State Water Development Authority
Revenue, Loan Program II, Series A,
6.90%, 11/1/01..................... 141
160 State Water Development Authority
Revenue, Loan Program II, Series A,
7.10%, 11/1/04, Callable 11/1/01
@102............................... 177
2,000 State Water Development Authority
Revenue, Loan Program, Series A,
7.00%, 11/1/11, Callable 11/1/01
@102, FSA.......................... 2,200
100 State Water Development Authority
Revenue, Series A, 7.30%,
11/1/99............................ 106
100 State Water Development Authortiy
Revenue, Series A, 7.40%,
11/1/00............................ 109
225 University Dormitory Revenue, Series
A, 5.60%, 5/1/99, MBIA............. 231
750 University Revenues, State University
System, Marshall University
Library, 5.60%, 4/1/11, Callable
4/1/06 @101, AMBAC................. 772
1,000 Weirton Municipal Hospital Building
Community Revenue, 5.10%, 12/1/98,
AMBAC.............................. 1,016
1,000 Wheeling Waterworks & Sewer System
Revenue, Refunding, 5.40%, 6/1/11,
Callable 6/1/07 @100, FGIC......... 1,008
1,200 Wheeling Waterworks & Sewer System
Revenue, Series C, 6.60%, 6/1/12,
Prerefunded 6/1/02 @100, FGIC...... 1,313
-------
92,903
-------
Total Municipal Bonds 96,196
-------
INVESTMENT COMPANIES (3.3%):
3,241 The One Group Municipal Money Market
Fund, Fiduciary Class.............. 3,241
-------
Total Investment Companies 3,241
-------
Total (Cost--$94,924) (a) $99,437
=======
</TABLE>
Continued
63
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $97,692.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $4,513
Unrealized depreciation.................................................. --
------
Net unrealized appreciation.............................................. $4,513
======
</TABLE>
AMBAC Insured by AMBAC Indemnity Corp.
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Authority
FSA Insured by Federal Security Assurance
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
See notes to financial statements.
64
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (99.1%):
Arizona (99.1%):
$ 1,175 Apache County, Public Finance Corp.,
Certificates of Participation,
5.25%, 5/1/04, Callable 5/1/00
@102.............................. $ 1,190
500 Apache County, Public Finance Corp.,
Certificates of Participation,
5.50%, 5/1/10, Callable 5/1/00
@102.............................. 507
1,000 Arizona State University Revenues
Refunding System, Series A, 5.60%,
7/1/05, Callable 7/1/02 @101...... 1,043
1,000 Arizona State University Revenues
System, 6.90%, 7/1/04, Callable
7/1/02 @101, AMBAC................ 1,112
1,315 Arizona State University Revenues
System, 7.00%, 7/1/06, Prerefunded
7/1/01 @102....................... 1,464
1,950 Arizona State University Revenues,
Series A, 5.85%, 7/1/08, Callable
7/1/02 @101....................... 2,037
1,820 Arizona State University Revenues,
Series A, 5.90%, 7/1/09, Callable
7/1/02 @101....................... 1,896
650 Bullhead City, Municipal Property
Corp., Municipal Facilities
Revenue, 7.20%, 7/1/10,
Prerefunded 7/1/00 @101, FGIC..... 710
725 Casa Grande, Excise Tax Revenue,
5.90%, 4/1/09, Callable 4/1/04
@100, FGIC........................ 761
750 Central Arizona Water Conservation
District, Contract Revenue, 7.15%,
11/1/99........................... 798
6,290 Central Arizona Water Conservation
District, Contract Revenue, 7.00%,
11/1/03, Prerefunded 11/1/00
@102.............................. 6,929
1,000 Central Arizona Water Conservation
District, Contract Revenue, 7.65%,
11/1/09, Prerefunded 11/1/00
@102.............................. 1,122
3,300 Central Arizona Water Conservation
District, Contract Revenue, 7.13%,
11/1/11, Prerefunded 11/1/00
@102.............................. 3,649
2,875 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project, 4.75%,
11/1/07, Callable 5/1/04 @102,
MBIA.............................. 2,860
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,460 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project - Series
A, 5.20%, 11/1/03................. $ 1,504
4,000 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project - Series
A, 5.40%, 11/1/05................. 4,157
4,750 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project - Series
A, 5.40%, 11/1/06................. 4,946
4,175 Central Arizona Water Conservation
District, Contract Revenue, Series
B, Power Sales Co., 6.50%,
11/1/11, Prerefunded 5/1/01
@102.............................. 4,560
625 Coconino & Yavapai Counties Arizona,
School District #9, Sedona Oak
Creek Project of 1992-C, GO,
5.60%, 7/1/06, Callable 7/1/02
@101, FGIC........................ 653
1,000 Coconino & Yavapai Counties Arizona,
School District #9, Sedona Oak
Creek Project of 1992-D, GO,
5.20%, 7/1/01, FGIC............... 1,030
905 Coconino County, Arizona University,
School District #001, Flagstaff,
GO, 5.70%, 7/1/01, Callable 7/1/00
@101, AMBAC....................... 947
2,400 Coconino County, Arizona University,
School District #001, Flagstaff,
GO, 5.50%, 7/1/08, Callable 7/1/05
@101, AMBAC....................... 2,492
2,500 East Valley Institute of Technology,
District #401, Project of 1994,
Series B, GO, 6.00%, 7/1/05,
AMBAC............................. 2,698
1,000 East Valley Institute of Technology,
District #401, Series A, GO,
6.00%, 7/1/04, Callable 7/1/00
@101, AMBAC....................... 1,046
740 Flagstaff Street & Highway User
Revenue, 6.90%, 7/1/04,
Prerefunded 7/1/98 @102........... 776
870 Flagstaff, GO, 4.60%, 7/1/04,
FGIC.............................. 868
1,000 Gilbert Improvement District #011,
GO, 7.60%, 1/1/04, Callable 1/1/98
@102.5, FGIC...................... 1,044
1,000 Glendale Municipal Property Corp.,
Refunding, 7.00%, 7/1/05, Callable
7/1/99 @101, MBIA................. 1,058
1,000 Glendale Municipal Property Corp.,
Refunding, 7.00%, 7/1/09, Callable
7/1/99 @101, MBIA................. 1,058
</TABLE>
Continued
65
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 4,000 Glendale University High School,
District #205, Projects of 1993 -
Series A, GO, 5.30%, 7/1/07,
Callable 7/1/03 @101.............. $ 4,114
2,900 Glendale University High School,
District #205, Projects of 1993 -
Series B, GO, 5.45%, 7/1/09,
Callable 7/1/05 @101, FGIC........ 2,990
2,000 Glendale, GO, 5.05%, 7/1/02, FGIC... 2,057
2,000 Maricopa County, Community College
District, 5.00%, 7/1/13, Callable
7/1/06 @101....................... 1,941
1,570 Maricopa County, Community College
District, Building Revenue, 5.10%,
7/15/05, MBIA..................... 1,610
1,000 Maricopa County, Community College
District, Series A, 6.00%, 7/1/07,
Callable 7/1/03 @101.............. 1,068
500 Maricopa County, Industrial
Development Authority, Hospital
Facility Revenue, St. Joseph's
Hospital & Medical Centers
Project, 6.20%, 11/1/11, Putable
11/1/97 @100, ETM................. 505
1,000 Maricopa County, School District
#001, Phoenix Elementary, GO,
5.50%, 7/1/10, Callable 7/1/07
@101, MBIA........................ 1,030
850 Maricopa County, School District
#006, Washington Elementary,
Series A, GO, 5.75%, 7/1/05,
Callable 7/1/02 @101, AMBAC....... 896
900 Maricopa County, School District
#006, Washington Elementary,
Series A, GO, 5.75%, 7/1/06,
Callable 7/1/02 @101, AMBAC....... 946
2,000 Maricopa County, School District
#038, Madison Elementary Project
of 1995 - Series B, GO, 5.80%,
7/1/15, Callable 7/1/06 @101,
MBIA.............................. 2,076
1,015 Maricopa County, School District
#038, Madison Elementary
Refunding, GO, 5.30%, 7/1/08,
Callable 7/1/03 @101, AMBAC....... 1,039
2,000 Maricopa County, School District
#097, Deer Valley Project
1986 - Series D, GO, 6.90%,
7/1/01, Prerefunded 7/1/00 @101,
MBIA.............................. 2,167
1,000 Maricopa County, School District
#097, Deer Valley Project of
1986 - Series F, GO, 5.90%,
7/1/03, Callable 7/1/02 @101,
FGIC.............................. 1,070
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 750 Maricopa County, School District
#097, Deer Valley Project of
1996 - Series C, GO, 5.35%,
7/1/09, Callable 7/1/07 @100,
FSA............................... $ 763
2,000 Maricopa County, School District
#210, Phoenix Refunding, GO,
5.25%, 7/1/04, Callable 7/1/03
@101.............................. 2,076
2,000 Maricopa County, School District
#210, Project of 1995 - Series B,
GO, 5.38%, 7/1/13................. 2,003
1,200 Maricopa County, School District
#210, Series A, GO, 5.60%, 7/1/13,
Callable 7/1/05 @101.............. 1,229
2,250 Maricopa County, School District
#210, Series D, GO, 6.70%, 7/1/03,
Prerefunded 7/1/01 @101........... 2,452
1,000 Maricopa County, School District
#210, Series E, GO, 7.10%,
7/1/03............................ 1,135
2,000 Maricopa County, School District
#210, Series E, GO, 6.20%, 7/1/06,
Prerefunded 7/1/02 @101........... 2,174
1,440 Maricopa County, School District
#28, Kyrene Elementary, Series G,
GO, 6.75%, 7/1/99, ETM............ 1,516
1,250 Maricopa County, School District #4,
GO, 5.25%, 7/1/03, FGIC........... 1,299
2,000 Maricopa County, School District #4,
GO, 5.50%, 7/1/09, Callable 7/1/05
@102, FGIC........................ 2,071
2,500 Maricopa County, School District #4,
GO, 5.00%, 7/1/10, Callable 7/1/06
@101, FGIC........................ 2,468
750 Maricopa County, School District #4,
GO, 5.65%, 7/1/11, Callable 7/1/05
@102, FGIC........................ 777
1,000 Maricopa County, School District
#48, Scottsdale Refunding, GO,
5.20%, 7/1/06, Callable 7/1/03
@101.............................. 1,033
1,475 Maricopa County, School District
#48, Scottsdale Refunding, GO,
4.90%, 7/1/06, Callable 7/1/02
@101.............................. 1,492
1,000 Maricopa County, School District
#48, Scottsdale Refunding, GO,
5.25%, 7/1/08, Callable 7/1/03
@101.............................. 1,025
1,500 Maricopa County, School District
#48, Scottsdale Refunding, GO,
6.75%, 7/1/09, Prerefunded 7/1/01
@101.............................. 1,644
2,000 Maricopa County, School District
#48, Scottsdale Refunding, Series
B, GO, 6.10%, 7/1/02.............. 2,154
</TABLE>
Continued
66
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,000 Maricopa County, School District
#48, Scottsdale Refunding, Series
B, GO, 6.30%, 7/1/04.............. $ 1,104
2,000 Maricopa County, School District
#48, Scottsdale School
Improvements, GO, 7.50%, 7/1/04,
Prerefunded 7/1/97 @103........... 2,060
2,500 Maricopa County, School District
#48, Scottsdale School
Improvements, GO, 5.00%, 7/1/14,
Callable 7/1/04 @101.............. 2,410
3,100 Maricopa County, School District
#69, Paradise Valley Refunding,
GO, 5.80%, 7/1/09, AMBAC.......... 3,335
2,400 Maricopa County, School District
#69, Paradise Valley Refunding,
GO, 5.00%, 7/1/09, Callable 7/1/03
@102, AMBAC....................... 2,392
1,000 Maricopa County, School District
#69, Paradise Valley Refunding,
GO, 6.35%, 7/1/10, MBIA........... 1,125
2,000 Maricopa County, School District
#69, Paradise Valley, Series B,
GO, 6.50%, 7/1/08, Prerefunded
7/1/01 @100....................... 2,157
1,000 Maricopa County, School District
#80, Chandler Projects of
1995 - Series C, GO, 5.10%,
7/1/08, FGIC...................... 1,014
1,000 Maricopa County, School District
#80, Chandler, GO, 5.80%, 7/1/08,
Callable 7/1/05 @101, FGIC........ 1,064
920 Maricopa County, School District #9,
Wickenburg, GO, 5.50%, 7/1/13,
Callable 7/1/07 @100, AMBAC....... 928
1,625 Mesa, GO, 6.00%, 7/1/02, AMBAC...... 1,739
1,000 Mesa, GO, 5.70%, 7/1/03, FGIC....... 1,062
725 Mesa, GO, 5.00%, 7/1/03, MBIA....... 743
2,040 Mesa, Project of 1987, GO, 9.00%,
7/1/01, ETM, MBIA................. 2,384
2,000 Mesa, Project of 1987, GO, 5.70%,
7/1/08, Callable 7/1/03 @101.5,
MBIA.............................. 2,096
2,000 Mesa, Utility System Revenue, 5.38%,
7/1/12, Callable 7/1/05 @101,
FGIC.............................. 2,015
1,205 Mohave County, Elementary School
District #16, GO, 5.25%, 7/1/09,
Callable 7/1/07 @100, MBIA........ 1,219
1,200 Mohave County, School District # 1,
Lake Havasu Refunding, GO, 5.20%,
7/1/09, Callable 7/1/03 @101,
AMBAC............................. 1,211
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,000 Northern Arizona University,
Revenues, 7.50%, 6/1/03,
Prerefunded 6/1/99 @100........... $ 1,063
2,750 Northern Arizona University,
Revenues, 6.40%, 6/1/07, Callable
6/1/02 @101, FGIC................. 2,979
2,000 Northern Arizona University,
Revenues, 7.50%, 6/1/08,
Prerefunded 6/1/99 @100........... 2,125
1,215 Northern Arizona University,
Revenues, Series A, 5.60%, 6/1/05,
Callable 6/1/02 @102, AMBAC....... 1,274
1,000 Oro Valley Municipal Property Corp.,
Municipal Water System Revenue,
Canada Hills, 5.45%, 7/1/14,
Callable 7/1/08 @101, MBIA........ 1,009
2,000 Phoenix Civic Improvement Corp.,
Water System Revenue, 5.63%,
7/1/09, Callable 7/1/06 @100...... 2,080
1,320 Phoenix Street & Highway User
Revenue, 6.10%, 7/1/01, ETM....... 1,406
725 Phoenix Street & Highway User
Revenue, 6.25%, 7/1/06, Callable
7/1/02 @102....................... 784
2,000 Phoenix Street & Highway User
Revenue, 6.50%, 7/1/09, ETM....... 2,169
1,255 Phoenix Street & Highway User
Revenue, Series A, 5.80%, 7/1/05,
Callable 7/1/02 @102, FGIC........ 1,332
3,000 Phoenix, GO, 6.50%, 7/1/11,
Prerefunded 7/1/99 @102........... 3,192
2,450 Phoenix, GO, 6.38%, 7/1/13, Callable
7/1/02 @102....................... 2,649
1,125 Phoenix, GO, Series A, 5.10%,
7/1/04............................ 1,161
2,500 Phoenix, GO, Series A, 5.20%,
7/1/05............................ 2,590
1,000 Phoenix, GO, Series A, 5.40%,
7/1/07............................ 1,051
1,000 Pima County, Arizona College
District, Certificates of
Participation, Series B, 6.00%,
7/1/07, Callable 7/1/01 @101,
AMBAC............................. 1,049
725 Pima County, GO, 5.60%, 7/1/07,
Callable 7/1/03 @101.............. 758
555 Pima County, GO, 6.20%, 7/1/08,
Callable 7/1/02 @101.............. 590
1,500 Pima County, Industrial Development
Authority, HealthPartners - Series
A, 5.30%, 4/1/07, MBIA............ 1,547
1,000 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue Refunding, Series B, AMT,
6.15%, 11/1/23, Callable 5/1/07
@102, GNMA........................ 1,075
</TABLE>
Continued
67
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,165 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue, Series A, 6.40%, 8/1/11,
Callable 8/1/05 @102.............. $ 1,215
315 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue, Series A, 7.63%, 2/1/12,
Callable 2/1/01 @101.............. 330
1,585 Pima County, Sewer Revenue, Series
A, 4.90%, 7/1/08, Callable 7/1/04
@102, FGIC........................ 1,572
1,000 Pima County, Union School District
#1, Project of 1989 - Series G,
GO, 5.00%, 7/1/06, Callable 7/1/05
@101, MBIA........................ 1,013
2,205 Pima County, Union School District
#1, Project of 1989 - Series G,
GO, 5.00%, 7/1/07, Callable 7/1/05
@101, MBIA........................ 2,235
1,000 Pima County, Union School District
#1, Series B, GO, 7.20%, 7/1/09,
Prerefunded 7/1/00 @101........... 1,091
1,500 Pima County, Union School District
#1, Series C, GO, 6.88%, 7/1/10,
Prerefunded 7/1/01 @101, MBIA..... 1,652
2,000 Pima County, Union School District
#1, Tucson School Improvements,
Series D, GO, 6.10%, 7/1/11,
Callable 7/1/02 @102, FGIC........ 2,110
1,200 Pinal County, School District #004,
Casa Grande Elementary School
Improvement, GO, 6.00%, 7/1/04,
Callable 7/1/01 @101, AMBAC....... 1,271
1,270 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series A, 5.40%,
1/1/04............................ 1,325
2,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series A, 5.63%,
1/1/06............................ 2,118
1,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series A, 6.50%,
1/1/07, Callable 1/1/01 @102...... 1,078
5,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series B, 5.05%,
1/1/06............................ 5,095
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 3,250 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series B, 5.20%,
1/1/08............................ $ 3,339
2,500 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series B, 5.38%,
1/1/09, Callable 1/1/03 @102...... 2,546
2,200 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series C, 4.70%,
1/1/06............................ 2,186
3,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems Revenue
Refunding, Series D, 6.00%,
1/1/13, Callable 1/1/02 @102...... 3,128
2,085 Scottsdale Municipal Property Corp.,
Excise Tax Revenue, 5.38%,
7/1/05............................ 2,172
1,000 Scottsdale Municipal Property Corp.,
Lease Revenue Refunding, Excise
Tax Revenue, 6.38%, 5/1/05,
Callable 11/1/02 @100............. 1,074
1,900 Scottsdale Project of 1989, Series
E, GO, 5.50%, 7/1/14, Callable
7/1/02 @101....................... 1,916
1,065 Scottsdale Street & Highway User
Revenue, 5.50%, 7/1/07............ 1,118
2,200 Scottsdale, GO, 6.90%, 7/1/06,
Prerefunded 7/1/00 @102........... 2,401
1,700 Scottsdale, GO, 5.25%, 7/1/06....... 1,770
1,100 Scottsdale, GO, 6.90%, 7/1/07,
Prerefunded 7/1/00 @102........... 1,201
500 Scottsdale, GO, 5.50%, 7/1/09....... 525
850 Scottsdale, GO, 5.00%, 7/1/09,
Callable 7/1/03 @101.............. 852
1,615 Scottsdale, GO, Series A, 4.80%,
7/1/08, Callable 7/1/03 @101...... 1,605
750 Scottsdale, GO, Series B, 6.00%,
7/1/09, Prerefunded 7/1/01 @101... 801
2,500 State Certificates of Participation,
6.63%, 9/1/08, Callable 9/1/01
@102, FSA......................... 2,714
1,000 State Municipal Financing Program,
Certificates of Participation,
Series 20, 7.70%, 8/1/10, ETM,
BIG............................... 1,214
1,000 State Municipal Financing Program,
Certificates of Participation,
Series 27, 7.00%, 8/1/04, Callable
8/1/98 @101, BIG.................. 1,038
1,250 State Power Authority Resource
Revenue Refunding, Hoover Uprating
Project, 4.80%, 10/1/01, MBIA..... 1,277
</TABLE>
Continued
68
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 2,035 State Power Authority Resource
Revenue Refunding, Hoover Uprating
Project, 5.40%, 10/1/07, Callable
10/1/03 @102, MBIA................ $ 2,111
2,000 State Transportation Board Excise
Tax Revenue, Maricopa County
Regional Area Road Fund - A,
7.60%, 7/1/05, Prerefunded 7/1/98
@102, FGIC........................ 2,113
2,000 State Transportation Board Highway
Revenue, 7.00%, 7/1/06,
Prerefunded 7/1/00 @101........... 2,173
3,000 State Transportation Board Highway
Revenue, 5.25%, 7/1/07, Callable
7/1/03 @102....................... 3,098
1,000 State Transportation Board Highway
Revenue, Sub-Series B, 6.50%,
7/1/08, Prerefunded 7/1/02
@101.5............................ 1,106
1,000 State Transportation Board Revenue,
Sub-Series A, 6.50%, 7/1/11,
Prerefunded 7/1/01 @101.5......... 1,092
1,635 Tempe, GO, 5.00%, 7/1/10, Callable
7/1/06 @101....................... 1,614
1,000 Tempe, GO, Series A, 5.10%,
7/1/05............................ 1,025
580 Tempe, GO, Series B, 6.00%, 7/1/06,
Callable 7/1/02 @101.............. 616
2,235 Tempe, Union High School District
#213, Project of 1989 - Series B,
GO, 5.90%, 7/1/04, Callable 7/1/01
@101.............................. 2,351
1,000 Tucson Street & Highway User
Revenue, 5.30%, 7/1/05, Callable
7/1/03 @102, MBIA................. 1,035
2,000 Tucson Water Revenue Refunding,
Series A, 5.75%, 7/1/12, Callable
7/1/02 @102, MBIA, IBC............ 2,053
700 University of Arizona, Foundation
Certificates of Participation,
Series 8, 4.90%, 8/1/09, MBIA..... 693
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,000 University of Arizona, University
Revenues, 6.25%, 6/1/11, Callable
6/1/02 @102....................... $ 1,072
2,215 University of Arizona, University
Revenues, Series A, 7.00%, 6/1/10,
Prerefunded 6/1/00 @102........... 2,419
1,100 Yavapai County, Industrial
Development Authority, Hospital
Facility Revenue, Yavapai Regional
Medical Center - Series A, 5.13%,
12/1/13, Callable 6/1/07 @102,
FSA............................... 1,073
1,750 Yuma County, GO, 6.13%, 7/1/12,
Callable 7/1/03 @101, AMBAC....... 1,845
1,305 Yuma County, GO, Elementary School
District #1, 5.25%, 7/1/10,
Callable 7/1/07 @101, MBIA........ 1,306
1,000 Yuma County, Industrial Development
Authority, Hospital Revenue
Refunding, Yuma Regional Medical
Center, 5.50%, 8/1/09, Callable
8/1/07 @102, MBIA................. 1,021
1,000 Yuma County, Municipal Property
Corp. Revenue, Series A, 5.20%,
7/1/09, Callable 7/1/03 @101,
AMBAC............................. 1,005
1,575 Yuma County, Union High School,
District #70, GO, 5.00%, 7/1/06,
Callable 7/1/02 @101, FGIC........ 1,597
--------
Total Municipal Bonds 255,076
--------
INVESTMENT COMPANIES (0.3%):
693 The One Group Municipal Money Market
Fund, Fiduciary Class............. 693
--------
Total Investment Companies 693
--------
Total (Cost--$243,140) (a) $255,769
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $257,255.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $12,666
Unrealized depreciation.................................................. (37)
-------
Net unrealized appreciation.............................................. $12,629
=======
</TABLE>
AMBAC Insured by AMBAC Indemnity Corp.
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
See notes to financial statements.
69
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
INTERMEDIATE MUNICIPAL KENTUCKY OHIO
TAX-FREE BOND INCOME MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND FUND
-------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $449,354; $476,532;
$117,316; $153,990; respectively)................. $465,462 $486,211 $123,428 $163,485
Interest receivable................................. 6,636 7,610 1,969 1,699
Receivable for capital shares issued................ 30 759 9 98
Prepaid expenses and other assets................... 1 2 -- --
-------- -------- -------- --------
TOTAL ASSETS........................................ 472,129 494,582 125,406 165,282
-------- -------- -------- --------
LIABILITIES:
Dividends payable................................... 1,861 2,059 526 688
Payable to brokers for investments purchased........ 7,115 5,442 -- 820
Payable for capital shares redeemed................. 20 109 -- 48
Accrued expenses and other payables:
Investment advisory fees........................ 146 138 37 41
Administration fees............................. 64 67 17 23
12b-1 fees...................................... 4 34 3 14
Other........................................... 66 69 40 46
-------- -------- -------- --------
TOTAL LIABILITIES................................... 9,276 7,918 623 1,680
-------- -------- -------- --------
NET ASSETS:
Capital............................................. 444,793 485,576 120,470 158,243
Undistributed net investment income................. 233 18 -- 5
Accumulated undistributed net realized gains
(losses) from investment transactions............. 1,719 (8,609) (1,799) (4,141)
Net unrealized appreciation from investments........ 16,108 9,679 6,112 9,495
-------- -------- -------- --------
NET ASSETS.......................................... $462,853 $486,664 $124,783 $163,602
======== ======== ======== ========
NET ASSETS:
Fiduciary....................................... $451,089 $408,577 $116,830 $133,172
Class A......................................... 8,457 41,829 5,554 16,114
Class B......................................... 3,307 36,258 2,399 14,316
-------- -------- -------- --------
Total........................................... $462,853 $486,664 $124,783 $163,602
======== ======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary....................................... 41,315 41,518 11,450 12,245
Class A......................................... 775 4,237 544 1,478
Class B......................................... 303 3,686 236 1,304
-------- -------- -------- --------
Total........................................... 42,393 49,441 12,230 15,027
======== ======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per share..... $ 10.92 $ 9.84 $ 10.20 $ 10.88
======== ======== ======== ========
Class A
Redemption price per share.................. $ 10.91 $ 9.87 $ 10.21 $ 10.91
======== ======== ======== ========
Maximum sales charge........................ 4.50% 4.50% 4.50% 4.50%
======== ======== ======== ========
Maximum offering price per share
(100%/(100%-maximum sales charge) of net
asset value adjusted to nearest cent)..... $ 11.42 $ 10.34 $ 10.69 $ 11.42
======== ======== ======== ========
Class B
Offering price per share (a)................ $ 10.93 $ 9.84 $ 10.15 $ 10.98
======== ======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
70
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
LOUISIANA WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $157,802; $94,924; $243,140;
respectively)............................................... $164,152 $ 99,437 $255,769
Interest receivable........................................... 2,996 1,350 5,879
Receivable for capital shares issued.......................... -- 4 --
Prepaid expenses and other assets............................. -- 3 3
-------- -------- --------
TOTAL ASSETS.................................................. 167,148 100,794 261,651
-------- -------- --------
LIABILITIES:
Dividends payable............................................. 663 402 1,073
Payable to brokers for investments purchased.................. 689 2,622 3,051
Payable for capital shares redeemed........................... -- -- 60
Accrued expenses and other payables:
Investment advisory fees.................................. 51 23 72
Administration fees....................................... 23 11 26
12b-1 fees................................................ 13 -- --
Other..................................................... 38 44 114
-------- -------- --------
TOTAL LIABILITIES............................................. 1,477 3,102 4,396
-------- -------- --------
NET ASSETS:
Capital....................................................... 159,996 93,207 243,644
Undistributed net investment income........................... -- -- --
Accumulated undistributed net realized gains (losses) from
investment transactions..................................... (675) (28) 982
Net unrealized appreciation from investments.................. 6,350 4,513 12,629
-------- -------- --------
NET ASSETS.................................................... $165,671 $ 97,692 $257,255
======== ======== ========
NET ASSETS:
Fiduciary................................................. $113,338 $ 96,270 $255,755
Class A................................................... 48,498 808 1,500
Class B................................................... 3,835 614 --(b)
-------- -------- --------
Total......................................................... $165,671 $ 97,692 $257,255
======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary................................................. 11,221 9,567 25,425
Class A................................................... 4,802 80 150
Class B................................................... 380 61 --(b)
-------- -------- --------
Total......................................................... 16,403 9,708 25,575
======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per share............... $ 10.10 $ 10.06 $ 10.06
======== ======== ========
Class A
Redemption price per share............................ $ 10.10 $ 10.15 $ 9.99
======== ======== ========
Maximum sales charge.................................. 4.50% 4.50% 4.50%
======== ======== ========
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent)............................................... $ 10.58 $ 10.63 $ 10.46
======== ======== ========
Class B
Offering price per share (a).......................... $ 10.10 $ 10.12 $ 10.09
======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
(b) Amount is less than $1,000.
See notes to financial statements.
71
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE MUNICIPAL KENTUCKY OHIO
TAX-FREE BOND INCOME MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND FUND
-------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................ $ 18,815 $ 22,398 $ 4,351 $ 7,389
Dividend income........................ 73 95 54 120
-------- -------- -------- --------
TOTAL INCOME........................... 18,888 22,493 4,405 7,509
-------- -------- -------- --------
EXPENSES:
Investment advisory fees............... 2,012 1,703 348 781
Administration fees.................... 554 626 128 215
12b-1 fees (Class A)................... 24 111 26 57
12b-1 fees (Class B)................... 26 294 20 119
Custodian and accounting fees.......... 46 65 7 21
Legal and audit fees................... 15 12 2 6
Organization costs..................... -- 1 -- --
Trustees' fees and expenses............ 3 4 1 1
Transfer agent fees.................... 24 45 30 36
Registration and filing fees........... 36 60 9 21
Printing costs......................... 31 34 7 12
Other.................................. 2 2 -- 1
-------- -------- -------- --------
Total expenses before waivers.......... 2,773 2,957 578 1,270
Less waivers........................... (786) (466) (87) (422)
-------- -------- -------- --------
NET EXPENSES........................... 1,987 2,491 491 848
-------- -------- -------- --------
Net Investment Income.................. 16,901 20,002 3,914 6,661
-------- -------- -------- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from
investment transactions.............. 1,738 (530) 16 (175)
Net change in unrealized appreciation
(depreciation) from investments...... 5,870 7,608 1,197 2,389
-------- -------- -------- --------
Net realized/unrealized gains from
investments.......................... 7,608 7,078 1,213 2,214
-------- -------- -------- --------
Change in net assets resulting from
operations........................... $ 24,509 $ 27,080 $ 5,127 $ 8,875
======== ======== ======== ========
</TABLE>
See notes to financial statements.
72
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
LOUISIANA WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND MUNICIPAL BOND
FUND FUND (a) FUND (a)
<S> <C> <C> <C>
---------------- ---------------- ----------------
INVESTMENT INCOME:
Interest income................................ $ 9,906 $2,316 $6,541
Dividend income................................ 36 45 29
-------- ------ ------
TOTAL INCOME................................... 9,942 2,361 6,570
-------- ------ ------
EXPENSES:
Investment advisory fees....................... 1,077 188 517
Administration fees............................ 297 69 190
12b-1 fees (Class A)........................... 176 1 1
12b-1 fees (Class B)........................... 36 1 --
Custodian and accounting fees.................. 30 9 23
Legal and audit fees........................... 12 6 10
Trustees' fees and expenses.................... 3 2 2
Transfer agent fees............................ 62 9 6
Registration and filing fees................... 12 30 81
Printing costs................................. 17 9 24
Other.......................................... 1 1 2
-------- ------ ------
Less waivers................................... (448) (77) (176)
-------- ------ ------
NET EXPENSES................................... 1,275 248 680
-------- ------ ------
Net Investment Income.......................... 8,667 2,113 5,890
-------- ------ ------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment
transactions................................. (79) (28) 982
Net change in unrealized appreciation
(depreciation) from investments.............. 3,224 627 511
-------- ------ ------
Net realized/unrealized gains from
investments.................................. 3,145 599 1,493
-------- ------ ------
Change in net assets resulting from
operations................................... $ 11,812 $2,712 $7,383
======== ====== ======
</TABLE>
- ------------
(a) For the period from January 20, 1997 to June 30, 1997.
See notes to financial statements.
73
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE MUNICIPAL KENTUCKY
TAX-FREE BOND INCOME MUNICIPAL BOND
FUND FUND FUND
-------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........................ $ 16,901 $11,312 $20,002 $13,782 $ 3,914 $ 1,845
Net realized gains (losses) from investment
transactions............................... 1,738 1,432 (530) (2,505) 16 (36)
Net change in unrealized appreciation
(depreciation) from investments............ 5,870 (248) 7,608 1,176 1,197 571
-------- -------- -------- -------- -------- -------
Change in net assets resulting from operations... 24,509 12,496 27,080 12,453 5,127 2,380
-------- -------- -------- -------- -------- -------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income................... (16,473) (10,698) (17,054) (12,119) (3,488) (1,450)
From net realized gains from investment
transactions............................... (414) (468) -- -- -- --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................... (322) (328) (1,627) (996) (346) (374)
From net realized gains from investment
transactions............................... (11) (17) -- -- -- --
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................... (106) (64) (1,321) (666) (80) (21)
From net realized gains from investment
transactions............................... (4) (3) -- -- -- --
-------- -------- -------- -------- -------- -------
Change in net assets from shareholder
distributions.................................. (17,330) (11,578) (20,002) (13,781) (3,914) (1,845)
-------- -------- -------- -------- -------- -------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................. 103,061 79,285 194,651 135,163 19,089 7,868
Proceeds from shares issued in conversion.... 182,568 -- 55,269 -- 78,683 --
Dividends reinvested......................... 603 1,603 2,256 1,920 244 224
Cost of shares redeemed...................... (56,820) (73,503) (62,696) (51,353) (14,381) (10,109)
-------- -------- -------- -------- -------- -------
Change in net assets from share transactions..... 229,412 7,385 189,480 85,730 83,635 (2,017)
-------- -------- -------- -------- -------- -------
Change in net assets............................. 236,591 8,303 196,558 84,402 84,848 (1,482)
NET ASSETS:
Beginning of period.......................... 226,262 217,959 290,106 205,704 39,935 41,417
-------- -------- -------- -------- -------- -------
End of period................................ $462,853 $226,262 $486,664 $290,106 $124,783 $39,935
======== ======== ======== ======== ======== =======
SHARE TRANSACTIONS:
Issued....................................... 9,528 7,384 19,945 13,875 1,892 779
Issued in conversion......................... 16,858 -- 5,680 -- 7,752 --
Reinvested................................... 56 148 231 197 24 23
Redeemed..................................... (5,252) (6,824) (6,436) (5,278) (1,415) (997)
-------- -------- -------- -------- -------- -------
Change in shares................................. 21,190 708 19,420 8,794 8,253 (195)
======== ======== ======== ======== ======== =======
Undistributed net investment income included in
net assets:
End of period................................ $ 233 $ 233 $ 18 $ 20 $ -- $ --
======== ======== ======== ======== ======== =======
</TABLE>
See notes to financial statements.
74
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
OHIO LOUISIANA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND(A)
-------------------- ----------------------------------------
YEAR YEAR YEAR SEVEN MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, NOVEMBER 30,
1997 1996 1997 1996 1995
-------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........................ $ 6,661 $ 5,010 $ 8,667 $ 5,578 $ 10,058
Net realized losses from investment
transactions............................... (175) (253) (79) (146) (11)
Net change in unrealized appreciation
(depreciation) from investments............ 2,389 483 3,224 (3,198) 14,487
-------- -------- -------- -------- --------
Change in net assets resulting from operations... 8,875 5,240 11,812 2,234 24,534
-------- -------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS (B):
From net investment income................... (5,336) (4,102) (6,174) (1,732) --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................... (810) (670) (2,349) (3,782) (10,014)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................... (515) (238) (144) (64) (44)
-------- -------- -------- -------- --------
Change in net assets from shareholder
distributions.................................. (6,661) (5,010) (8,667) (5,578) (10,058)
-------- -------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................. 39,896 28,462 10,148 13,459 27,568
Proceeds from shares issued in conversion.... 39,137 -- -- -- --
Dividends reinvested......................... 1,160 890 1,612 929 1,980
Cost of shares redeemed...................... (24,777) (18,818) (41,977) (26,535) (32,814)
-------- -------- -------- -------- --------
Change in net assets from share transactions..... 55,416 10,534 (30,217) (12,147) (3,266)
-------- -------- -------- -------- --------
Change in net assets............................. 57,630 10,764 (27,072) (15,491) 11,210
NET ASSETS:
Beginning of period.......................... 105,972 95,208 192,743 208,234 197,024
-------- -------- -------- -------- --------
End of period................................ $163,602 $105,972 $165,671 $192,743 $208,234
======== ======== ======== ======== ========
SHARE TRANSACTIONS:
Issued....................................... 3,691 2,628 1,013 870 2,610
Issued in conversion......................... 3,617 -- -- -- --
Issued in restatement of net asset value
(c)........................................ -- -- -- 1,261 --
Reinvested................................... 107 82 161 89 189
Redeemed..................................... (2,289) (1,744) (4,190) (2,146) (3,138)
-------- -------- -------- -------- --------
Change in shares................................. 5,126 966 (3,016) 74 (339)
======== ======== ======== ======== ========
Undistributed net investment income included in
net assets:
End of period................................ $ 5 $ 8 $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Changes in net assets for the
periods prior to March 26, 1996 represent the Paragon Louisiana Tax-Free
Fund.
(b) Fiduciary Shares of the Louisiana Municipal Bond Fund commenced offering on
March 26, 1996 upon conversion of certain Class A Shares to Fiduciary
Shares.
(c) Pursuant to its reorganization as a fund of The One Group, the Louisiana
Municipal Bond Fund issued additional shares at the close of business March
25, 1996 as a result of restatement of the net asset values of Class A
Shares from $10.67 to $10.00 and Class B Shares from $10.70 to $10.00.
See notes to financial statements.
75
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
---------------- ----------------
JANUARY 20, 1997 JANUARY 20, 1997
THROUGH THROUGH
JUNE 30, JUNE 30,
1997(A) 1997(A)
---------------- ----------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income......................................... $ 2,113 $ 5,890
Net realized gains (losses) from investment transactions...... (28) 982
Net change in unrealized appreciation (depreciation) from
investments.................................................. 627 511
-------- --------
Change in net assets resulting from operations..................... 2,712 7,383
-------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.................................... (2,097) (5,879)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.................................... (11) (11)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.................................... (5) --(b)
-------- --------
Change in net assets from shareholder distributions................ (2,113) (5,890)
-------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................................... 10,842 11,134
Proceeds from shares issued in conversion..................... 91,179 263,882
Dividends reinvested.......................................... 9 5
Cost of shares redeemed....................................... (4,937) (19,259)
-------- --------
Change in net assets from share transactions....................... 97,093 255,762
-------- --------
Change in net assets............................................... 97,692 257,255
NET ASSETS:
Beginning of period........................................... -- --
-------- --------
End of period................................................. $ 97,692 $257,255
======== ========
SHARE TRANSACTIONS:
Issued........................................................ 1,081 1,116
Issued in conversion.......................................... 9,118 26,388
Reinvested.................................................... 1 1
Redeemed...................................................... (492) (1,930)
-------- --------
Change in shares................................................... 9,708 25,575
======== ========
Undistributed net investment income included in net assets:
End of period................................................. $ -- $ --
======== ========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Amount less than $1,000.
See notes to financial statements.
76
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Intermediate Tax-Free
Bond Fund, the Municipal Income Fund, the Kentucky Municipal Bond Fund, the
Ohio Municipal Bond Fund, the Louisiana Municipal Bond Fund, the Arizona
Municipal Bond Fund, and the West Virginia Municipal Bond Fund (individually
a "Fund", collectively the "Funds") only. The Funds are each offered in
Fiduciary Class, Class A and Class B Shares. Class A Shares are subject to
initial sales charges, imposed at the time of purchase, in accordance with
the Funds' prospectuses. Certain redemptions of Class B Shares are subject to
contingent deferred sales charges in accordance with the Funds' prospectuses.
Each Fund is a non-diversified mutual fund, except for the Intermediate
Tax-Free Bond and the Municipal Income Fund, which are diversified.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. Subsequent to the reorganization,
the fiscal period end changed from November 30 to June 30 for the Louisiana
Municipal Bond Fund. Therefore, the prior period statement of changes in net
assets for that Fund presents the changes in net assets for the seven months
ended June 30, 1996.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---------------------------------- ------------------------------------------------------------
<S> <C>
Intermediate Tax-Free Bond Fund Current income exempt from Federal income taxes consistent
with prudent investment management and the preservation of
capital.
Municipal Income Fund Current income exempt from Federal income taxes.
Kentucky Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Kentucky
personal income tax.
Ohio Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Ohio
personal income tax.
Louisiana Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Louisiana
income tax.
Arizona Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Arizona
personal income tax.
West Virginia Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and West
Virginia personal income tax.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
Continued
77
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
SECURITY VALUATION
Corporate debt securities and debt securities of U.S. issuers (other than
short-term investments maturing in 60 days or less), including municipal
securities, are valued on the basis of valuations provided by dealers or by
an independent pricing service approved by the Board of Trustees. Short-term
investments maturing in 60 days or less are valued at amortized cost, which
approximates market value. Futures contracts are valued at the settlement
price established each day by the board of trade or an exchange on which they
are traded. Options traded on an exchange are valued using the last sale
price or, in the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations. Investments for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by Banc One Investment Advisors Corporation (the
"Advisor") under the direction of the Board of Trustees.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that the
Fund's investment advisor has determined are creditworthy. Each repurchase
agreement is recorded at cost. The Fund requires that the securities
purchased in a repurchase agreement transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities
held at not less than the repurchase price, including accrued interest.
Repurchase agreements are considered to be loans by a fund under the 1940
Act.
WRITTEN OPTIONS
The Funds may write covered call or put options for which premiums received
are recorded as liabilities and are subsequently adjusted to the current
value of the options written. Premiums received from writing options which
expire are treated as realized gains. Premiums received from writing options,
which are either exercised or closed, are offset against the proceeds
received or amount paid on the transaction to determine realized gains or
losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period. Cash
or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change in
the market value of the position are recorded as unrealized appreciation or
depreciation until the contract is closed out, at which time the appreciation
or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities may
be more volatile than the referenced instrument itself, but any loss is
limited to the amount of the original investment.
MORTGAGE ROLLS
The Funds may enter into mortgage "dollar rolls" in which the Fund sells
mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar securities
Continued
78
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the mortgage-backed securities. The Fund is
compensated by fee income or the difference between the current sales price
and the lower forward price for the future purchase.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgement of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risk. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997 the Funds had no securities on
loan.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Dividends are recorded on the ex-dividend date. Interest
income, including any discount or premium, is accrued as earned using the
effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one fund of the Trust
are allocated among the respective Funds. Each class of shares bears its
pro-rata portion of expenses attributable to its series, except that each
class separately bears expenses related specifically to that class, such as
distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly for
the Funds. Net realized capital gains, if any, are distributed at least
annually. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for mortgage-backed securities, expiring capital loss
carryforwards, and deferrals of certain losses. Permanent book and tax basis
differences have been reclassified among the components of net assets.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain
Continued
79
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and from
net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service. Currently, the Trust consists of thirty three active Funds and not
all Funds can issue all classes of shares. As of June 30, 1997, there were no
shareholders in Class C or Service Class of the Funds. Shareholders are
entitled to one vote for each full share held and will vote in the aggregate
and not by class or series, except as otherwise expressly required by law or
when the Board of Trustees has determined that the matter to be voted on
affects only the interest of shareholders of a particular class or series.
The following is a summary of transactions in Fund shares for the periods
ended June 30, 1997 and June 30, 1996:
Continued
80
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INTERMEDIATE TAX-FREE MUNICIPAL INCOME KENTUCKY MUNICIPAL
BOND FUND FUND BOND FUND
---------------------------- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued.... $ 98,433 $ 73,620 $155,470 $100,593 $ 17,564 $ 6,010
Proceeds from shares issued in
conversion................... 182,568 -- 55,269 -- 78,683 --
Dividends reinvested........... 267 1,311 198 835 11 30
Cost of shares redeemed........ (54,356) (69,859) (49,425) (45,206) (10,777) (8,690)
-------- -------- -------- -------- -------- --------
Change in net assets from
Fiduciary Share
transactions................. $226,912 $ 5,072 $161,512 $ 56,222 $ 85,481 $ (2,650)
======== ======== ======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued.... $ 2,964 $ 4,157 $ 24,091 $ 18,884 $ 425 $ 475
Dividends reinvested........... 245 246 1,160 699 191 186
Cost of shares redeemed........ (1,518) (3,426) (9,801) (5,106) (3,370) (1,412)
-------- -------- -------- -------- -------- --------
Change in net assets from Class
A Share transactions......... $ 1,691 $ 977 $ 15,450 $ 14,477 $ (2,754) $ (751)
======== ======== ======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued.... $ 1,664 $ 1,508 $ 15,090 $ 15,686 $ 1,100 $ 1,383
Dividends reinvested........... 91 46 898 386 42 8
Cost of shares redeemed........ (946) (218) (3,470) (1,041) (234) (7)
-------- -------- -------- -------- -------- --------
Change in net assets from Class
B Share transactions......... $ 809 $ 1,336 $ 12,518 $ 15,031 $ 908 $ 1,384
======== ======== ======== ======== ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued......................... 9,103 6,859 15,939 10,330 1,740 593
Issued in conversion........... 16,858 -- 5,680 -- 7,752 --
Reinvested..................... 25 121 20 86 1 4
Redeemed....................... (5,024) (6,488) (5,078) (4,649) (1,061) (856)
-------- -------- -------- -------- -------- --------
Change in Fiduciary Shares..... 20,962 492 16,561 5,767 8,432 (259)
======== ======== ======== ======== ======== ========
CLASS A SHARES:
Issued......................... 272 387 2,459 1,933 42 48
Reinvested..................... 23 22 119 72 19 18
Redeemed....................... (141) (316) (1,002) (522) (331) (140)
-------- -------- -------- -------- -------- --------
Change in Class A Shares....... 154 93 1,576 1,483 (270) (74)
======== ======== ======== ======== ======== ========
CLASS B SHARES:
Issued......................... 153 138 1,547 1,612 110 138
Reinvested..................... 8 5 92 40 4 1
Redeemed....................... (87) (20) (356) (108) (23) (1)
-------- -------- -------- -------- -------- --------
Change in Class B Shares....... 74 123 1,283 1,544 91 138
======== ======== ======== ======== ======== ========
</TABLE>
Continued
81
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
OHIO MUNICIPAL LOUISIANA MUNICIPAL
BOND FUND BOND FUND (a)
-------------------- ------------------------------------------
YEAR YEAR YEAR SEVEN MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, NOVEMBER 30,
1997 1996 1997 1996 1995
-------- -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued........................... $ 28,385 $ 16,537 $ 5,386 $ 6,255
Proceeds issued in conversion......................... 39,137 -- -- --
Proceeds from shares issued in conversion from Class A
Shares.............................................. -- -- -- 137,607(b)
Dividends reinvested.................................. 93 245 -- --
Cost of shares redeemed............................... (16,829) (16,421) (30,290) (6,804)
-------- -------- -------- ----------
Change in net assets from Fiduciary Share
transactions........................................ $ 50,786 $ 361 $(24,904) $ 137,058
======== ======== ======== ==========
CLASS A SHARES:
Proceeds from shares issued........................... $ 5,044 $ 5,812 $ 4,042 $ 5,814 $ 25,634
Dividends reinvested.................................. 675 479 1,510 889 1,948
Cost of shares redeemed............................... (6,371) (1,813) (11,414) (19,453) (32,701)
Cost of shares redeemed in conversion to Fiduciary
Shares.............................................. -- -- -- (137,607)(b) --
-------- -------- -------- ---------- --------
Change in net assets from Class A Share
transactions........................................ $ (652) $ 4,478 $ (5,862) $ (150,357) $ (5,119)
======== ======== ======== ========== ========
CLASS B SHARES:
Proceeds from shares issued........................... $ 6,467 $ 6,113 $ 720 $ 1,390 $ 1,934
Dividends reinvested.................................. 392 166 102 40 31
Cost of shares redeemed............................... (1,577) (584) (273) (278) (112)
-------- -------- -------- ---------- --------
Change in net assets from Class B Share
transactions........................................ $ 5,282 $ 5,695 $ 549 $ 1,152 $ 1,853
======== ======== ======== ========== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued................................................ 2,635 1,528 538 195
Issued in conversion.................................. 3,617 -- -- --
Issued in conversion from Class A Shares.............. -- -- -- 13,761(b)
Reinvested............................................ 9 23 -- --
Redeemed.............................................. (1,556) (1,523) (3,023) (250)
-------- -------- -------- ----------
Change in Fiduciary Shares............................ 4,705 28 (2,485) 13,706
======== ======== ======== ==========
CLASS A SHARES:
Issued................................................ 464 539 403 545 2,426
Issued in restatement of net asset value (c).......... -- -- -- 1,239 --
Reinvested............................................ 62 44 151 85 186
Redeemed.............................................. (588) (167) (1,140) (1,869) (3,127)
Redeemed in conversion to Fiduciary Shares............ -- -- -- (13,761)(b) --
-------- -------- -------- ---------- --------
Change in Class A Shares.............................. (62) 416 (586) (13,761) (515)
======== ======== ======== ========== ========
CLASS B SHARES:
Issued................................................ 592 561 72 130 183
Issued in restatement of net asset value (c).......... -- -- -- 22 --
Reinvested............................................ 36 15 10 4 3
Redeemed.............................................. (145) (54) (27) (27) (10)
-------- -------- -------- ---------- --------
Change in Class B Shares.............................. 483 522 55 129 176
======== ======== ======== ========== ========
</TABLE>
- ------------
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Capital and share
transactions for the periods prior to March 26, 1996 represent the Paragon
Louisiana Tax-Free Fund.
(b) Fiduciary Shares of the Louisiana Municipal Bond Fund commenced offering on
March 26, 1996 upon conversion of certain Class A Shares to Fiduciary
Shares.
(c) Pursuant to reorganization as a fund of The One Group, the Louisiana
Municipal Bond Fund issued additional shares at the close of business March
26, 1996 as a result of restatement of the net asset values of Class A
Shares from $10.67 to $10.00 and Class B Shares from $10.70 to $10.00.
Continued
82
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
---------------- ----------------
JANUARY 20, 1997 JANUARY 20, 1997
THROUGH THROUGH
JUNE 30, JUNE 30,
1997 (a) 1997 (a)
---------------- ----------------
<S> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued..................................... $ 9,442 $ 9,187
Proceeds from shares issued in conversion....................... 91,179 263,882
Dividends reinvested............................................ --(b) --
Cost of shares redeemed......................................... (4,937) (18,791)
-------- --------
Change in net assets from Fiduciary Share transactions.......... $ 95,684 $254,278
======== ========
CLASS A SHARES:
Proceeds from shares issued..................................... $ 795 $ 1,947
Dividends reinvested............................................ 7 5
Cost of shares redeemed......................................... -- (468)
-------- --------
Change in net assets from Class A Share transactions......... $ 802 $ 1,484
======== ========
CLASS B SHARES:
Proceeds from shares issued..................................... $ 605 $ --(b)
Dividends reinvested............................................ 2 --
Cost of shares redeemed......................................... -- --
-------- --------
Change in net assets from Class B Share transactions............ $ 607 $ --(b)
======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.......................................................... 941 920
Issued in conversion............................................ 9,118 26,388
Reinvested...................................................... 1 --
Redeemed........................................................ (492) (1,883)
-------- --------
Change in Fiduciary Shares...................................... 9,568 25,425
======== ========
CLASS A SHARES:
Issued.......................................................... 79 196
Reinvested...................................................... -- 1
Redeemed........................................................ -- (47)
-------- --------
Change in Class A Shares........................................ 79 150
======== ========
CLASS B SHARES:
Issued.......................................................... 61 --(b)
Reinvested...................................................... -- --
Redeemed........................................................ -- --
-------- --------
Change in Class B Shares........................................ 61 --(b)
======== ========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Amount is less than 1,000.
Continued
83
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to the following percentages of the Funds' average
net assets: 0.60% of the Intermediate Tax-Free Bond Fund, the Ohio Municipal
Bond Fund and the Louisiana Municipal Bond Fund; and 0.45% of the Municipal
Income Fund, the Kentucky Municipal Bond Fund, the Arizona Municipal Bond
Fund and the West Virginia Municipal Bond Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
the first $1.5 billion of Trust net assets (excluding the Investor Growth
Fund, the Investor Growth & Income Fund, the Investor Conservative Fund , and
the Investor Balanced Fund, the "Investor Funds" and the Treasury Only Money
Market Fund and the Government Money Market Fund, the "Institutional Money
Market Funds"); 0.18% on the next $0.5 billion of Trust net assets (excluding
the Investor Funds and the Institutional Money Market Funds); and 0.16% of
Trust net assets (excluding the Investor Funds and the Institutional Money
Market Funds) over $2 billion. The Advisor also serves as Sub-Administrator
to each fund of the Trust, pursuant to an agreement between the Administrator
and the Advisor. Pursuant to this agreement, the Advisor performs many of the
Administrator's duties, for which the Advisor receives a fee paid by the
Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A and Class B Shares are subject to distribution and
shareholder services plans (the "Plans") pursuant to Rule 12b-1 under the
1940 Act. As provided in the Plans, the Trust will pay the Distributor a fee
of 0.35% of the average daily net assets of Class A Shares of each of the
Funds and 1.00% of the average daily net assets of the Class B Shares of each
of the Funds. Currently, the Distributor has voluntarily agreed to limit
payments under the Plans to 0.25% and 0.90% of average daily net assets of
the Class A Shares and Class B Shares, respectively, of each Fund. Up to
0.25% of the fees payable under the Plans may be used as compensation for
shareholder services by the Distributor and/or financial institutions and
intermediaries. Fees paid under the Plans may be applied by the Distributor
toward (i) compensation for its services in connection with distribution
assistance or provision of shareholder services; or (ii) payments to
financial institutions and intermediaries such as banks (including affiliates
of the Advisor), brokers, dealers and other institutions, including the
Distributor's affiliates and subsidiaries as compensation for services or
reimbursement of expenses incurred in connection with distribution assistance
or provision of shareholder services. Fiduciary Class Shares of each Fund are
offered without distribution fees. For the period ended June 30, 1997, the
Distributor received $1,156,585 from commissions earned on sales of Class A
Shares and redemptions of Class B Shares, of which the Distributor reallowed
$1,140,301 to affiliated broker/dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
84
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the period ended June 30, 1997, fees in
the following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
12B-1 FEES
INVESTMENT WAIVED
ADVISORY FEES ADMINISTRATION --------------------
WAIVED FEES WAIVED CLASS A CLASS B
------------- --------------- -------- --------
<S> <C> <C> <C> <C>
Intermediate Tax-Free Bond Fund............. $ 777 $-- $ 6 $ 3
Municipal Income Fund....................... 388 17 32 29
Kentucky Municipal Bond Fund................ 78 -- 7 2
Ohio Municipal Bond Fund.................... 392 2 16 12
Louisiana Municipal Bond Fund............... 394 -- 50 4
West Virginia Municipal Bond Fund........... 67 10 -- --
Arizona Municipal Bond Fund................. 126 50 -- --
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the period
ended June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- --------
<S> <C> <C>
Intermediate Tax-Free Bond Fund....................... $508,298 $286,186
Municipal Income Fund................................. 396,026 229,213
Kentucky Municipal Bond Fund.......................... 87,698 10,214
Ohio Municipal Bond Fund.............................. 64,127 9,362
Louisiana Municipal Bond Fund......................... 30,718 58,974
West Virginia Municipal Bond Fund..................... 11,420 5,670
Arizona Municipal Bond Fund........................... 14,524 20,446
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risk in excess of the
amounts reflected in the Statement of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in the
particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates, an
illiquid secondary market for the instruments or inability of counterparties
to perform under the terms of the contract. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuation in
securities.
7. CONCENTRATION OF CREDIT RISK:
The Kentucky, Ohio, Louisiana, Arizona and West Virginia Municipal Bond Funds
invest in primarily debt obligations issued by the respective States and
their political subdivisions, agencies and public authorities to obtain funds
for various public purposes. The Funds are more susceptible to economic and
political factors adversely affecting issuers of the state's specific
municipal securities than are municipal bond funds that are not concentrated
in these issuers to the same extent.
8. REORGANIZATION:
The Trust entered an Agreement and Plan of Reorganization ("Reorganization")
with Paragon pursuant to which all of the assets and liabilities of each
Paragon Fund transferred to a fund of the One Group in exchange for shares of
the corresponding fund of the One Group. The Paragon Louisiana Tax-Free Fund
transferred its assets
Continued
85
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
and liabilities to the One Group Louisiana Municipal Bond Fund. The
Reorganization, which qualified as tax-free exchange for Federal income tax
purposes, was completed on March 25, 1996 following approval by shareholders
of Paragon at a special shareholder meeting. The following is a summary of
shares outstanding, net assets, net asset value per share and unrealized
appreciation immediately before and after the Reorganization (amounts in
thousands except net asset value):
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
-------------------------- --------------
PARAGON LOUISIANA LOUISIANA
LOUISIANA MUNICIPAL MUNICIPAL
TAX-FREE FUND BOND FUND BOND
------------- --------- --------------
<S> <C> <C> <C>
Shares.................................................... 18,757 -- 20,018*
Net Assets................................................ $ 200,185 -- $200,185
Net Asset Value:
Fiduciary............................................... -- $ 10.00*
Class A................................................. $ 10.67 -- 10.00*
Class B................................................. 10.70 -- 10.00*
Unrealized Appreciation................................... $ 4,349 -- $ 4,349
</TABLE>
- ------------
* Pursuant to its reorganization as a fund of the One Group, the Fund issued
additional shares at the close of business March 25, 1996 as a result of
the restatement of the net asset values of Class A Shares from $10.67 to
$10.00 and Class B Shares from $10.70 to $10.00.
9. FEDERAL TAX INFORMATION (UNAUDITED):
The accompanying table below details distributions from long-term capital
gains for the following funds for the period ended June 30, 1997 (amounts in
thousands):
<TABLE>
<CAPTION>
DISTRIBUTIONS
-------------
<S> <C>
Intermediate Tax Free Bond Fund............................................... $ 226
</TABLE>
At June 30, 1997, the following Funds have capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD EXPIRES
------------ -------
<S> <C> <C>
Municipal Income Fund................................................ 6,340 2005
Municipal Income Fund................................................ 2,195 2002
Kentucky Municipal Bond Fund......................................... 483 2004
Kentucky Municipal Bond Fund......................................... 1,316 2003
Ohio Municipal Bond Fund............................................. 217 2005
Ohio Municipal Bond Fund............................................. 1,463 2004
Ohio Municipal Bond Fund............................................. 2,319 2003
Louisiana Municipal Bond Fund........................................ 45 2005
Louisiana Municipal Bond Fund........................................ 268 2004
Louisiana Municipal Bond Fund........................................ 48 2003
Louisiana Municipal Bond Fund........................................ 281 2002
</TABLE>
Continued
86
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occuring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ended June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
POST-OCTOBER
CAPITAL LOSSES
--------------
<S> <C>
Ohio Municipal Bond Fund..................................................... $104
Louisiana Municipal Bond Fund................................................ 33
West Virginia Municipal Bond Fund............................................ 28
</TABLE>
The Funds designate the following exempt-interest dividends for the taxable
year ended June 30, 1997 (amounts in thousands):
<TABLE>
<CAPTION>
TAX-EXEMPT
DISTRIBUTION
-----------
<S> <C>
Intermediate Tax Free Bond Fund............................................... $15,864
Municipal Income Fund......................................................... 19,189
Kentucky Municipal Bond Fund.................................................. 3,448
Ohio Municipal Bond Fund...................................................... 6,384
Louisiana Municipal Bond Fund................................................. 8,717
West Virginia Municipal Bond Fund............................................. 1,682
Arizona Municipal Bond Fund................................................... 4,663
</TABLE>
10. CONVERSION OF COMMON TRUST FUNDS:
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
NET ASSETS VALUE PER UNREALIZED
SHARES CONVERTED SHARE ISSUED APPRECIATION
------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Intermediate Tax-Free Bond Fund...................... 16,858 $182,568 $10.83 $ 7,412
Municipal Income Fund................................ 5,680 55,269 9.73 1,784
Kentucky Municipal Bond Fund......................... 7,752 78,683 10.15 4,545
Ohio Municipal Bond Fund............................. 3,617 39,137 10.82 2,826
West Virginia Municipal Bond Fund.................... 9,118 91,179 10.00 3,886
Arizona Municipal Bond Fund.......................... 26,388 263,882 10.00 12,118
</TABLE>
Continued
87
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 10.67 $ 10.64 $ 10.49 $ 11.15 $ 10.69
-------- -------- -------- -------- --------
Investment Activities:
Net investment income.................................... 0.54 0.52 0.54 0.52 0.53
Net realized and unrealized gains (losses) from
investments............................................ 0.27 0.04 0.15 (0.52) 0.49
-------- -------- -------- -------- --------
Total from Investment Activities....................... 0.81 0.56 0.69 0.00 1.02
-------- -------- -------- -------- --------
Distributions:
Net investment income.................................... (0.54) (0.51) (0.54) (0.53) (0.52)
In excess of net investment income....................... -- -- -- (0.01) --
Net realized gains....................................... (0.02) (0.02) -- (0.01) (0.04)
In excess of net realized gains.......................... -- -- -- (0.11) --
-------- -------- -------- -------- --------
Total Distributions.................................... (0.56) (0.53) (0.54) (0.66) (0.56)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD............................. $ 10.92 $ 10.67 $ 10.64 $ 10.49 $ 11.15
======== ======== ======== ======== ========
Total Return............................................... 7.76% 5.39% 6.75% (0.11)% 9.79%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $451,089 $217,201 $211,229 $182,611 $166,489
Ratio of expenses to average net assets.................. 0.58% 0.54% 0.53% 0.48% 0.54%
Ratio of net investment income to average net assets..... 5.05% 4.87% 5.17% 4.78% 4.93%
Ratio of expenses to average net assets*................. 0.81% 0.87% 0.88% 0.84% 0.94%
Ratio of net investment income to average net assets*.... 4.82% 4.54% 4.82% 4.42% 4.53%
Portfolio turnover (a)................................... 86.89% 111.58% 199.76% 105.98% 31.99%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
88
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
-------------------------------------------------
CLASS A
-------------------------------------------------
YEARS ENDED JUNE 30,
-------------------------------------------------
1997 1996 1995 1994 1993
------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................. $10.67 $ 10.63 $ 10.48 $ 11.14 $10.69
------ ------- ------- ------- ------
Investment Activities:
Net investment income........................................... 0.51 0.50 0.51 0.50 0.55
Net realized and unrealized gains (losses) from investments..... 0.26 0.05 0.15 (0.52) 0.44
------ ------- ------- ------- ------
Total from Investment Activities.............................. 0.77 0.55 0.66 (0.02) 0.99
------ ------- ------- ------- ------
Distributions:
Net investment income........................................... (0.51) (0.49) (0.49) (0.52) (0.50)
In excess of net investment income.............................. -- -- (0.02) (0.01) --
Net realized gains.............................................. (0.02) (0.02) -- -- (0.04)
In excess of net realized gains................................. -- -- -- (0.11) --
------ ------- ------- ------- ------
Total Distributions........................................... (0.53) (0.51) (0.51) (0.64) (0.54)
------ ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD.................................... $10.91 $ 10.67 $ 10.63 $ 10.48 $11.14
====== ======= ======= ======= ======
Total Return (Excludes Sales Charge).............................. 7.39% 5.28% 6.49% (0.33)% 9.47%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................... $8,457 $ 6,622 $ 5,614 $ 5,556 $5,480
Ratio of expenses to average net assets......................... 0.83% 0.79% 0.78% 0.73% 0.71%
Ratio of net investment income to average net assets............ 4.75% 4.62% 4.91% 4.57% 4.77%
Ratio of expenses to average net assets*........................ 1.15% 1.22% 1.23% 1.19% 1.27%
Ratio of net investment income to average net assets*........... 4.43% 4.19% 4.46% 4.11% 4.21%
Portfolio turnover (a).......................................... 86.89% 111.58% 199.76% 105.98% 31.99%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
89
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
----------------------------------------
CLASS B
----------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------
1997 1996 1995 1994(a)
------ ------- ------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................................... $10.68 $ 10.65 $ 10.50 $ 11.18
------ ------- ------- -------
Investment Activities:
Net investment income................................................... 0.45 0.43 0.46 0.17
Net realized and unrealized gains (losses) from investments............. 0.27 0.04 0.14 (0.67)
------ ------- ------- ------
Total from Investment Activities...................................... 0.72 0.47 0.60 (0.50)
------ ------- ------- ------
Distributions:
Net investment income................................................... (0.45) (0.42) (0.45) (0.17)
Net realized gains...................................................... (0.02) (0.02) -- --
In excess of net realized gains......................................... -- -- -- (0.01)
------ ------- ------- -------
Total Distributions................................................... (0.47) (0.44) (0.45) (0.18)
------ ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................................ $10.93 $ 10.68 $ 10.65 $ 10.50
====== ======= ======= =======
Total Return (Excludes Sales Charge)...................................... 6.82% 4.48% 5.89% (4.48)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $3,307 $ 2,439 $ 1,116 $ 549
Ratio of expenses to average net assets................................. 1.47% 1.44% 1.43% 1.40% (c)
Ratio of net investment income to average net assets.................... 4.09% 3.97% 4.29% 4.08% (c)
Ratio of expenses to average net assets*................................ 1.78% 1.87% 1.88% 1.85% (c)
Ratio of net investment income to average net assets*................... 3.78% 3.54% 3.84% 3.63% (c)
Portfolio turnover (d).................................................. 86.89% 111.58% 199.76% 105.98%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
90
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.66 $ 9.69 $ 9.66 $ 10.11 $ 10.00
-------- -------- -------- -------- -------
Investment Activities:
Net investment income..................................... 0.53 0.56 0.57 0.56 0.19
Net realized and unrealized gains (losses) from
investments............................................. 0.18 (0.03) 0.03 (0.42) 0.11
-------- -------- -------- -------- -------
Total from Investment Activities........................ 0.71 0.53 0.60 0.14 0.30
-------- -------- -------- -------- -------
Distributions:
Net investment income..................................... (0.53) (0.56) (0.57) (0.56) (0.19)
In excess of net realized gains........................... -- -- -- (0.03) --
-------- -------- -------- -------- -------
Total Distributions..................................... (0.53) (0.56) (0.57) (0.59) (0.19)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.84 $ 9.66 $ 9.69 $ 9.66 $ 10.11
======== ======== ======== ======== =======
Total Return................................................ 7.49% 5.54% 6.46% 1.36% 5.18% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $408,577 $241,115 $185,916 $152,763 $40,777
Ratio of expenses to average net assets................... 0.57% 0.56% 0.56% 0.54% 0.54% (b)
Ratio of net investment income to average net assets...... 5.38% 5.70% 6.02% 5.61% 5.66% (b)
Ratio of expenses to average net assets*.................. 0.68% 0.76% 0.74% 0.71% 1.01% (b)
Ratio of net investment income to average net assets*..... 5.27% 5.50% 5.84% 5.44% 5.19% (b)
Portfolio turnover (c).................................... 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 9, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
91
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
----------------------------------------------------
CLASS A
----------------------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------------------
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 9.69 $ 9.72 $ 9.67 $ 10.12 $10.06
------- ------- ------- ------- -------
Investment Activities:
Net investment income......................................... 0.51 0.55 0.55 0.55 0.19
Net realized and unrealized gains (losses) from investments... 0.18 (0.04) 0.05 (0.43) 0.05
------- ------- ------- ------- -------
Total from Investment Activities............................ 0.69 0.51 0.60 0.12 0.24
------- ------- ------- ------- -------
Distributions:
Net investment income......................................... (0.51) (0.54) (0.55) (0.54) (0.18)
In excess of net realized gains............................... -- -- -- (0.03) --
------- ------- ------- ------- -------
Total Distributions......................................... (0.51) (0.54) (0.55) (0.57) (0.18)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.................................. $ 9.87 $ 9.69 $ 9.72 $ 9.67 $10.12
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)............................ 7.24% 5.35% 6.21% 1.34% 6.86%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................. $41,829 $25,787 $11,462 $10,725 $4,106
Ratio of expenses to average net assets....................... 0.82% 0.81% 0.81% 0.79% 0.80%(b)
Ratio of net investment income to average net assets.......... 5.13% 5.45% 5.76% 5.44% 5.71%(b)
Ratio of expenses to average net assets*...................... 1.03% 1.11% 1.09% 1.06% 1.36%(b)
Ratio of net investment income to average net assets*......... 4.92% 5.15% 5.48% 5.17% 5.15%(b)
Portfolio turnover (c)........................................ 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 23, 1993.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
92
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
----------------------------------------
CLASS B
----------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------
1997 1996 1995 1994(a)
------- ------- ------ --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................................... $ 9.66 $ 9.69 $ 9.62 $10.10
------- ------- ------ -------
Investment Activities:
Net investment income................................................... 0.44 0.47 0.49 0.24
Net realized and unrealized gains (losses) from investments............. 0.18 (0.03) 0.07 (0.48)
------- ------- ------ -------
Total from Investment Activities...................................... 0.62 0.44 0.56 (0.24)
------- ------- ------ -------
Distributions:
Net investment income................................................... (0.44) (0.47) (0.49) (0.24)
------- ------- ------ -------
Total Distributions................................................... (0.44) (0.47) (0.49) (0.24)
------- ------- ------ -------
NET ASSET VALUE, END OF PERIOD............................................ $ 9.84 $ 9.66 $ 9.69 $ 9.62
======= ======= ====== =======
Total Return (Excludes Sales Charge)...................................... 6.55% 4.65% 5.58% (1.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................................... $36,258 $23,204 $8,326 $4,855
Ratio of expenses to average net assets................................. 1.47% 1.46% 1.46% 1.41%(c)
Ratio of net investment income to average net assets.................... 4.48% 4.80% 5.14% 4.95%(c)
Ratio of expenses to average net assets*................................ 1.67% 1.76% 1.74% 1.62%(c)
Ratio of net investment income to average net assets*................... 4.28% 4.50% 4.86% 4.74%(c)
Portfolio turnover (d).................................................. 62.83% 83.17% 66.02% 101.48%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
93
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
--------------------------------------------------------------------
FIDUCIARY
-----------------------------------
YEAR YEAR JANUARY 20, FEBRUARY 1, MARCH 12,
ENDED ENDED 1995 TO 1994, TO 1993, TO
JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JANUARY 31,
1997 1996 1995(a) 1995(b) 1994(b)(c)
-------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 10.04 $ 9.92 $ 9.49 $ 10.45 $ 10.00
Investment Activities:
Net investment income.......................... 0.50 0.50 0.20 0.41 0.36
Net realized and unrealized gains (losses) from
investments.................................. 0.16 0.12 0.43 (0.95) 0.43
-------- ------- ------- -------- -------
Total from Investment Activities............. 0.66 0.62 0.63 (0.54) 0.79
-------- ------- ------- -------- -------
Distributions:
Net investment income.......................... (0.50) (0.50) (0.20) (0.42) (0.34)
-------- ------- ------- -------- -------
Total Distributions.......................... (0.50) (0.50) (0.20) (0.42) (0.34)
-------- ------- ------- -------- -------
NET ASSET VALUE, END OF PERIOD................... $ 10.20 $ 10.04 $ 9.92 $ 9.49 $ 10.45
======== ======= ======= ======== =======
Total Return..................................... 6.74% 6.35% 6.56%(d) (5.17)%(d) 8.05%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).............. $116,830 $30,300 $32,520 $ 41,953 $64,663
Ratio of expenses to average net assets........ 0.59% 0.68% 0.65%(e) 1.03%(e) 0.70%(e)
Ratio of net investment income to average
net assets................................... 5.12% 4.60% 4.70%(e) 4.27%(e) 4.19%(e)
Ratio of expenses to average net assets*....... 0.72% 1.02% 0.97%(e) 1.05%(e) 0.91%(e)
Ratio of net investment income to average
net assets*.................................. 4.99% 4.26% 4.38%(e) 4.25%(e) 3.98%(e)
Portfolio turnover (f)......................... 13.30% 16.78% 19.75% 10.00% 5.00%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Prior to reorganizing as a fund of The One Group, the Fund offered only one
class of shares.
(c) Period from commencement of operations.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
See notes to financial statements.
94
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
-----------------------------------
CLASS A
-----------------------------------
YEAR YEAR JANUARY 20,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
1997 1996 1995(a)
-------- -------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......................................... $10.05 $ 9.93 $ 9.49
------ ------ -------
Investment Activities:
Net investment income....................................................... 0.48 0.44 0.19
Net realized and unrealized gains from investments.......................... 0.16 0.12 0.44
------ ------ -------
Total from Investment Activities.......................................... 0.64 0.56 0.63
------ ------ -------
Distributions:
Net investment income....................................................... (0.48) (0.44) (0.19)
------ ------ -------
Total Distributions....................................................... (0.48) (0.44) (0.19)
------ ------ -------
NET ASSET VALUE, END OF PERIOD................................................ $10.21 $10.05 $ 9.93
====== ====== =======
Total Return (Excludes Sales Charge).......................................... 6.46% 5.70% 5.66%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................................... $5,554 $8,178 $ 8,818
Ratio of expenses to average net assets..................................... 0.84% 0.93% 0.90%(c)
Ratio of net investment income to average net assets........................ 4.66% 4.35% 4.44%(c)
Ratio of expenses to average net assets*.................................... 1.04% 1.37% 1.33%(c)
Ratio of net investment income to average net assets*....................... 4.46% 3.91% 4.01%(c)
Portfolio turnover (d)...................................................... 13.30% 16.78% 19.75%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
95
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
-----------------------------------
CLASS B
-----------------------------------
YEAR YEAR MARCH 16,
ENDED ENDED 1995 TO
JUNE 30, JUNE 30, JUNE 30,
1997 1996 1995(a)
-------- -------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......................................... $ 9.99 $ 9.87 $ 9.75
------ ------ -------
Investment Activities:
Net investment income....................................................... 0.41 0.38 0.14
Net realized and unrealized gains from investments.......................... 0.16 0.13 0.12
------ ------ -------
Total from Investment Activities.......................................... 0.57 0.51 0.26
------ ------ -------
Distributions:
Net investment income....................................................... (0.41) (0.39) (0.14)
------ ------ -------
Total Distributions....................................................... (0.41) (0.39) (0.14)
------ ------ -------
NET ASSET VALUE, END OF PERIOD................................................ $10.15 $ 9.99 $ 9.87
====== ====== =======
Total Return (Excludes Sales Charge).......................................... 5.81% 5.16% 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................................... $2,399 $1,457 $ 79
Ratio of expenses to average net assets..................................... 1.47% 1.58% 1.58%(c)
Ratio of net investment income to average net assets........................ 4.05% 3.70% 3.89%(c)
Ratio of expenses to average net assets*.................................... 1.70% 2.02% 2.21%(c)
Ratio of net investment income to average net assets*....................... 3.82% 3.26% 3.25%(c)
Portfolio turnover (d)...................................................... 13.30% 16.78% 19.75%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on March 16, 1995.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
96
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
----------------------------------------------------
FIDUCIARY
----------------------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------------------
1997 1996 1995 1994 1993
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......................................... $ 10.69 $ 10.65 $ 10.58 $ 11.11 $ 10.48
-------- ------- ------- ------- -------
Investment Activities:
Net investment income........................................ 0.56 0.56 0.55 0.51 0.54
Net realized and unrealized gains (losses) from
investments................................................ 0.19 0.04 0.07 (0.50) 0.62
-------- ------- ------- ------- -------
Total from Investment Activities........................... 0.75 0.60 0.62 0.01 1.16
-------- ------- ------- ------- -------
Distributions:
Net investment income........................................ (0.56) (0.56) (0.55) (0.52) (0.53)
In excess of net realized gains.............................. -- -- -- (0.02) --
-------- ------- ------- ------- -------
Total Distributions........................................ (0.56) (0.56) (0.55) (0.54) (0.53)
-------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................ $ 10.88 $ 10.69 $ 10.65 $ 10.58 $ 11.11
======== ======= ======= ======= =======
Total Return................................................... 7.22% 5.69% 6.07% 0.07% 11.43%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................ $133,172 $80,611 $79,993 $93,261 $74,792
Ratio of expenses to average net assets...................... 0.54% 0.57% 0.58% 0.53% 0.55%
Ratio of net investment income to average net assets......... 5.24% 5.17% 5.29% 4.76% 5.14%
Ratio of expenses to average net assets*..................... 0.84% 0.95% 0.91% 0.86% 0.94%
Ratio of net investment income to average net assets*........ 4.94% 4.79% 4.96% 4.43% 4.75%
Portfolio turnover (a)....................................... 7.45% 24.61% 77.69% 16.77% 26.67%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
97
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................... $ 10.72 $ 10.68 $ 10.61 $ 11.13 $ 10.48
------- ------- ------- ------- -------
Investment Activities:
Net investment income......................................... 0.54 0.55 0.53 0.50 0.52
Net realized and unrealized gains (losses) from investments... 0.19 0.03 0.07 (0.48) 0.64
------- ------- ------- ------- -------
Total from Investment Activities............................ 0.73 0.58 0.60 0.02 1.16
------- ------- ------- ------- -------
Distributions:
Net investment income......................................... (0.54) (0.54) (0.51) (0.50) (0.51)
In excess of net investment income............................ -- -- (0.02) (0.02) --
In excess of net realized gains............................... -- -- -- (0.02) --
------- ------- ------- ------- -------
Total Distributions......................................... (0.54) (0.54) (0.53) (0.54) (0.51)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................. $ 10.91 $ 10.72 $ 10.68 $ 10.61 $ 11.13
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)............................ 6.95% 5.44% 5.79% (0.05)% 11.40%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................. $16,114 $16,507 $12,006 $14,883 $13,092
Ratio of expenses to average net assets....................... 0.79% 0.82% 0.82% 0.78% 0.77%
Ratio of net investment income to average net assets.......... 4.96% 4.92% 5.01% 4.63% 4.85%
Ratio of expenses to average net assets*...................... 1.19% 1.30% 1.25% 1.21% 1.25%
Ratio of net investment income to average net assets*......... 4.56% 4.44% 4.58% 4.20% 4.37%
Portfolio turnover (a)........................................ 7.45% 24.61% 77.69% 16.77% 26.67%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
98
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
--------------------------------------
CLASS B
--------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------
1997 1996 1995 1994(a)
------- ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................................... $ 10.79 $10.75 $10.68 $11.31
------- ------ ------ ------
Investment Activities:
Net investment income..................................................... 0.47 0.48 0.43 0.17
Net realized and unrealized gains (losses) from investments............... 0.19 0.03 0.07 (0.62)
------- ------ ------ ------
Total from Investment Activities........................................ 0.66 0.51 0.50 (0.45)
------- ------ ------ ------
Distributions:
Net investment income..................................................... (0.47) (0.47) (0.43) (0.17)
In excess of net investment income........................................ -- -- -- (0.01)
------- ------ ------ ------
Total Distributions..................................................... (0.47) (0.47) (0.43) (0.18)
------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................................................. $ 10.98 $10.79 $10.75 $10.68
======= ====== ====== ======
Total Return (Excludes Sales Charge)........................................ 6.26% 4.79% 5.17% (4.02)% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................................... $14,316 $8,854 $3,209 $2,043
Ratio of expenses to average net assets................................... 1.44% 1.47% 1.48% 1.28% (c)
Ratio of net investment income to average net assets...................... 4.33% 4.27% 4.40% 4.23% (c)
Ratio of expenses to average net assets*.................................. 1.84% 1.95% 1.91% 1.68% (c)
Ratio of net investment income to average net assets*..................... 3.93% 3.79% 3.97% 3.83% (c)
Portfolio turnover (d).................................................... 7.45% 24.61% 77.69% 16.77%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
99
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
-------------------------------
FIDUCIARY
-------------------------------
YEAR MARCH 26, 1996
ENDED THROUGH
JUNE 30, JUNE 30,
1997 1996(a)
----------- ----------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................................... $ 9.93 $ 10.00
--------- --------
Investment Activities:
Net investment income......................................................... 0.49 0.13
Net realized and unrealized gains (losses) from investments................... 0.17 (0.07)
--------- --------
Total from Investment Activities............................................ 0.66 0.06
--------- --------
Distributions:
Net investment income......................................................... (0.49) (0.13)
--------- --------
Total Distributions......................................................... (0.49) (0.13)
--------- --------
NET ASSET VALUE,
END OF PERIOD................................................................. $ 10.10 $ 9.93
========= ========
Total Return.................................................................... 6.81% 0.90%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................................. $ 113,338 $136,041
Ratio of expenses to average net assets....................................... 0.62% 0.71%(d)
Ratio of net investment income to average net assets.......................... 4.91% 4.76%(d)
Ratio of expenses to average net assets*...................................... 0.84% 0.86%(d)
Ratio of net investment income to average net assets*......................... 4.69% 4.61%(d)
Portfolio turnover (e)........................................................ 17.39% 16.72%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Not annualized.
(c) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period March
26, 1996 through June 30, 1996.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
100
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------
YEAR SEVEN MONTHS
ENDED ENDED YEARS ENDED NOVEMBER 30,
JUNE 30, JUNE 30, --------------------------------------------
1997 1996(a) 1995 1994 1993 1992
-------- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................ $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92 $ 9.73
------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income...................... 0.47 0.24 0.50 0.49 0.52 0.55
Net realized and unrealized gains (losses)
from investments......................... 0.17 (0.16) 0.71 (0.79) 0.42 0.26
------- -------- -------- -------- -------- --------
Total from Investment Activities......... 0.64 0.08 1.21 (0.30) 0.94 0.82
------- -------- -------- -------- -------- --------
Distributions:
Net investment income...................... (0.47) (0.24) (0.50) (0.49) (0.52) (0.55)
Net realized gains......................... -- -- -- (0.10) (0.07) (0.07)
------- -------- -------- -------- -------- --------
Total Distributions...................... (0.47) (0.24) (0.50) (0.59) (0.59) (0.62)
------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.............................. $ 10.10 $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92
======= ======== ======== ======== ======== ========
Total Return (Excludes Sales Charge)......... 6.55% 0.84%(b) 13.11% (2.97)% 9.65% 8.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $48,498 $ 53,479 $206,119 $196,820 $196,534 $135,692
Ratio of expenses to average net assets.... 0.87% 0.69%(c) 0.62% 0.65% 0.62% 0.58%
Ratio of net investment income to average
net assets............................... 4.66% 4.71%(c) 5.07% 4.97% 5.07% 5.70%
Ratio of expenses to average net assets*... 1.19% 0.86%(c) 0.77% 0.80% 0.78% 0.83%
Ratio of net investment income to average
net assets*.............................. 4.34% 4.54%(c) 4.92% 4.82% 4.91% 5.45%
Portfolio turnover (d)..................... 17.39% 16.72% 28.00% 24.00% 25.00% 32.00%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Financial highlights for the
periods prior to March 26, 1996 represents the Paragon Louisiana Tax-Free
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $10.67
to $10.00 effective March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
101
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
---------------------------------------------------------
CLASS B
---------------------------------------------------------
YEAR SEVEN MONTHS YEAR SEPTEMBER 16,
ENDED ENDED ENDED 1994 THROUGH
JUNE 30, JUNE 30, NOVEMBER 30, NOVEMBER 30,
1997 1996(a) 1995 1994(b)
-------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................... $ 9.93 $10.09 $ 9.36 $ 9.73
------ ------ ------ -------
Investment Activities:
Net investment income................................. 0.40 0.21 0.42 0.08
Net realized and unrealized gains (losses)
from investments.................................... 0.17 (0.16) 0.73 (0.37)
------ ------ ------ -------
Total from Investment Activities.................... 0.57 0.05 1.15 (0.29)
------ ------ ------ -------
Distributions:
Net investment income................................. (0.40) (0.21) (0.42) (0.08)
------ ------ ------ -------
Total Distributions................................. (0.40) (0.21) (0.42) (0.08)
------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD......................................... $10.10 $ 9.93 $10.09 $ 9.36
====== ====== ====== =======
Total Return (Excludes Sales Charge).................... 5.87% 0.48%(c) 12.52% 2.94%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..................... $3,835 $3,223 $2,115 $ 204
Ratio of expenses to average net assets............... 1.51% 1.50%(d) 1.37% 1.41%(d)
Ratio of net investment income to average net
assets.............................................. 4.02% 3.98%(d) 4.27% 4.45%(d)
Ratio of expenses to average net assets*.............. 1.85% 1.70%(d) 1.52% 1.56%(d)
Ratio of net investment income to average net
assets*............................................. 3.68% 3.78%(d) 4.12% 4.30%(d)
Portfolio turnover (e)................................ 17.39% 16.72% 28.00% 24.00%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Financial highlights for the
periods prior to March 26, 1996 represents the Paragon Louisiana Tax-Free
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $10.70
to $10.00 effective March 26, 1996.
(b) Class B Shares commenced offering on September 16, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
102
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
WEST VIRGINIA
MUNICIPAL BOND FUND
-------------------
FIDUCIARY
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.22
Net realized and unrealized gains from investments..................................... 0.06
-------
Total from Investment Activities..................................................... 0.28
-------
Distributions:
Net investment income.................................................................. (0.22)
-------
Total Distributions.................................................................. (0.22)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.06
=======
Total Return............................................................................. 2.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $96,270
Ratio of expenses to average net assets................................................ 0.59%(c)
Ratio of net investment income to average net assets................................... 5.04%(c)
Ratio of expenses to average net assets*............................................... 0.67%(c)
Ratio of net investment income to average net assets*.................................. 4.96%(c)
Portfolio turnover (d)................................................................. 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
103
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
WEST VIRGINIA
MUNICIPAL BOND FUND
-------------------
CLASS A
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.16
Net realized and unrealized gains from investments..................................... 0.15
-------
Total from Investment Activities..................................................... 0.31
-------
Distributions:
Net investment income.................................................................. (0.16)
-------
Total Distributions.................................................................. (0.16)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.15
=======
Total Return (Excludes Sales Charge)..................................................... 3.08%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 808
Ratio of expenses to average net assets................................................ 0.84%(c)
Ratio of net investment income to average net assets................................... 4.94%(c)
Ratio of expenses to average net assets*............................................... 0.97%(c)
Ratio of net investment income to average net assets*.................................. 4.81%(c)
Portfolio turnover (d)................................................................. 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
104
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
WEST VIRGINIA
MUNICIPAL BOND FUND
-------------------
CLASS B
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.14
Net realized and unrealized gains from investments..................................... 0.12
-------
Total from Investment Activities..................................................... 0.26
-------
Distributions:
Net investment income.................................................................. (0.14)
-------
Total Distributions.................................................................. (0.14)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.12
=======
Total Return (Excludes Sales Charge)..................................................... 2.64%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 614
Ratio of expenses to average net assets................................................ 1.49%(c)
Ratio of net investment income to average net assets................................... 4.08%(c)
Ratio of expenses to average net assets*............................................... 1.62%(c)
Ratio of net investment income to average net assets*.................................. 3.95%(c)
Portfolio turnover (d)................................................................. 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
105
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA
MUNICIPAL BOND FUND
-------------------
FIDUCIARY
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
---------
Investment Activities:
Net investment income.................................................................. 0.23
Net realized and unrealized gains from investments..................................... 0.06
---------
Total from Investment Activities..................................................... 0.29
---------
Distributions:
Net investment income.................................................................. (0.23)
---------
Total Distributions.................................................................. (0.23)
---------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.06
=========
Total Return............................................................................. 2.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 255,755
Ratio of expenses to average net assets................................................ 0.59%(c)
Ratio of net investment income to average net assets................................... 5.09%(c)
Ratio of expenses to average net assets*............................................... 0.66%(c)
Ratio of net investment income to average net assets*.................................. 5.02%(c)
Portfolio turnover (d)................................................................. 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
106
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA
MUNICIPAL BOND FUND
-------------------
CLASS A
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(A)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net investment income.................................................................. 0.15
Net realized and unrealized gains (losses) from investments............................ (0.01)
-------
Total from Investment Activities..................................................... 0.14
-------
Distributions:
Net investment income.................................................................. (0.15)
-------
Total Distributions.................................................................. (0.15)
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 9.99
=======
Total Return (Excludes Sales Charge)..................................................... 1.40%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ 1,500
Ratio of expenses to average net assets................................................ 0.85%(c)
Ratio of net investment income to average net assets................................... 4.90%(c)
Ratio of expenses to average net assets*............................................... 0.96%(c)
Ratio of net investment income to average net assets*.................................. 4.79%(c)
Portfolio turnover (d)................................................................. 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
107
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA
MUNICIPAL BOND FUND
-------------------
CLASS B
-------------------
JANUARY 20, 1997
THROUGH
JUNE 30,
1997(a)
-------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................... $ 10.00
-------
Investment Activities:
Net realized and unrealized gains from investments..................................... 0.09
-------
Total from Investment Activities..................................................... 0.09
-------
NET ASSET VALUE,
END OF PERIOD.......................................................................... $ 10.09
=======
Total Return (Excludes Sales Charge)..................................................... 0.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................................................... $ --(c)
Ratio of expenses to average net assets................................................ --(d)
Ratio of net investment income to average net assets................................... --(d)
Ratio of expenses to average net assets*............................................... --(d)
Ratio of net investment income to average net assets*.................................. --(d)
Portfolio turnover (e)................................................................. 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Amount is less than $1,000.
(d) Since net assets are less than $1,000, ratios have not been presented.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
108
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Intermediate Tax-Free Bond Fund, the Municipal Income Fund , the Kentucky
Municipal Bond Fund, the Ohio Municipal Bond Fund, the Louisiana Municipal Bond
Fund, the West Virginia Municipal Bond Fund and the Arizona Municipal Bond Fund
(seven series of The One Group Family of Mutual Funds), including the schedules
of portfolio investments, as of June 30, 1997, and the related statements of
operations, statements of changes in net assets and the financial highlights for
each period presented except as noted in the next paragraph. These financial
statements and financial highlights are the responsibility of The One Group
Family of Mutual Funds' management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based on our audits.
The Kentucky Municipal Bond Fund's financial highlights for the period from
February 1, 1994 to January 19, 1995 and the period from March 12, 1993
(commencement of operations) to January 31, 1994 were audited by other auditors
whose report dated April 6, 1995 expressed an unqualified opinion on those
financial statements and financial highlights. The Louisiana Municipal Bond
Fund's statement of changes in net assets for the year ended November 30, 1995
and the financial highlights for each of the four years in the period ended
November 30, 1995 were audited by other auditors, whose report dated January 19,
1996 expressed an unqualified opinion on those financial statements and
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above, except as noted in the second paragraph present fairly, in all material
respects, the financial position of the Intermediate Tax-Free Bond Fund, the
Municipal Income Fund, the Kentucky Municipal Bond Fund, the Ohio Municipal Bond
Fund, the Louisiana Municipal Bond Fund, the West Virginia Municipal Bond Fund
and the Arizona Municipal Bond Fund as of June 30, 1997, the results of their
operations, the changes in their net assets and the financial highlights for the
periods indicated herein, in conformity with generally accepted accounting
principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
109
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
U.S. Treasury Securities Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (21.4%):
U.S. Treasury Bills (3.7%):
$ 50,000 11/20/97 (b)........................ $ 48,959
55,000 3/5/98 (b).......................... 52,977
---------
101,936
---------
U.S. Treasury Notes (17.7%):
50,000 5.88%, 9/2/97 (b)................... 50,014
75,000 5.88%, 9/2/97....................... 75,057
25,000 5.75%, 9/30/97 (b).................. 25,001
25,000 8.75%, 10/15/97..................... 25,230
25,000 5.63%, 10/31/97 (b)................. 25,013
165,000 7.38%, 11/15/97 (b)................. 166,053
75,000 6.00%, 11/30/97 (b)................. 75,127
50,000 6.00%, 12/31/97 (b)................. 50,068
---------
491,563
---------
Total U.S. Treasury Obligations 593,499
---------
REPURCHASE AGREEMENTS (78.8%):
112,000 Aubrey G. Lanston & Co., 5.90%,
7/1/97 (Collateralized by $116,678
various U.S. Treasury Securities,
0.00% - 5.50%, 12/4/97 - 2/28/99,
market value - $114,242).......... 112,000
100,000 Barclays De Zoette Wedd, 5.90%,
7/1/97 (Collateralized by $70,382
various U.S. Treasury Securities,
8.75% - 11.25%, 2/15/15 - 5/15/17,
market-value $102,001)............ 100,000
100,000 CIBC/Wood Gundy, 5.95%, 7/1/97
(Collateralized by $100,000
various U.S. Treasury Notes,
11.13% - 12.50%,
8/15/03 - 8/15/14, market
value - $103,207)................. 100,000
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
REPURCHASE AGREEMENTS, CONTINUED:
$ 675,000 Deutsche, Morgan, Grenfell, 5.90%,
7/1/97 (Collateralized by $679,813
various U.S. Treasury Securities,
0.00% - 12.00%, 2/15/98 - 2/15/20,
market value - $688,501).......... $ 675,000
100,000 Donaldson, Lufkin & Jenerette,
5.90%, 7/1/97 (Collateralized by
$105,411 U.S. Treasury Notes,
5.88%, 11/15/05, market
value - $102,000)................. 100,000
105,000 Goldman Sachs, 5.88%, 7/1/97
(Collateralized by $105,162
various U.S. Treasury Securities,
6.63%, 5/15/07 - 2/15/27, market
value - $107,101)................. 105,000
113,989 HSBC, 5.90%, 7/1/97 (Collateralized
by $112,125 various U.S. Treasury
Notes, 5.50% - 8.50%,
7/15/97 - 5/15/07, market
value - $116,274)................. 113,989
675,000 J. P. Morgan & Co., Inc., 6.00%,
7/1/97 (Collateralized by
$1,061,927 various U.S. Treasury
Securities, 0.00% - 8.13%,
4/30/01 - 8/15/23, market
value - $688,500)................. 675,000
100,000 Lehman Brothers Holdings, Inc.,
6.00%, 7/1/97 (Collateralized by
$175,617 various U.S. Treasury
Securities, 0.00% - 11.75%,
11/15/97 - 11/15/14, market
value - $102,001)................. 100,000
105,000 Prudential Securities, Inc., 5.90%,
7/1/97 (Collateralized by cash in
the amount of $105,000)........... 105,000
---------
Total Repurchase Agreements 2,185,989
---------
Total (Amortized Cost--$2,779,488) (a) $2,779,488
=========
</TABLE>
- ------------
Percentages indicated are based on net assets of $2,773,589.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Prime Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
COMMERCIAL PAPER (65.9%):
Automotive (5.2%):
$ 43,885 American Honda Finance Corp., 5.63%,
7/28/97........................... $ 43,700
42,000 General Motors Acceptance Corp.,
5.42%, 7/22/97.................... 41,867
41,210 General Motors Acceptance Corp.,
5.43%, 7/30/97.................... 41,030
25,000 General Motors Acceptance Corp.,
5.86%, 10/10/97................... 24,589
---------
151,186
---------
Banking (8.1%):
50,000 Banco Nacional de Comercio Exterior,
S.N.C., 5.55%, 9/17/97............ 49,399
25,000 Banco Nacional de Comercio Exterior,
S.N.C., 5.64%, 12/1/97............ 24,401
25,000 Banco Rio de la Plata S.A., 5.44%,
10/27/97.......................... 24,554
38,000 Banco Rio de la Plata S.A., 5.36%,
10/31/97.......................... 37,310
50,000 Bankers Trust New York Corp., 5.42%,
7/15/97........................... 49,894
25,000 Bankers Trust New York Corp., 6.11%,
3/25/98........................... 24,993
22,500 Galicia Funding Corp., 5.58%,
9/16/97........................... 22,231
---------
232,782
---------
Brokerage Services (3.9%):
50,000 Lehman Brothers Holdings, Inc.,
5.64%, 7/9/97..................... 49,938
19,991 Sumitomo Bank Capital Markets,
5.68%, 7/14/97.................... 19,950
42,000 Sumitomo Bank Capital Markets,
5.68%, 7/18/97.................... 41,887
---------
111,775
---------
Computer Software (4.3%):
13,000 CSC Enterprises, 5.57%, 7/7/97...... 12,988
30,500 CSC Enterprises, 5.65%, 7/11/97..... 30,452
23,500 CSC Enterprises, 5.63%, 7/21/97..... 23,426
30,000 CSC Enterprises, 5.61%, 8/12/97..... 29,804
15,000 CSC Enterprises, 5.60%, 8/19/97..... 14,886
13,550 CSC Enterprises, 5.62%, 9/11/97..... 13,398
---------
124,954
---------
Construction (2.5%):
25,000 Cemex, S.A. de C.V., 5.65%,
8/6/97............................ 24,859
15,000 Cemex, S.A. de C.V., 5.59%,
8/19/97........................... 14,886
14,000 Cemex, S.A. de C.V., 5.59%,
8/20/97........................... 13,891
20,000 Cemex, S.A. de C.V., 5.59%,
8/21/97........................... 19,842
---------
73,478
---------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
COMMERCIAL PAPER, CONTINUED:
Financial Services (25.3%):
$ 18,413 Banner Receivables Corp., 5.69%,
7/2/97............................ $ 18,410
46,297 Banner Receivables Corp., 5.68%,
8/4/97............................ 46,049
45,797 Banner Receivables Corp., 5.75%,
8/14/97........................... 45,475
32,499 Banner Receivables Corp., 5.68%,
9/5/97............................ 32,161
50,000 Broadway Capital, 5.73%, 7/31/97.... 49,761
33,206 Broadway Capital, 5.72%, 8/5/97..... 33,021
31,765 Broadway Capital, 5.67%, 9/2/97..... 31,450
50,000 Corporate Receivables Corp., 5.62%,
7/3/97............................ 49,984
50,000 CXC, Inc., 5.62%, 7/8/97............ 49,945
30,375 Falcon Asset Securitization Corp.,
5.62%, 7/21/97.................... 30,280
40,755 Gotham Funding Corp., 5.43%,
7/17/97........................... 40,657
25,000 Gotham Funding Corp., 5.72%,
7/18/97........................... 24,932
25,000 Gotham Funding Corp., 5.47%,
7/24/97........................... 24,913
37,553 Gotham Funding Corp., 5.70%,
8/1/97............................ 37,369
25,000 Gotham Funding Corp., 5.67%,
8/5/97............................ 24,862
65,000 Old Line Funding Corp., 5.62%,
7/1/97............................ 64,999
26,500 Old Line Funding Corp., 5.67%,
7/14/97........................... 26,446
25,000 WCP Funding, Inc., 5.66%, 7/2/97.... 24,996
25,000 WCP Funding, Inc., 5.63%, 7/7/97.... 24,977
25,000 WCP Funding, Inc., 5.63%, 7/10/97... 24,965
25,000 WCP Funding, Inc., 5.58%, 7/25/97... 24,907
---------
730,559
---------
Gas & Electric Utility (2.8%):
32,382 AES Shady Point, Inc., 5.60%,
7/18/97........................... 32,296
20,991 Cogentrix of Richmond, Inc., 5.64%,
7/10/97........................... 20,961
27,762 Cogentrix of Richmond, Inc., 5.65%,
7/16/97........................... 27,697
---------
80,954
---------
Industrial Goods & Services (2.1%):
12,000 Akzo Nobel, Inc., 5.63%, 8/7/97..... 11,931
10,000 Akzo Nobel, Inc., 5.62%, 8/29/97.... 9,908
10,000 Hosokawa Micron International, Inc.,
5.70%, 7/8/97..................... 9,989
10,000 Hosokawa Micron International, Inc.,
5.65%, 8/15/97.................... 9,929
19,500 Hosokawa Micron International, Inc.,
5.71%, 8/26/97.................... 19,327
---------
61,084
---------
</TABLE>
Continued
9
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Prime Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
COMMERCIAL PAPER, CONTINUED:
Leasing (1.0%):
$ 29,400 International Lease Finance Corp.,
5.27%, 7/14/97.................... $ 29,344
---------
Office Equipment & Services (1.5%):
20,000 Xerox Mexicana SA de CV, 5.57%,
7/7/97............................ 19,981
24,500 Xerox Mexicana SA de CV, 5.59%,
7/24/97........................... 24,413
---------
44,394
---------
Oil & Gas Exploration (1.6%):
25,000 Pemex Capital, Inc., 5.71%,
9/11/97........................... 24,714
23,000 Petroleo Brasileiro SA, Series C,
5.68%, 10/2/97.................... 22,663
---------
47,377
---------
Printing & Publishing (0.8%):
22,000 Tribune Co., 5.70%, 7/29/97......... 21,902
---------
Real Estate (6.8%):
19,264 75 State Street Capital Corp.,
5.64%,
7/16/97........................... 19,219
25,140 75 State Street Capital Corp.,
5.65%,
7/22/97........................... 25,057
50,000 75 State Street Capital Corp.,
5.63%,
7/23/97........................... 49,828
31,802 75 State Street Capital Corp.,
5.64%,
7/25/97........................... 31,682
20,000 75 State Street Capital Corp.,
5.67%,
7/29/97........................... 19,912
25,000 Countrywide Home Loans, 5.67%,
8/11/97........................... 24,839
10,000 SRD Finance, Inc., 5.63%, 7/17/97... 9,975
17,000 SRD Finance, Inc., 5.64%, 7/17/97... 16,957
---------
197,469
---------
Total Commercial Paper 1,907,258
---------
CORPORATE NOTES & BONDS (4.6%):
Banking (0.9%):
25,000 PNC Bank N.A., 6.05%, 5/28/98....... 24,978
---------
Brokerage Services (1.4%):
25,000 Bear Stearns Co., Inc., 6.30%,
4/16/98........................... 25,000
15,000 Credit Suisse First Boston, 6.12%,
3/31/98........................... 14,987
---------
39,987
---------
Computer Hardware (2.3%):
43,500 IBM Credit Corp., 5.75%, 1/20/98.... 43,494
25,000 IBM Credit Corp., 6.07%, 5/19/98.... 25,000
---------
68,494
---------
Total Corporate Notes & Bonds 133,459
---------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ----------
FUNDING AGREEMENTS (11.0%):
$ 50,000 Allstate Life Insurance Co., 5.90%,
8/29/97*.......................... $ 50,000
150,000 General American Life Insurance Co.,
5.89%, 2/19/98*................... 150,001
60,000 Peoples Security Life Insurance Co.,
5.86%, 4/22/97*................... 60,000
60,000 Providian Life & Health Insurance
Co., 5.84%, 11/1/98*.............. 60,000
---------
Total Funding Agreements 320,001
---------
U.S. GOVERNMENT AGENCY SECURITIES (1.7%):
Student Loan Marketing Assoc. (1.7%):
50,000 5.26%, 9/28/98*..................... 50,000
---------
Total U.S. Government Agency Securities 50,000
---------
YANKEE & EURODOLLAR (11.5%):
Banking (11.5%):
50,000 ABN Amro Bank NV, 6.27%, 4/17/98.... 49,989
50,000 Bank of Nova Scotia - SCIOTABANK,
5.95%, 6/30/98.................... 49,971
22,000 Deutsche Bank A.G., 6.20%, 4/8/98... 22,016
23,500 Dresdner Bank A.G., 5.85%,
2/13/98........................... 23,502
12,000 Rabobank Nederland, 5.75%, 2/3/98... 11,978
25,000 Royal Bank of Canada, 6.08%,
5/20/98........................... 24,994
25,000 Royal Bank Of Canada, 6.05%,
6/8/98............................ 24,989
50,000 Societe Generale, 6.10%, 9/10/97.... 50,031
50,000 Societe Generale, 5.85%, 3/3/98..... 49,990
25,000 Societe Generale, 6.18%, 5/6/98..... 24,994
---------
Total Yankee & Eurodollar 332,454
---------
REPURCHASE AGREEMENTS (4.1%):
119,096 Prudential Securities, 6.05%, 7/1/97
(Collateralized by $142,576
various U.S. Government
Securities, 0.00% - 6.62%,
1/13/98 - 7/1/34, market
value - $122,496)................. 119,096
---------
Total Repurchase Agreements 119,096
---------
Total (Amortized Cost--$2,862,268) (a) $2,862,268
=========
</TABLE>
- ------------
Percentages indicated are based on net assets of $2,897,032.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market rates. The
rate reflected on the Schedule of Portfolio Investments is the rate in effect
at June 30, 1997.
See notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
<S> <C> <C>
ANTICIPATION NOTES (8.3%):
Michigan (3.9%):
$20,000 State Municipal Bond Authority,
Series A, 4.50%, 7/3/97........... $ 20,001
--------
Ohio (0.3%):
1,750 Richland County, Clear Fork Valley
Local School District, BAN, 4.20%,
9/25/97........................... 1,753
--------
Puerto Rico (2.5%):
13,000 Commonwealth of Puerto Rico, Trans-
Series 97A, 4.00%, 7/30/97........ 13,007
--------
Texas (1.6%):
8,000 State Tax & Revenue, 4.75%,
8/29/97........................... 8,015
--------
Total Anticipation Notes 42,776
--------
DAILY DEMAND NOTES (7.3%):
Alabama (1.0%):
1,400 Phenix City, IDR for Mead, AMT,
4.15%, 3/1/31, LOC: Bayerische
Landesbank*....................... 1,400
3,800 Phenix City, IDR for Mead, Series
93-A, AMT, 4.15%, 6/1/28, LOC:
Toronto Dominion Bank*............ 3,800
--------
5,200
--------
Idaho (1.8%):
9,345 Health Facility Authority Revenue,
St. Lukes Regional Medical Center
Project, 4.10%, 5/1/22, LOC:
Credit Suisse*.................... 9,345
--------
New York (1.0%):
1,000 New York City Municipal Water
Finance, 5.50%, 6/15/25, FGIC*.... 1,000
1,900 New York City, GO, Series B, 5.50%,
10/1/20, FGIC*.................... 1,900
2,100 New York City, GO, Series B, 5.50%,
10/1/22, FGIC*.................... 2,100
--------
5,000
--------
North Dakota (0.8%):
4,300 Grand Forks Health Care Revenue,
United Hospital Obligation Group,
Series 96A, 4.15%, 12/1/25, LOC:
LaSalle National Bank*............ 4,300
--------
Ohio (0.1%):
600 State Air Quality Development
Authority, Cincinnati Gas &
Electric, 5.50%, 12/1/15, LOC:
J.P. Morgan*...................... 600
--------
Texas (2.6%):
10,515 Brazos River Authority, PCR, Texas
Utilities Electric Co. Project,
AMT, 5.55%, 6/1/30, AMBAC*........ 10,515
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
DAILY DEMAND NOTES, CONTINUED:
Texas, continued:
$ 2,500 Brazos River Authority, PCR, Texas
Utilities Electric Co., Series B,
AMT, 5.55%, 6/1/30, LOC: Union
Bank of Switzerland*.............. $ 2,500
100 Grapevine Industrial Development
Corp., Multiple Mode Revenue
Bonds, Series A4, 4.10%, 12/1/24,
LOC: Morgan Guaranty*............. 100
300 North Central Health Facility
Development Corp. Revenue,
Presbyterian Medical Center,
Series D, 4.10%, 12/1/15, MBIA*... 300
--------
13,415
--------
Total Daily Demand Notes 37,860
--------
MONTHLY DEMAND NOTES (3.0%):
Arizona (0.4%):
2,000 Chandler Industrial Development
Authority, Parsons Municipal
Project, 4.10%, 12/15/09, LOC:
National Westminister*............ 2,000
--------
Indiana (2.6%):
13,700 Gary Environmental Improvement
Revenue, U.S. Steel Corp. Project,
4.10%, 7/15/02, LOC: Bank of Nova
Scotia*........................... 13,700
--------
Total Monthly Demand Notes..................... 15,700
--------
MUNICIPAL NOTES (4.7%):
Colorado (2.0%):
10,000 State General Fund Series A, 4.50%,
6/26/98........................... 10,063
--------
Idaho (0.5%):
2,500 State Tansportation, 4.63%,
6/30/98........................... 2,518
--------
Wisconsin (2.2%):
11,405 Green Bay, Area Public School
District, 3.84%, 2/2/98........... 11,407
--------
Total Municipal Notes.......................... 23,988
--------
PUT BONDS (7.1%):
Arizona (0.7%):
3,600 Cochise County, PCR, Arizona
Electric Power Corp., Series A,
AMT, 3.50%, 9/1/24................ 3,600
--------
Connecticut (0.9%):
4,500 Special Assessment, Compensation
Unemployment Revenue Bonds
(CURBS), 3.90%, 11/15/01, FGIC.... 4,500
--------
</TABLE>
Continued
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
PUT BONDS, CONTINUED:
Georgia (0.8%):
$ 4,000 Burke County Development Authority,
Oglethorpe Power, Series A, 3.60%,
12/1/97, AMBAC.................... $ 4,000
--------
Missouri (0.8%):
4,175 State Environmental Improvement &
Energy, Union Electric Co., Series
B, 3.95%, 6/1/14, LOC: Union Bank
of Switzerland.................... 4,175
--------
North Dakota (0.4%):
2,200 Mercer County, Solid Waste Disposal
Revenue, National Rural Utility
Power Project, Series U, 3.80%,
12/1/97........................... 2,200
--------
Ohio (2.1%):
11,000 Housing Finance Agency, Series 1997
A-2, AMT, 3.65%, 3/2/98........... 11,000
--------
Oregon (0.9%):
4,500 Oregon Housing & Community, Series
96-R, AMT, 3.65%, 12/11/97........ 4,500
--------
Wyoming (0.5%):
2,500 Uinta County, PCR, Amoco Standard
Oil Co., 3.90%, 12/1/12........... 2,500
--------
Total Put Bonds 36,475
--------
TAX FREE COMMERCIAL PAPER (7.7%):
Alabama (1.1%):
5,500 Phenix City, Industrial Development,
Environmental Improvement Revenue,
Mead, 3.80%, 7/7/97, LOC: ABN
AMRO.............................. 5,500
--------
Arizona (0.6%):
3,100 Mesa, Municipal Development Corp.,
Series A, 3.70%, 9/9/97, LOC: West
Deutche Landes Bank............... 3,100
--------
Michigan (1.0%):
5,080 State Building Authority, 3.80%,
9/4/97, LOC: Canadian Imperial
Commerce Bank..................... 5,080
--------
Ohio (1.5%):
2,100 Air Quality Development Authority,
CEI Co., Series B, 3.85%, 8/1/97,
FGIC.............................. 2,100
5,500 Water Development Authority, CEI
Co., 3.80%, 8/13/97, FGIC......... 5,500
--------
7,600
--------
Texas (2.6%):
5,000 Brazos River Authority, PCR, Texas
Utilities, 3.85%, 10/30/97,
LOC: CIBC......................... 5,000
5,900 Public Financing Authority, GO,
3.63%, 8/14/97.................... 5,900
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
TAX FREE COMMERCIAL PAPER, CONTINUED:
Texas, continued:
$ 3,100 Public Financing Authority, GO,
Series 93A, 3.20%, 8/11/97........ $ 3,100
--------
14,000
--------
West Virginia (0.9%):
4,500 State Public Authority Energy
Revenue, Morgantown Assoc.
Project, AMT, 3.85%, 3/1/17, LOC:
Swiss Bank........................ 4,500
--------
Total Tax Free Commercial Paper 39,780
--------
WEEKLY DEMAND NOTES (63.6%):
Alaska (0.9%):
4,500 Anchorage, Higher Education Revenue,
Alaska Pacific University, 4.25%,
7/1/17, LOC: Seattle-First
National Bank*.................... 4,500
--------
Arkansas (1.6%):
8,100 Clark County, Solid Waste Disposal
Revenue, Reynolds Metals Co.
Project, AMT, 4.20%, 8/1/22, LOC:
Trust Co. Bank*................... 8,100
--------
Colorado (1.9%):
3,000 Housing Finance Authority, Pool I,
Series B, Coventry Village, 4.15%,
10/15/16, FNMA*................... 3,000
2,500 Student Obligation Bond Authority,
90-A, AMT, 4.25%, 9/1/24,
Sallie Mae*....................... 2,500
4,400 Student Obligation Bond Authority,
AMT, 4.25%, 7/1/20, Sallie Mae*... 4,400
--------
9,900
--------
Florida (1.9%):
10,000 State Housing Finance Authority,
Woodlands Apt. Project 85S, 4.15%,
12/1/17, LOC: Citibank*........... 10,000
--------
Georgia (2.1%):
7,000 De Kalb Private Hospital Authority
Revenue, Egleston Children's
Hospital, Series A, 4.20%, 3/1/24,
LOC: SunTrust Bank*............... 7,000
3,735 Gwinnett County Housing Authority,
Herrington Woods Apts., Series
96A, AMT, 4.25%, 9/15/26, LOC:
KeyBank*.......................... 3,735
--------
10,735
--------
Illinois (9.4%):
11,300 Chicago O'Hare International Airport
Revenue, Second Lien, Series B,
AMT, 4.20%, 1/1/18, LOC: Societe
Generale*......................... 11,300
</TABLE>
Continued
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Illinois, continued:
$ 3,700 Development Authority, Presbyterian
Home Lake Forrest Place Project,
4.15%, 9/1/31, LOC: LaSalle
National Bank*.................... $ 3,700
5,200 Development Finance Authority
Revenue, Aurora Central Catholic
High School, 4.15%, 4/1/24, LOC:
Northern Trust*................... 5,200
4,500 Development Finance Authority
Revenue, Roosevelt University
Project, 4.15%, 4/1/25, LOC:
American National Bank*........... 4,500
5,900 Development Finance Authority
Revenue, Special Facility, Little
City Foundation, 4.15%, 2/1/19,
LOC: LaSalle National Bank*....... 5,900
1,625 Development Finance Authority
Revenue, St. Paul's House Project,
4.15%, 2/1/25, LOC: LaSalle
National Bank*.................... 1,625
3,000 Health Facilities Authority Revenue,
Washington & Jane Smith Home,
4.25%, 7/1/26, LOC: Comerica
Bank*............................. 3,000
7,640 Jacksonville Industrial Project
Revenue, AGI Inc. Project, AMT,
4.40%, 2/1/26, LOC: Bank of
America*.......................... 7,640
1,230 Lombard IDR, Chicago Roll Co.
Project, 4.75%, 2/1/10, LOC:
American National Bank*........... 1,230
2,000 Orland Hills Multi-Family Mortgage
Revenue, 88th Avenue Project,
4.15%, 12/1/04, LOC: LaSalle
National Bank*.................... 2,000
2,500 Regional Transport Authority Trust
Receipts, 4.30%, 6/1/25, LOC:
Societe Generale*................. 2,500
--------
48,595
--------
Indiana (8.2%):
4,000 City of Madison, IDR, Series 1997,
Century Tube Corp. Project,
4.40%, 3/1/07, LOC: Bank of
Tokyo-Mitsubishi, Ltd.*........... 4,000
14,800 Health Facility Financing Authority,
Rehabilitation Hospital, Inc.,
4.20%, 11/1/20, LOC: National Bank
of Detroit*....................... 14,800
5,600 Indianapolis Economic Development
Revenue, Children's Museum
Project, 4.15%, 10/1/25, LOC:
National Bank of Detroit*......... 5,600
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
WEEKLY DEMAND NOTES, CONTINUED:
Indiana, continued:
$ 3,600 Jasper Economic Development Revenue,
Best Chairs, Inc. Project, AMT,
4.40%, 3/1/19, LOC:
PNC Bank*......................... $ 3,600
14,035 Rockport, PCR, Indiana & Michigan
Electric Co., Series A, 4.20%,
8/1/14, LOC: Swiss Bank*.......... 14,035
--------
42,035
--------
Kentucky (0.5%):
2,500 Mayfield, League of Cities Lease
Finance Program 96, 4.30%, 7/1/26,
LOC: PNC Bank*.................... 2,500
--------
Michigan (6.0%):
16,800 Higher Education Student Loan,
Series B, AMT, 4.25%, 10/1/13,
AMBAC*............................ 16,800
800 State Strategic Fund, Limited
Obligation Revenue, Environmental
Quality, AMT, 4.30%, 5/1/05, LOC:
Comerica Bank*.................... 800
1,560 State Strategic Fund, Limited
Obligation, Wayne Disposal Oakland
Project, AMT, 4.30%, 3/1/05, LOC:
Credit Suisse-First Boston*....... 1,560
11,800 Wayne County Airport Revenue
(Detriot Airport), Series B, AMT,
4.20%, 12/1/16, LOC: Bayerische
Landesbank*....................... 11,800
--------
30,960
--------
Nevada (5.1%):
10,000 Clark County, IDR, Nevada Power Co.
Project, Series A, 4.30%, 10/1/30,
LOC: Barclays Bank*............... 10,000
5,000 Clark County, Limited Tax GO, 1996
Las Vegas Convention Trust
Receipts, 4.30%, 7/1/26, FSA*..... 5,000
2,215 Clark County, PCR, Nevada Power Co.
Project, Series C, 4.20%, 10/1/30,
LOC: Barclays Bank*............... 2,215
9,300 Lancaster County, Hospital
Authority, Bryan Memorial
Hospital, 4.45%, 6/1/12, MBIA*.... 9,300
--------
26,515
--------
</TABLE>
Continued
13
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<S> <C> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Ohio (7.5%):
$ 6,700 Cuyahoga County, Cleveland Clinic
Foundation, 4.05%, 1/1/26, LOC:
Morgan Guaranty*.................. $ 6,700
3,000 Hamilton County, Health Alliance of
Cincinnati, Series B, 4.15%,
1/1/18, MBIA*..................... 3,000
5,000 Hamilton County, Health Alliance of
Cincinnati, Series F, 4.05%,
1/1/18, MBIA*..................... 5,000
6,300 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, AMT, 4.20%, 4/1/29,
LOC: Societe Generale*............ 6,300
2,800 State Air Quality Development
Revenue Bond, Timken Co. Project,
AMT, 4.15%, 6/1/01, LOC: Credit
Suisse*........................... 2,800
5,500 State Water Development Authority
Revenue, Timken Co. Project,
4.15%, 5/1/07, LOC: Wachovia
Bank*............................. 5,500
4,625 Student Loan Funding Corp., 4.15%,
12/29/98, LOC: Bank of America*... 4,625
2,800 Student Loan Funding Corp., Loan
Revenue, Series A-3, AMT, 4.30%,
1/1/07, LOC: National
Westminister*..................... 2,800
2,000 Water Development Authority, Timken
Co. Project, 4.15%, 6/1/01, LOC:
Credit Suisse*.................... 2,000
--------
38,725
--------
Pennsylvania (0.8%):
4,000 Allegheny County, Hospital Revenue,
General Hospital Obligation Group,
Series B, 4.15%, 9/1/20, LOC:
Morgan Guaranty*.................. 4,000
--------
Rhode Island (1.0%):
5,000 State Student Loan Revenue Bond #3,
AMT, 4.25%, 6/1/26, LOC: National
Westminister*..................... 5,000
--------
South Carolina (0.3%):
1,700 Cherokee County, Industrial Revenue,
Oshkosh Truck Corp. Project, AMT,
4.35%, 8/1/19, LOC: Bank of Nova
Scotia*........................... 1,700
--------
Tennessee (0.7%):
3,800 Oak Ridge Industrial Development
Board, Economic Development
Revenue, Limited Obligation,
4.20%, 5/1/09, LOC: ABN AMRO*..... 3,800
--------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ --------
WEEKLY DEMAND NOTES, CONTINUED:
Texas (10.5%):
$14,100 Capital Health Facilities
Development Corp., Island on Lake
Travis Ltd. Project, AMT, 4.25%,
12/1/16, LOC: Credit Suisse*...... $ 14,100
6,500 Lower Colorado River Authority,
Texas Electricity Revenue, 4.15%,
1/1/13, MBIA*..................... 6,500
10,000 Panhandle Plains Higher Education
Inc., Student Loan Revenue, Series
A, 4.25%, 6/1/21, LOC: Sallie
Mae*.............................. 10,000
8,400 Panhandle Plains Higher Education
Inc., Student Loan Revenue, Series
A, AMT, 4.25%, 6/1/23, LOC: Sallie
Mae*.............................. 8,400
14,900 San Antonio Health Facilities
Development Corp., Hospital
Revenue, Warm Springs
Rehabilitation Foundation, Series
A, 4.30%, 6/1/08, LOC:
NationsBank*...................... 14,900
--------
53,900
--------
Utah (1.3%):
6,600 Salt Lake City Airport Revenue, Sub-
Series A, 4.20%, 6/1/98, LOC:
Credit Suisse*.................... 6,600
--------
Washington (2.6%):
4,425 Pierce County, NN Baking Co., AMT,
4.30%, 7/1/03, LOC: U.S. Bank of
Washington*....................... 4,425
6,600 Port Vancouver, United Grain Corp.,
Series 84A, 4.35%, 12/1/09, LOC:
Sumitomo Bank, Ltd.*.............. 6,600
2,500 State GO, Municipal Securities,
Trust Receipts, 4.30%, 7/1/16*,
LOC: Societe General.............. 2,500
--------
13,525
--------
West Virginia (1.3%):
2,300 Marion County Community Solid Waste
Disposal Facility Revenue, Grant
Town, AMT, 4.30%, 10/1/17, LOC:
National Westminster*............. 2,300
4,600 Marion County, Community Solid Waste
Disposal Facility Revenue, Grant
Town, 4.25%, 10/1/17, LOC:
National Westminster*............. 4,600
--------
6,900
--------
Total Weekly Demand Notes 327,990
--------
Total (Amortized Cost--$524,569) (a) $524,569
========
</TABLE>
Continued
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
- ------------
Percentages indicated are based on net assets of $515,605.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market rates. The
rate reflected on the Schedule of Portfolio Investments is the rate in effect
at June 30, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BAN Bond Anticipation Notes
FGIC Insured by Financial Guaranty Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Financial Security Assurance
GO General Obligation
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
</TABLE>
See notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<S> <C> <C>
ANTICIPATION NOTES (14.2%):
Ohio (14.2%):
$ 675 Butler County, BAN, 4.10%,
3/20/98.......................... $ 677
2,000 Cleveland, 1996-A Cleveland Stadium
Project, BAN, 4.50%, 10/15/97.... 2,004
1,000 Dublin City School District Notes,
4.33%, 5/13/98................... 1,003
2,090 Kent City Service Center, BAN,
4.50%, 4/9/98.................... 2,096
2,175 Pickerington, Limited Tax GO, BAN,
4.13%, 6/26/98................... 2,179
750 Richland County, Clear Fork Valley
Local School District, BAN,
4.20%, 9/25/97................... 751
600 Union County, Limited Tax GO, BAN,
4.17%, 6/25/98................... 602
1,500 University of Cincinnati, BAN,
4.25%, 8/28/97................... 1,501
1,500 University of Cincinnati, General
Receipts, BAN, 4.25%, 3/19/98.... 1,506
-------
Total Anticipation Notes 12,319
-------
DAILY DEMAND NOTES (12.5%):
Ohio (12.5%):
1,300 Franklin County, Franciscan
Sister-- St. Anthony Health
System, 4.00%, 7/1/15, LOC:
Chemical Bank*................... 1,300
200 Paulding, Solid Waste, Lafarge
Corp., 4.00%, 8/1/26, LOC: Royal
Bank of Canada*.................. 200
4,000 State Air Quality Development
Authority, Cincinnati Gas &
Electric Co., 5.50%, 12/1/15,
LOC: Union Bank of
Switzerland*..................... 4,000
4,000 State PCR, British Petroleum,
4.05%, 5/1/22*................... 4,000
900 Twinsburg, IDR, United Stationers
Project, 4.40%, 12/1/11, LOC: PNC
Bank*............................ 900
500 Water Development Authority, Series
B, Mead Paper Co., 4.00%,
11/1/15, LOC: Swiss Bank*........ 500
-------
Total Daily Demand Notes 10,900
-------
MONTHLY DEMAND NOTES (6.7%):
Ohio (6.7%):
5,800 Housing Finance Agency, Kenwood
Retirement Project, 3.70%,
12/1/15, LOC: Morgan Guaranty*... 5,800
-------
Total Monthly Demand Notes 5,800
-------
MUNICIPAL BONDS (1.2%):
Ohio (1.2%):
1,000 Columbus, GO, 6.75%, 7/1/97........ 1,000
-------
Total Municipal Bonds 1,000
--------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- --------
PUT BOND (4.6%):
Ohio (4.6%):
$ 4,000 Housing Finance Agency, Series 1997
A-2, AMT, 3.65%, 3/2/98, AIG:
Guaranteed Investment Contract... $ 4,000
-------
Total Put Bond 4,000
-------
TAX FREE COMMERCIAL PAPER (4.6%):
Ohio (2.3%):
1,000 Air Quality Development Authority,
CEI Co., Series B, 3.80%,
8/13/97, FGIC.................... 1,000
1,000 Water Development Authority, CEI
Co., 3.70%, 7/15/97, FGIC........ 1,000
-------
2,000
-------
Puerto Rico (2.3%):
2,000 Government Development Bank, 3.75%,
7/15/97.......................... 2,000
-------
Total Tax Free Commercial Paper 4,000
-------
WEEKLY DEMAND NOTES (54.4%):
Ohio (54.4%):
1,000 Butler County, Meadow Ridge
Apartments, AMT, 4.15%, 11/15/30,
FNMA Collateral Agreement*....... 1,000
2,000 Butler County, Middletown Hospital
Facilities, 4.15%, 11/1/17, LOC:
Star Bank, N.A.*................. 2,000
300 Cuyahoga County, IDR, Allen Group,
Inc., 4.25%, 4/1/12, LOC:
Dresdner Bank*................... 300
1,600 Cuyahoga County, IDR, Allen Group,
Inc., 4.10%, 12/1/15, LOC: Union
Bank of Switzerland*............. 1,600
3,200 Franklin County, Hospital Revenue,
Holy Cross Health Systems, 4.15%,
6/1/16, LIQ: Morgan Guaranty..... 3,200
1,500 Franklin County, Hospital Revenue,
Lutheran City, Inc. Project,
4.15%, 5/1/15, LOC: National Bank
of
Detroit*......................... 1,500
1,400 Franklin County, Inland Products,
Inc., 4.40%, 6/1/04, LOC: PNC
Bank*............................ 1,400
2,000 Franklin County, Ohio Multifamily
Housing Revenue, Stonebridge
Apartments, 4.40%, 6/1/27, LOC:
Star Bank, N.A.*................. 2,000
2,000 Geauga County, IDR, General Signal
Corp., 4.30%, 4/1/04, LOC:
Wachovia*........................ 2,000
400 Hamilton County, Economic
Development Revenue, Cincinnati
Performing Arts Center, 4.20%,
6/15/05, LOC: Fifth Third
Bank*............................ 400
</TABLE>
Continued
16
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<S> <C> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Ohio, continued:
$ 3,325 Hamilton County, Health Alliance of
Cincinnati, Series B, 4.15%,
1/1/18, MBIA*.................... $ 3,325
2,000 Hamilton County, Hospital
Facilities Revenue, Bethesda
Hospital,
4.00%, 2/15/24, LOC:
Rabobank Nederland*.............. 2,000
1,500 Hamilton County, Hospital
Facilities Revenue, Children's
Hospital Medical Center, 4.15%,
5/15/17, LOC: PNC Bank *......... 1,500
3,000 Housing Finance Agency, Spring
Valley Apartments, 4.25%,
12/15/29, LOC: Key Bank*......... 3,000
500 Montgomery County, Sisters of
Charity Health Care, 4.15%,
5/15/25, LIQ: Toronto
Dominion*........................ 500
2,295 Ohio State University, General
Receipts, Series B, 4.15%,
12/1/06*......................... 2,295
1,000 Ross County, Ohio Hospital
Facilities, Medical Center
Project, 4.15%, 12/1/20, LOC:
Fifth Third*..................... 1,000
1,000 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, AMT, 4.20%, 4/1/29,
LOC: Societe Generale*........... 1,000
2,300 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, Series A, AMT,
4.20%, 4/1/28, LOC: Societe
Generale*........................ 2,300
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- --------
WEEKLY DEMAND NOTES, CONTINUED:
Ohio, continued:
$ 3,000 State Air Quality Development
Revenue Bond, Timken Co. Project,
AMT, 4.15%, 6/1/01, LOC: Credit
Suisse*.......................... $ 3,000
950 State Higher Educational
Facilities, Mount Union College,
4.15%, 9/1/20, LOC: National Bank
of Detroit*...................... 950
3,000 State Higher Educational
Facilities, Oberlin College,
4.00%, 10/1/15, SBPA: Morgan
Guaranty*........................ 3,000
2,000 Student Loan Funding Corp., 4.15%,
12/29/98, LOC: Bank of
America*......................... 2,000
2,000 Student Loan Funding Corp., 4.30%,
1/1/07, LOC: National
Westminister Bank*............... 2,000
2,000 Water Development Authority, Timken
Co. Project, 4.15%, 6/1/01, LOC:
Credit Suisse*................... 2,000
2,100 Wooster, IDR, Allen Group, Inc.,
4.40%, 12/1/10, LOC: Union Bank
of Switzerland*.................. 2,100
--------
Total Weekly Demand Notes 47,370
--------
Total (Amortized Cost--$85,389) (a) $ 85,389
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $86,921.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based an index of market rates. The rate
reflected on the Schedule of Portfolio Investments is the rate in effect at
June 30, 1997.
<TABLE>
<S> <C>
AMT Alternative Minimum Tax Paper
BAN Bond Anticipated Notes
FGIC Insured by Financial Guaranty Insurance Corp.
FNMA Insured by Federal National Mortgage Association
GO General Obligation
IDR Industrial Development Revenue
LIQ Liquidity Agreement
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
SBPA Standby Bond Purchase Agreement
</TABLE>
See notes to financial statements.
17
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
<S> <C> <C> <C> <C>
U.S.
TREASURY OHIO
SECURITIES MUNICIPAL MUNICIPAL
MONEY MARKET PRIME MONEY MONEY MARKET MONEY MARKET
FUND MARKET FUND FUND FUND
------------ ---------- ------------ ------------
ASSETS:
Investments, at amortized cost.............. $ 593,499 $2,743,172 $524,569 $ 85,389
Repurchase agreements, at cost.............. 2,185,989 119,096 -- --
---------- ---------- -------- --------
Total....................................... 2,779,488 2,862,268 524,569 85,389
Cash........................................ -- -- 1,513 1,323
Interest receivable......................... 5,867 9,048 3,715 499
Receivable for shares issued................ -- 39,508 -- --
Prepaid expenses and other assets........... 813 401 83 1
---------- ---------- -------- --------
TOTAL ASSETS................................ 2,786,168 2,911,225 529,880 87,212
---------- ---------- -------- --------
LIABILITIES:
Dividends payable........................... 11,437 12,944 1,482 239
Payable to brokers for investments
purchased................................. -- -- 12,581 --
Accrued expenses and other payables:
Investment advisory fees............... 554 698 110 18
Administration fees.................... 367 374 72 8
12b-1 fees............................. 108 67 9 7
Accounting and transfer agent fees..... -- 3 -- 5
Other.................................. 113 107 21 14
---------- ---------- -------- --------
TOTAL LIABILITIES........................... 12,579 14,193 14,275 291
---------- ---------- -------- --------
NET ASSETS:
Capital..................................... 2,773,395 2,897,025 515,748 87,012
Undistributed (distributions in excess of)
net investment income..................... 43 7 (130) (75)
Accumulated undistributed net realized gains
(losses) from investment transactions..... 151 -- (13) (16)
---------- ---------- -------- --------
NET ASSETS.................................. $2,773,589 $2,897,032 $515,605 $ 86,921
========== ========== ======== ========
Net Assets
Fiduciary.............................. $2,243,376 $2,563,768 $467,420 $ 56,442
Class A................................ 530,164 332,646 48,185 30,479
Class B................................ 49 618 -- --
---------- ---------- -------- --------
Total....................................... $2,773,589 $2,897,032 $515,605 $ 86,921
========== ========== ======== ========
Outstanding units of beneficial interest
Fiduciary.............................. 2,243,208 2,563,763 467,546 56,481
Class A................................ 530,136 332,643 48,200 30,506
Class B................................ 49 619 -- --
---------- ---------- -------- --------
Total....................................... 2,773,393 2,897,025 515,746 86,987
========== ========== ======== ========
Net asset value--offering and redemption
price per share (Fiduciary, Class A and
Class B shares)........................... $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
</TABLE>
See notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
U.S.
TREASURY OHIO
SECURITIES MUNICIPAL MUNICIPAL
MONEY MARKET PRIME MONEY MONEY MARKET MONEY MARKET
FUND MARKET FUND FUND FUND
------------ ------------ ------------ ------------
INVESTMENT INCOME:
Interest income............................. $133,807 $154,583 $ 18,652 $3,112
Dividend income............................. -- -- 168 67
Income from securities lending.............. 204 9 -- --
-------- -------- -------- ------
TOTAL INCOME................................ 134,011 154,592 18,820 3,179
-------- -------- -------- ------
EXPENSES:
Investment advisory fees.................... 8,665 9,724 1,836 268
Administration fees......................... 4,093 4,594 867 148
12b-1 fees (Class A)........................ 1,191 1,178 148 128
12b-1 fees (Class B)........................ -- 2 -- --
Custodian and accounting fees............... 192 177 16 14
Legal and audit fees........................ 93 106 18 4
Organization costs.......................... -- -- -- 1
Trustees' fees and expenses................. 26 29 5 1
Transfer agent fees......................... 470 266 7 20
Registration and filing fees................ 384 438 114 14
Printing costs.............................. 132 146 29 5
Other....................................... 70 81 4 1
-------- -------- -------- ------
Total expense before waivers................ 15,316 16,741 3,044 604
Less waivers................................ (3,135) (2,504) (681) (152)
-------- -------- -------- ------
NET EXPENSES................................ 12,181 14,237 2,363 452
-------- -------- -------- ------
Net Investment Income....................... 121,830 140,355 16,457 2,727
-------- -------- -------- ------
REALIZED GAINS (LOSSES) FROM INVESTMENT
TRANSACTIONS:
Net realized gains (losses) from investment
transactions.............................. 190 27 (10) (15)
-------- -------- -------- ------
Net increase in net assets resulting from
operations................................ $122,020 $140,382 $ 16,447 $2,712
======== ======== ======== ======
</TABLE>
See notes to financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY
SECURITIES MONEY PRIME MONEY MUNICIPAL MONEY OHIO MUNICIPAL MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND
------------------------- ------------------------- ------------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment
income......... $ 121,830 $ 80,358 $ 140,355 $ 130,413 $ 16,457 $ 19,034 $ 2,727 $ 2,941
Net realized
gains (losses)
from investment
transactions... 190 (9) 27 9 (10) (4) (15) --
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in net assets
resulting from
operations......... 122,020 80,349 140,382 130,422 16,447 19,030 2,712 2,941
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
DISTRIBUTIONS TO
FIDUCIARY
SHAREHOLDERS:
From net
investment
income......... (105,790) (75,330) (124,100) (116,410) (15,228) (17,075) (1,662) (1,588)
In excess of net
investment
income......... -- -- -- -- -- -- -- (22)
From net realized
gains from
investment
transactions... (5) -- -- -- -- (4) -- --
DISTRIBUTIONS TO
CLASS A
SHAREHOLDERS:
From net
investment
income......... (16,039) (5,012) (16,246) (13,976) (1,229) (1,947) (1,065) (1,353)
In excess of net
investment
income......... -- -- -- -- -- -- -- (19)
DISTRIBUTIONS TO
CLASS B
SHAREHOLDERS:
From net
investment
income......... (1) -- (9) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in net assets
from shareholder
distributions...... (121,835) (80,342) (140,355) (130,386) (16,457) (19,026) (2,727) (2,982)
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
CAPITAL
TRANSACTIONS:
Proceeds from
shares
issued......... 6,413,072 4,000,794 6,677,852 5,382,651 1,311,970 1,409,174 359,395 337,815
Proceeds from
shares issued
in connection
with
acquisition.... -- 356,742 -- -- -- -- -- --
Dividends
reinvested..... 9,274 4,792 16,726 14,099 1,285 1,889 1,067 1,337
Cost of shares
redeemed....... (5,604,396) (3,683,695) (6,299,509) (5,062,234) (1,308,167) (1,394,801) (370,573) (329,660)
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in net assets
from share
transactions....... 817,950 678,633 395,069 334,516 5,088 16,262 (10,111) 9,492
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
Change in Net
Assets............. 818,135 678,640 395,096 334,552 5,078 16,266 (10,126) 9,451
NET ASSETS:
Beginning of
period......... 1,955,454 1,276,814 2,501,936 2,167,384 510,527 494,261 97,047 87,596
---------- ---------- ---------- ---------- ---------- ---------- --------- ---------
End of period.... $2,773,589 $1,955,454 $2,897,032 $2,501,936 $ 515,605 $ 510,527 $ 86,921 $ 97,047
========== ========= ========== ========== ========== ========== ========= =========
SHARE TRANSACTIONS:
Issued........... 6,413,072 4,000,794 6,677,852 5,382,651 1,311,970 1,409,174 359,395 337,815
Issued in
connection with
acquisition.... -- 356,742 -- -- -- -- -- --
Reinvested....... 9,274 4,792 16,726 14,099 1,285 1,889 1,067 1,337
Redeemed......... (5,604,396) (3,683,695) (6,299,509) (5,062,234) (1,308,167) (1,394,801) (370,573) (329,660)
========== ========= ========== ========== ========== ========== ======== ========
Change in shares.... 817,950 678,633 395,069 334,516 5,088 16,262 (10,111) 9,492
========== ========= ========== ========== ========== ========== ======== ========
Undistributed
(distributions in
excess of) net
investment income
included in net
assets:
End of Period.... $ 43 $ 43 7 $ 7 $ (130) $ (127) $ (75) $ (51)
========== ========== ========== ========== ========== ========== ========= =========
</TABLE>
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a diversified, open-end investment
company established as a Massachusetts business trust. The accompanying
financial statements and financial highlights are those of the U.S. Treasury
Securities Money Market Fund, the Prime Money Market Fund, the Municipal
Money Market Fund, and the Ohio Municipal Money Market Fund (individually, a
"Fund"; collectively, the "Funds") only. Each Fund is a diversified mutual
fund, except the Ohio Municipal Money Market Fund which is non-diversified.
The Trust entered into an Agreement and Plan of Reorganization (the
"Agreement") with the Paragon Portfolio ("Paragon"), a Massachusetts business
trust. Pursuant to the Agreement all of the assets and liabilities of each
Paragon Fund transferred to a fund of The One Group in exchange for shares of
the corresponding fund of The One Group. Changes in net assets and financial
highlights for periods prior to the reorganization, March 25, 1996, are
presented for the funds of The One Group only.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
------------------------------------------- ------------------------------------------------
<S> <C>
U.S. Treasury Securities Money Market Fund Current income with liquidity and stability of
principal.
Prime Money Market Fund Current income with liquidity and stability of
principal.
Municipal Money Market Fund As high a level of current interest income
exempt from Federal income taxes as is
consistent with the preservation of capital and
stability of principal.
Ohio Municipal Money Market Fund As high a level of current interest income
exempt from Federal income taxes and Ohio
personal income tax as is consistent with the
preservation of capital and stability of
principal.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the maturity
of the security. In addition, the Funds may not (a) purchase any instrument
with a remaining maturity greater than thirteen months unless such instrument
is subject to a demand feature, or (b) maintain a dollar-weighted average
maturity which exceeds 90 days.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that Banc
One Investment Advisors Corporation (the "Advisor") has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Fund
requires that the securities purchased in a repurchase transaction be
transferred to the
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities
held at not less than the repurchase price, including accrued interest.
Repurchase agreements are considered to be loans by a fund under the 1940
Act.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses on sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgment of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risk. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of June 30, 1997, the following Fund had securities
with the following amortized cost on loan (amount in thousands):
<TABLE>
<CAPTION>
AMORTIZED COST
OF LOANED
SECURITIES
---------------
<S> <C>
U.S. Treasury Securities Money Market Fund................... $307,101
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities as of June 30, 1997.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Net income for this purpose consists of interest accrued and discount
earned (including both original issue discount and market discount) less
amortization of any market premium and accrued expenses. Net realized
capital gains, if any, are distributed at least annually. Dividends are
declared separately for each class. No class has preferential
Continued
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
dividend rights; differences in per share dividend rates are generally
due to differences in separate class expenses.
Net investment income and net capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments of expiring capital loss carryforwards and deferrals
of certain losses. Permanent book and tax differences, if any, have been
reclassified among the components of net assets.
FEDERAL INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies as defined in applicable sections of the Internal Revenue Code,
and to make distributions of net investment income and net realized
capital gains sufficient to relieve it from all, or substantially all,
federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more. The Trust is registered to offer forty series
and five classes of shares: Fiduciary, Class A, Class B, Class C and Service.
Currently, the Trust consists of thirty three active funds and not all funds
can offer all classes of shares. During the year ended June 30, 1995, Service
Shares transferred to Class A Shares. As of June 30, 1997 there were no
shareholders in Class C or the Service Class of the Funds. Shareholders are
entitled to one vote for each full share held and will vote in the aggregate
and not by class or series, except as otherwise expressly required by law or
when the Board of Trustees has determined that the matter to be voted on
affects only the interest of shareholders of a particular class or series.
The following is a summary of transactions in Fund shares for the fiscal
years ending June 30, 1997 and 1996:
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY SECURITIES PRIME MONEY
MONEY MARKET FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $4,920,570 $ 3,573,870 $4,681,923 $ 4,119,886
Proceeds from shares issued in connection with
acquisition............................................. -- 333,798 -- --
Dividends reinvested...................................... 521 345 1,986 1,683
Cost of shares redeemed................................... (4,522,461) (3,241,505) (4,306,729) (3,900,430)
---------- ----------- ---------- -----------
Change in net assets from Fiduciary share transactions.... 398,630 666,508 377,180 221,139
========== =========== ========== ===========
CLASS A SHARES:
Proceeds from shares issued............................... $1,492,429 $ 426,924 $1,994,727 $ 1,262,765
Proceeds from shares issued in connection with
acquisition............................................. -- 22,944 -- --
Dividends reinvested...................................... 8,752 4,447 14,734 12,416
Cost of shares redeemed................................... (1,081,910) (442,190) (1,992,191) (1,161,804)
---------- ----------- ---------- -----------
Change in net assets from Class A share transactions...... $ 419,271 $ 12,125 $ 17,270 $ 113,377
========== =========== ========== ===========
CLASS B SHARES:
Proceeds from shares issued............................... $ 73 $ 1,202
Dividends reinvested...................................... 1 6
Cost of shares redeemed................................... (25) (589)
---------- ----------
Change in net assets from Class B share transactions...... $ 49 $ 619
========== ==========
</TABLE>
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY SECURITIES PRIME MONEY
MONEY MARKET FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 4,920,570 3,573,870 4,681,923 4,119,886
Issued in connection with acquisition..................... -- 333,798 -- --
Reinvested................................................ 521 345 1,986 1,683
Redeemed.................................................. (4,522,461) (3,241,505) (4,306,729) (3,900,430)
---------- ----------- ---------- -----------
Change in Fiduciary Shares................................ 398,630 666,508 377,180 221,139
========== =========== ========== ===========
CLASS A SHARES:
Issued.................................................... 1,492,429 426,924 1,994,727 1,262,765
Issued in connection with acquisition..................... -- 22,944 -- --
Reinvested................................................ 8,752 4,447 14,734 12,416
Redeemed.................................................. (1,081,910) (442,190) (1,992,191) (1,161,804)
---------- ----------- ---------- -----------
Change in Class A Shares.................................. 419,271 12,125 17,270 113,377
========== =========== ========== ===========
CLASS B SHARES:
Issued.................................................... 73 1,202
Reinvested................................................ 1 6
Redeemed.................................................. (25) (589)
---------- ----------
Change in Class B Shares.................................. 49 619
========== ==========
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET OHIO MUNICIPAL MONEY
FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $1,104,184 $ 1,109,221 $ 178,921 $ 165,403
Dividends reinvested...................................... 138 114 87 62
Cost of shares redeemed................................... (1,096,700) (1,087,267) (178,473) (161,325)
---------- ----------- ---------- -----------
Change in net assets from Fiduciary share transactions.... $ 7,622 $ 22,068 $ 535 $ 4,140
========== =========== ========== ===========
CLASS A SHARES:
Proceeds from shares issued............................... $ 207,786 $ 299,953 $ 180,474 $ 172,412
Dividends reinvested...................................... 1,147 1,775 980 1,275
Cost of shares redeemed................................... (211,467) (307,534) (192,100) (168,335)
---------- ----------- ---------- -----------
Change in net assets from Class A share transactions...... $ (2,534) $ (5,806) $ (10,646) $ 5,352
========== =========== ========== ===========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 1,104,184 1,109,221 178,921 165,403
Reinvested................................................ 138 114 87 62
Redeemed.................................................. (1,096,700) (1,087,267) (178,473) (161,325)
---------- ----------- ---------- -----------
Change in Fiduciary Shares................................ 7,622 22,068 535 4,140
========== =========== ========== ===========
</TABLE>
Continued
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET OHIO MUNICIPAL MONEY
FUND MARKET FUND
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Issued.................................................... 207,786 299,953 180,474 172,412
Reinvested................................................ 1,147 1,775 980 1,275
Redeemed.................................................. (211,467) (307,534) (192,100) (168,335)
---------- ----------- ---------- -----------
Change in Class A Shares.................................. (2,534) (5,806) (10,646) 5,352
========== =========== ========== ===========
</TABLE>
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor, are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to 0.35% of the average daily net assets of the U.S.
Treasury Securities Money Market Fund, the Prime Money Market Fund and the
Municipal Money Market Fund and 0.30% of the average daily net assets of the
Ohio Municipal Money Market Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administration agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
each Fund's average daily net assets on the first $1.5 billion of Trust net
assets (excluding the Investor Growth Fund, the Investor Growth & Income
Fund, the Investor Conservative Growth Fund and the Investor Balanced Fund
(the "Investor Funds") and the Treasury Only Money Market Fund and the
Government Money Market Fund--the "Institutional Money Market Funds"); 0.18%
on the next $0.5 billion of Trust net assets (excluding the Investor Funds
and the Institutional Money Market Funds); and 0.16% on Trust net assets
(excluding the Investor Funds and the Institutional Money Market Funds) over
$2 billion. The Advisor also serves as Sub-Administrator to each Fund of the
Trust, pursuant to an agreement between the Administrator and the Advisor.
Pursuant to this agreement, the Advisor performs many of the Administrator's
duties, for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A Shares, Class B Shares and Service Class Shares are
subject to distribution and shareholder services plans (the "Plans") pursuant
to Rule 12b-1 under the 1940 Act. As provided in the Plan, the Trust will pay
the Distributor a fee of 0.35% of the average daily net assets of Class A
shares of each of the Funds, 1.00% of the average daily net assets of Class B
and C 0.75% of the average daily net assets of the Service Class Shares of
each of the Funds. The Distributor has voluntarily agreed to limit payments
under the Plan to 0.25% of average daily net assets of the Class A Shares of
each Fund and 0.55% of average daily net assets of the Service Class Shares
of each Fund. Up to 0.25% of the fees payable under the Plan may be used as
compensation of shareholder services by the Distributor and/or financial
institutions and intermediaries. Fees paid under the Plan may be applied by
the Distributor toward (i) compensation for its services in connection with
distribution assistance or provision of shareholder services; or (ii)
payments to financial institutions and intermediaries such as banks
(including affiliates of the Advisor), brokers, dealers and other
institutions, including the Distributor's affiliates and subsidiaries as
compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of shareholder services. Fiduciary
Class Shares of each Fund are offered without distribution fees.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
The Advisor, Administrator and the Distributor voluntarily agreed to waive a
portion of their fees and to reimburse the Funds for certain expenses. For
the year ended June 30, 1997, fees in the following amounts were waived from
the Funds (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12B-1 FEES
ADVISORY FEES ADMINISTRATION WAIVED
WAIVED FEES WAIVED CLASS A
------------- -------------- ----------
<S> <C> <C> <C>
U.S. Treasury Securities Money Market Fund................. $ 2,743 $ 52 $340
Prime Money Market Fund.................................... 1,899 269 336
Municipal Money Market Fund................................ 594 45 42
Ohio Municipal Money Market Fund........................... 36 79 37
</TABLE>
5. CONCENTRATION OF CREDIT RISK:
The Ohio Municipal Money Market Fund invests primarily in debt obligations
issued by the State of Ohio and its political subdivisions, agencies and
public authorities to obtain funds for various public purposes. The Fund is
more susceptible to economic and political factors adversely affecting
issuers of Ohio's specific municipal securities than are municipal bond funds
that are not concentrated in these issuers to the same extent.
6. REORGANIZATION:
The Trust entered an Agreement and Plan of Reorganization with Paragon
pursuant to which all of the assets and liabilities of each Paragon Fund
transferred to a fund of The One Group in exchange for shares of the
corresponding fund of The One Group. The Paragon Treasury Money Market Fund
transferred its assets and liabilities to the U.S. Treasury Securities Money
Market Fund. The reorganization, which qualified as a tax-free exchange for
federal income tax purposes, was completed on March 25, 1996 following
approval by shareholders of the Paragon Portfolio at a special shareholder
meeting. The following is a summary of shares outstanding, net assets and net
asset value per share immediately before and after the reorganization:
<TABLE>
<CAPTION>
BEFORE REORGANIZATION
---------------------------- REORGANIZATION
U.S. --------------
PARAGON TREASURY U.S. TREASURY
TREASURY SECURITIES SECURITIES
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ --------------
<S> <C> <C> <C>
Shares (000)....................... 356,742 1,735,489 2,092,231
Net Assets (000)................... $356,742 $1,735,505 $2,092,247
Net Asset Value:
Fiduciary..................... $ 1.00 $ 1.00
Class A....................... $ 1.00 $ 1.00 $ 1.00
</TABLE>
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
7. FEDERAL TAX INFORMATION (UNAUDITED):
At June 30, 1997, the following Funds had capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
OHIO
MUNICIPAL MUNICIPAL
MONEY MONEY
MARKET FUND MARKET FUND
----------- -----------
<S> <C> <C>
Expiring in 2003................................... $-- $--(b)
Expiring in 2004................................... 3 --(b)
Expiring in 2005................................... 10 8
</TABLE>
Capital losses incurred after October 31 within the Fund's fiscal year are
deemed to arise on the first business day of the following fiscal year. The
Ohio Municipal Money Market Fund incurred and will elect to defer such
capital losses in the amount of approximately $7,000.
Distributions declared from tax-exempt income during the fiscal year ended
June 30, 1997 are as follows (amounts in thousands):
<TABLE>
<S> <C>
Municipal Money Market Fund....................................... $16,231
Ohio Municipal Money Market Fund.................................. $ 2,741
</TABLE>
(b) Amounts less than $1,000.
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES MONEY MARKET FUND
--------------------------------------------------------------
FIDUCIARY
--------------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- -------- --------
Investment Activities
Net investment income................................ 0.050 0.052 0.050 0.030 0.029
---------- ---------- ---------- -------- --------
Less: Distributions
Net investment income................................ (0.050)(a) (0.052) (0.050) (0.030) (0.029)
---------- ---------- ---------- -------- --------
NET ASSET VALUE,
END OF PERIOD........................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ======== ========
Total Return........................................... 5.07% 5.34% 5.07% 3.01% 2.89%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................... $2,243,376 $1,844,590 $1,178,091 $969,326 $492,862
Ratio of expenses to average net assets.............. 0.46% 0.42% 0.41% 0.40% 0.45%
Ratio of net investment income to average net
assets............................................. 4.95% 5.17% 4.96% 3.02% 2.85%
Ratio of expenses to average net assets*............. 0.57% 0.56% 0.59% 0.58% 0.67%
Ratio of net investment income to average net
assets*............................................ 4.84% 5.03% 4.78% 2.84% 2.63%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Includes $.000002 short term capital gain.
See notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES MONEY MARKET FUND
-----------------------------------------------------
CLASS A
-----------------------------------------------------
YEARS ENDED JUNE 30,
-----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- ------- ------- -------
Investment Activities
Net investment income....................................... 0.047 0.050 0.047 0.027 0.026
-------- -------- ------- ------- -------
Less: Distributions
Net investment income....................................... (0.047)(a) (0.050) (0.047) (0.027) (0.026)
-------- -------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD............................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======= ======= =======
Total Return.................................................. 4.81% 5.08% 4.81% 2.76% 2.63%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................... $530,164 $110,864 $98,723 $53,423 $30,759
Ratio of expenses to average net assets..................... 0.72% 0.67% 0.66% 0.63% 0.65%
Ratio of net investment income to average net assets........ 4.71% 4.92% 4.71% 2.81% 2.52%
Ratio of expenses to average net assets*.................... 0.93% 0.91% 0.94% 0.87% 1.02%
Ratio of net investment income to average net assets*....... 4.50% 4.68% 4.43% 2.57% 2.15%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Includes $.000002 short term capital gain.
See notes to financial statements.
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES
MONEY MARKET FUND
------------------------
CLASS B
------------------------
NOVEMBER 21,
1996 TO
JUNE 30,
1997(a)
-----------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................................................................. $1.000
------
Investment Activities
Net investment income................................................................ 0.024
------
Less: Distributions
Net investment income................................................................ (0.024)(b)
------
NET ASSET VALUE,
END OF PERIOD........................................................................ $1.000
=======================
Total Return........................................................................... 2.44%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................................... $ 49
Ratio of expenses to average net assets.............................................. 1.48%(d)
Ratio of net investment income to average net assets................................. 3.97%(d)
Ratio of expenses to average net assets*............................................. 1.59%(d)
Ratio of net investment income to average net assets*................................ 3.86%(d)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Includes $.000002 short term capital gain.
(c) Not annualized.
(d) Annualized.
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
----------------------------------------------------------------
FIDUCIARY
----------------------------------------------------------------
YEARS ENDED JUNE 30,
----------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- --------
Investment Activities
Net investment income.............................. 0.051 0.054 0.052 0.031 0.030
---------- ---------- ---------- ---------- --------
Less: Distributions
Net investment income.............................. (0.051) (0.054) (0.052) (0.031) (0.030)
---------- ---------- ---------- ---------- --------
NET ASSET VALUE,
END OF PERIOD...................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ========
Total Return......................................... 5.20% 5.49% 5.34% 3.19% 3.09%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $2,563,768 $2,186,562 $1,965,416 $1,600,876 $979,275
Ratio of expenses to average net assets............ 0.48% 0.44% 0.41% 0.40% 0.44%
Ratio of net investment income to average net
assets........................................... 5.08% 5.34% 5.27% 3.18% 3.05%
Ratio of expenses to average net assets*........... 0.56% 0.55% 0.57% 0.59% 0.62%
Ratio of net investment income to average net
assets*.......................................... 5.00% 5.23% 5.12% 2.99% 2.87%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
------------------------------------------------------
CLASS A
------------------------------------------------------
YEARS ENDED JUNE 30,
------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- ------- -------
Investment Activities
Net investment income...................................... 0.048 0.051 0.050 0.027 0.030
-------- -------- -------- ------- -------
Less: Distributions
Net investment income...................................... (0.048) (0.051) (0.050) (0.027) (0.030)
-------- -------- -------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======= =======
Total Return................................................. 4.94% 5.22% 5.08% 2.93% 2.83%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $332,646 $315,374 $201,968 $74,759 $61,106
Ratio of expenses to average net assets.................... 0.73% 0.69% 0.67% 0.65% 0.65%
Ratio of net investment income to average net assets....... 4.83% 5.09% 5.02% 2.92% 2.67%
Ratio of expenses to average net assets*................... 0.91% 0.90% 0.92% 0.90% 0.99%
Ratio of net investment income to average net assets*...... 4.65% 4.88% 4.77% 2.67% 2.33%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
-----------------------
CLASS B
-----------------------
NOVEMBER 21,
1996 TO
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................ $ 1.000
-------
Investment Activities
Net investment income.............................................................. 0.026
-------
Less: Distributions
Net investment income.............................................................. (0.026)
-------
NET ASSET VALUE,
END OF PERIOD...................................................................... $ 1.000
============
Total Return......................................................................... 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................................................. $ 618
Ratio of expenses to average net assets............................................ 1.51%(c)
Ratio of net investment income to average net assets............................... 4.16%(c)
Ratio of expenses to average net assets*........................................... 1.59%(c)
Ratio of net investment income to average net assets*.............................. 4.08%(c)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
33
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
--------------------------------------------------------
FIDUCIARY
--------------------------------------------------------
YEARS ENDED JUNE 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
Investment Activities
Net investment income.................................... 0.031 0.033 0.032 0.021 0.021
-------- -------- -------- -------- --------
Less: Distributions
Net investment income.................................... (0.031) (0.033) (0.032) (0.021) (0.021)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD............................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Return............................................... 3.19% 3.34% 3.28% 2.16% 2.15%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $467,420 $459,807 $437,743 $352,702 $175,277
Ratio of expenses to average net assets.................. 0.43% 0.41% 0.41% 0.40% 0.46%
Ratio of net investment income to average net assets..... 3.16% 3.29% 3.26% 2.13% 2.12%
Ratio of expenses to average net assets*................. 0.55% 0.59% 0.59% 0.60% 0.66%
Ratio of net investment income to average net assets*.... 3.04% 3.11% 3.08% 1.93% 1.92%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
---------------------------------------------------
CLASS A
---------------------------------------------------
YEARS ENDED JUNE 30,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Investment Activities
Net investment income......................................... 0.029 0.030 0.030 0.021 0.019
------- ------- ------- ------- -------
Less: Distributions
Net investment income......................................... (0.029) (0.030) (0.030) (0.021) (0.019)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return.................................................... 2.97% 3.08% 3.02% 1.96% 1.89%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................. $48,185 $50,720 $56,518 $41,595 $18,932
Ratio of expenses to average net assets....................... 0.68% 0.66% 0.66% 0.65% 0.66%
Ratio of net investment income to average net assets.......... 2.91% 3.04% 3.01% 1.92% 1.82%
Ratio of expenses to average net assets*...................... 0.90% 0.94% 0.94% 0.91% 1.01%
Ratio of net investment income to average net assets*......... 2.69% 2.76% 2.73% 1.66% 1.47%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
35
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
----------------------------------------------------
FIDUCIARY
----------------------------------------------------
JUNE 9,
YEARS ENDED JUNE 30, 1993 TO
---------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Investment Activities
Net investment income........................................ 0.032 0.033 0.032 0.022 0.013
------- ------- ------- ------- -------
Less: Distributions
Net investment income........................................ (0.032) (0.032) (0.032) (0.022) (0.013)
In excess of net investment income........................... -- (0.001) -- -- --
------- ------- ------- ------- -------
Total Distributions........................................ (0.032) (0.033) (0.032) (0.022) (0.013)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return................................................... 3.22% 3.34% 3.20% 2.25% 2.14% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............................ $56,442 $55,915 $51,806 $55,375 $ 3,500
Ratio of expenses to average net assets...................... 0.40% 0.41% 0.41% 0.34% 0.08% (b)
Ratio of net investment income to average net assets......... 3.17% 3.19% 3.13% 2.29% 2.07% (b)
Ratio of expenses to average net assets*..................... 0.53% 0.71% 0.60% 0.57% 0.51% (b)
Ratio of net investment income to average net assets*........ 3.04% 2.89% 2.94% 2.06% 1.64% (b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
36
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
-------------------------------------------------------
CLASS A
-------------------------------------------------------
JANUARY 26,
YEARS ENDED JUNE 30, 1993 TO
---------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(a)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Investment Activities
Net investment income...................................... 0.029 0.030 0.029 0.021 0.009
------- ------- ------- ------- -------
Less: Distributions
Net investment income...................................... (0.029) (0.029) (0.029) (0.021) (0.009)
In excess of net investment income......................... -- (0.001) -- -- --
------- ------- ------- ------- -------
Total Distributions...................................... (0.029) (0.030) (0.029) (0.021) (0.009)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.............................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return................................................. 2.96% 3.08% 2.98% 2.09% 2.34%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......................... $30,479 $41,132 $35,790 $37,356 $25,125
Ratio of expenses to average net assets.................... 0.65% 0.66% 0.63% 0.44% 0.26%(b)
Ratio of net investment income to average net assets....... 2.90% 2.94% 2.91% 2.05% 2.03%(b)
Ratio of expenses to average net assets*................... 0.88% 1.06% 0.95% 0.94% 0.92%(b)
Ratio of net investment income to average net assets*...... 2.67% 2.54% 2.59% 1.55% 1.37%(b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
37
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
U.S. Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund (four
series of The One Group Family of Mutual Funds), including the schedules of
portfolio investments, as of June 30, 1997, and the related statements of
operations, statements of changes in net assets, and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of The One Group Family of Mutual Funds'
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
U.S. Treasury Securities Money Market Fund, the Prime Money Market Fund, the
Municipal Money Market Fund and the Ohio Municipal Money Market Fund as of June
30, 1997, the results of their operations, the changes in their net assets and
the financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
38
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.5%):
380 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 5,946
205 The One Group Government Bond Fund
Fiduciary Class......................... 1,985
320 The One Group Growth Opportunities Fund
Fiduciary Class......................... 6,228
84 The One Group Gulf South Growth Fund
Fiduciary Class......................... 916
168 The One Group Income Bond Fund Fiduciary
Class................................... 1,583
120 The One Group Intermediate Bond Fund
Fiduciary Class......................... 1,186
236 The One Group International Equity Index
Fund Fiduciary Class.................... 3,993
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
345 The One Group Large Company Growth Fund
Fiduciary Class......................... $ 6,704
430 The One Group Large Company Value Fund
Fiduciary Class......................... 6,365
75 The One Group Limited Volatility Fund
Fiduciary Class......................... 789
392 The One Group Prime Money Market Fund
Fiduciary Class......................... 392
616 The One Group Value Growth Fund
Fiduciary Class......................... 7,093
-------
Total Investment Companies 43,180
-------
Total (Cost--$39,084) (a) $43,180
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $43,408.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $4. Cost for federal income tax purposes differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $4,129
Unrealized depreciation......................... (37)
------
Net unrealized appreciation..................... $4,092
======
</TABLE>
See notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Growth & Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.4%):
398 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 6,237
656 The One Group Government Bond Fund
Fiduciary Class......................... 6,361
336 The One Group Growth Opportunities Fund
Fiduciary Class......................... 6,533
561 The One Group Income Bond Fund Fiduciary
Class................................... 5,284
319 The One Group Intermediate Bond Fund
Fiduciary Class......................... 3,166
245 The One Group International Equity Index
Fund Fiduciary Class.................... 4,146
368 The One Group Large Company Growth Fund
Fiduciary Class......................... 7,161
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
459 The One Group Large Company Value Fund
Fiduciary Class......................... $ 6,797
201 The One Group Limited Volatility Fund
Fiduciary Class......................... 2,107
523 The One Group Prime Money Market Fund
Fiduciary Class......................... 523
106 The One Group Ultra Short-Term Income
Fund Fiduciary Class.................... 1,051
617 The One Group Value Growth Fund
Fiduciary Class......................... 7,100
-------
Total Investment Companies 56,466
-------
Total (Cost--$52,633) (a) $56,466
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $56,818.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $102. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $3,841
Unrealized depreciation......................... (110)
------
Net unrealized appreciation..................... $3,731
======
</TABLE>
See notes to financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Conservative Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.7%):
13 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 197
514 The One Group Government Bond Fund
Fiduciary Class......................... 4,986
11 The One Group Growth Opportunities Fund
Fiduciary Class......................... 207
410 The One Group Income Bond Fund Fiduciary
Class................................... 3,864
37 The One Group Income Equity Fund
Fiduciary Class......................... 813
241 The One Group Intermediate Bond Fund
Fiduciary Class......................... 2,389
49 The One Group International Equity Index
Fund Fiduciary Class.................... 825
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
53 The One Group Large Company Growth Fund
Fiduciary Class......................... $ 1,039
67 The One Group Large Company Value Fund
Fiduciary Class......................... 986
140 The One Group Limited Volatility Fund
Fiduciary Class......................... 1,468
365 The One Group Prime Money Market Fund
Fiduciary Class......................... 365
74 The One Group Ultra Short-Term Income
Fund Fiduciary Class.................... 732
90 The One Group Value Growth Fund
Fiduciary Class......................... 1,030
-------
Total Investment Companies 18,901
-------
Total (Cost--$18,440) (a) $18,901
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $18,953.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $30. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $ 498
Unrealized depreciation......................... (67)
------
Net unrealized appreciation..................... $ 431
======
</TABLE>
See notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Investor Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (99.9%):
314 The One Group Disciplined Value Fund
Fiduciary Class......................... $ 4,910
1,500 The One Group Government Bond Fund
Fiduciary Class......................... 14,533
264 The One Group Growth Opportunities Fund
Fiduciary Class......................... 5,143
1,214 The One Group Income Bond Fund Fiduciary
Class................................... 11,438
768 The One Group Intermediate Bond Fund
Fiduciary Class......................... 7,616
253 The One Group International Equity Index
Fund Fiduciary Class.................... 4,274
399 The One Group Large Company Growth Fund
Fiduciary Class......................... 7,749
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ---------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
497 The One Group Large Company Value Fund
Fiduciary Class......................... $ 7,357
436 The One Group Limited Volatility Fund
Fiduciary Class......................... 4,562
755 The One Group Prime Money Market Fund
Fiduciary Class......................... 755
307 The One Group Ultra Short-Term Income
Fund Fiduciary Class.................... 3,035
742 The One Group Value Growth Fund
Fiduciary Class......................... 8,539
-------
Total Investment Companies 79,911
-------
Total (Cost--$75,431) (a) $79,911
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $80,003.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $23. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C>
Unrealized appreciation......................... $4,694
Unrealized depreciation......................... (237)
------
Net unrealized appreciation..................... $4,457
======
</TABLE>
See notes to financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands, except per share amounts)
INVESTOR
INVESTOR INVESTOR GROWTH CONSERVATIVE INVESTOR
GROWTH FUND & INCOME FUND GROWTH FUND BALANCED FUND
------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $39,084; $52,633;
$18,440; and $75,431; respectively).......... $43,180 $ 56,466 $18,901 $79,911
Cash........................................... 57 62 -- 30
Dividends receivable........................... 83 150 76 273
Receivable for capital shares issued........... 183 312 63 95
Receivable from Administrator.................. 12 11 11 11
Prepaid expenses and other assets.............. -- 2 6 4
------------- ------- ----------- -------------
TOTAL ASSETS................................... 43,515 57,003 19,057 80,324
------------- ------- ----------- -------------
LIABILITIES:
Cash overdraft................................. -- -- 1 --
Dividends payable.............................. 70 137 72 260
Payable for capital shares redeemed............ -- 7 -- 1
Accrued expenses and other payables:
Investment advisory fees................... -- -- -- 1
12b-1 fees................................. 7 7 2 4
Other...................................... 30 34 29 55
------------- ------- ----------- -------------
TOTAL LIABILITIES.............................. 107 185 104 321
------------- ------- ----------- -------------
NET ASSETS:
Capital........................................ 39,371 53,072 18,483 75,590
Accumulated undistributed net realized
gains/(losses) from investment
transactions................................. (59) (87) 9 (67)
Unrealized appreciation (depreciation) from
investments.................................. 4,096 3,833 461 4,480
------------- ------- ----------- -------------
NET ASSETS..................................... $43,408 $ 56,818 $18,953 $80,003
============= ======== =========== =============
NET ASSETS:
Fiduciary.................................. $31,318 $ 43,660 $15,038 $72,155
Class A.................................... 4,439 4,262 1,299 2,176
Class B.................................... 7,651 8,896 2,616 5,672
------------- ------- ----------- -------------
Total...................................... $43,408 $ 56,818 $18,953 $80,003
============= ======== =========== =============
OUTSTANDING UNITS OF BENEFICIAL INTEREST
(SHARES):
Fiduciary.................................. 2,784 3,996 1,455 6,790
Class A.................................... 396 387 126 204
Class B.................................... 675 808 253 533
------------- ------- ----------- -------------
Total...................................... 3,855 5,191 1,834 7,527
============= ======== =========== =============
Net Asset Value:
Fiduciary
Offering and redemption price per
share................................ $ 11.25 $ 10.93 $ 10.33 $ 10.63
============= ======== =========== =============
Class A
Redemption price per share............. $ 11.21 $ 11.02 $ 10.32 $ 10.66
============= ======== =========== =============
Maximum sales charge................... 4.50% 4.50% 4.50% 4.50%
============= ======== =========== =============
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest
cent)................................ $ 11.74 11.54 $ 10.81 $ 11.16
============= ======== =========== =============
Class B
Offering price per share (a)........... $ 11.34 $ 11.00 $ 10.33 $ 10.65
============= ======== =========== =============
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
See notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INVESTOR
INVESTOR INVESTOR GROWTH CONSERVATIVE INVESTOR
GROWTH FUND & INCOME FUND GROWTH FUND BALANCED FUND
------------- ---------------- -------------- -------------
DECEMBER 10, DECEMBER 10, DECEMBER 10, DECEMBER 10,
1996 THROUGH 1996 THROUGH 1996 THROUGH 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997(a) 1997(a) 1997(a) 1997(a)
------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Distribution income................. $ 302 $ 616 $352 $ 1,261
------------- ------- ------ -------------
EXPENSES:
Investment advisory fees............ 8 10 3 16
Administration fees................. 16 20 7 31
12b-1 fees (Class A)................ 2 3 1 1
12b-1 fees (Class B)................ 14 17 5 12
Custodian and accounting fees....... 14 14 13 17
Legal and audit fees................ 4 2 4 4
Transfer agent fees................. 12 14 16 16
Registration and filing fees........ 43 44 42 42
Printing costs...................... 15 20 7 30
Other............................... 17 17 16 20
------------- ------- ------ -------------
Total expenses before
waivers/reimbursements............ 145 161 114 189
Less waivers/reimbursements......... (99) (101) (95) (115)
------------- ------- ------ -------------
NET EXPENSES........................ 46 60 19 74
------------- ------- ------ -------------
Net Investment Income............... 256 556 333 1,187
------------- ------- ------ -------------
REALIZED/UNREALIZED LOSSES FROM
INVESTMENTS:
Net realized gains/(losses) from
investment transactions........... (59) (87) 9 (67)
Net change in unrealized
appreciation (depreciation) from
investments....................... 4,096 3,833 461 4,480
------------- ------- ------ -------------
Net realized/unrealized gains from
investments....................... 4,037 3,746 470 4,413
------------- ------- ------ -------------
Change in net assets resulting from
operations........................ $ 4,293 $4,302 $803 $ 5,600
============= =========== ========= =============
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
INVESTOR
INVESTOR INVESTOR GROWTH CONSERVATIVE INVESTOR
GROWTH FUND & INCOME FUND GROWTH FUND BALANCED FUND
------------- ---------------- ------------- -------------
DECEMBER 10, DECEMBER 10, DECEMBER 10, DECEMBER 10,
1996 THROUGH 1996 THROUGH 1996 THROUGH 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997(a) 1997(a) 1997(a) 1997(a)
------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........... $ 256 $ 556 $ 333 $ 1,187
Net realized gains/(losses) from
investment transactions....... (59) (87) 9 (67)
Net change in unrealized
appreciation (depreciation)
from investments.............. 4,096 3,833 461 4,480
------------- ---------------- ------------- -------------
Change in net assets resulting from
operations......................... 4,293 4,302 803 5,600
------------- ---------------- ------------- -------------
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income...... (227) (494) (296) (1,132)
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS:
From net investment income...... (14) (24) (14) (15)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS:
From net investment income...... (15) (38) (23) (40)
------------- ---------------- ------------- -------------
Change in net assets from shareholder
distributions...................... (256) (556) (333) (1,187)
------------- ---------------- ------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued..... 41,705 58,244 21,496 78,898
Dividends reinvested............ 25 49 41 49
Cost of shares redeemed......... (2,359) (5,221) (3,054) (3,357)
------------- ---------------- ------------- -------------
Change in net assets from share
transactions....................... 39,371 53,072 18,483 75,590
------------- ---------------- ------------- -------------
Change in Net Assets................. 43,408 56,818 18,953 80,003
NET ASSETS:
Beginning of period............. -- -- -- --
------------- ---------------- ------------- -------------
End of period................... $43,408 $ 56,818 $18,953 $80,003
============= ================ ============= =============
SHARE TRANSACTIONS:
Issued.......................... 4,079 5,697 2,132 7,850
Reinvested...................... 3 4 5 5
Redeemed........................ (227) (510) (303) (328)
------------- ---------------- ------------- -------------
Change in shares..................... 3,855 5,191 1,834 7,527
============= ================ ============= =============
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Investor Growth Fund,
the Investor Growth & Income Fund, the Investor Conservative Growth Fund and
the Investor Balanced Fund (individually a "Fund", collectively the "Funds")
only. The Funds are each offered in Fiduciary Class, Class A, Class B and
Class C Shares. Class A Shares are subject to initial sales charges, imposed
at the time of purchase, in accordance with the Funds' prospectuses. Certain
redemptions of Class B and Class C Shares are subject to contingent deferred
sales charges in accordance with the Funds' prospectuses.
The Funds investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Investor Growth Fund The Fund seeks long-term capital appreciation by investing
primarily in a diversified group of The One Group mutual
funds which invest primarily in equity securities.
Investor Growth & Income Fund The Fund seeks long-term capital appreciation and growth of
income by investing primarily in a diversified group of The
One Group mutual funds which invest primarily in equity
securities.
Investor Conservative Growth Fund The Fund seeks income and capital appreciation by investing
primarily in a diversified group of The One Group mutual
funds which invest primarily in equity and fixed income
securities.
Investor Balanced Fund The Fund seeks high total return consistent with the
preservation of capital by investing primarily in a
diversified group of The One Group mutual funds which
invest primarily in equity and fixed income securities.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Investments in The One Group mutual funds (the "Underlying Funds") are
valued at the closing net asset value per share of each Underlying Fund
on the day of valuation. Short-term investments maturing in 60 days or
less are valued at amortized cost, which approximates market value.
SECURITY TRANSACTIONS AND RELATED INCOME
Purchases and sales of the underlying funds are accounted for on a trade
date basis. Net realized gains or losses on sales of the underlying funds
are determined on the specific identification cost method. Other income
and expenses are recognized on the accrual basis. Distributions from the
underlying funds and dividends to the Funds' shareholders are recorded on
the ex-dividend date.
Continued
17
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid monthly for
the Funds. Net realized capital gains, if any, are distributed at least
annually. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses. Permanent book and tax
basis differences, which affect shareholder distributions, will be
reclassified to additional paid-in capital.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and
from net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service. Currently, the Trust consists of thirty three active funds, and not
all funds can offer all classes of shares. During the year ended June 30,
1997, there were no shareholders in Class C or the Service Class of the
Funds. Shareholders are entitled to one vote for each full share held and
will vote in the aggregate and not by class or series, except as otherwise
expressly required by law or when the Board of Trustees has determined that
the matter to be voted on affects only the interest of shareholders of a
particular class or series. The following is a summary of transactions in
Fund shares for the period from December 10, 1996 (commencement of
operations) through June 30, 1997:
Continued
18
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
INVESTOR INVESTOR
INVESTOR GROWTH & CONSERVATIVE INVESTOR
GROWTH FUND INCOME FUND GROWTH FUND BALANCED FUND
------------ ------------ ------------ -------------
DECEMBER 10, DECEMBER 10, DECEMBER 10, DECEMBER 10,
1996 THROUGH 1996 THROUGH 1996 THROUGH 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997(a) 1997(a) 1997(a) 1997(a)
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued..................... $ 30,381 $ 45,181 $ 17,645 $71,345
Dividends reinvested............................ 11 13 18 15
Cost of shares redeemed......................... (2,252) (4,561) (2,999) (3,309)
------------ ------------ ------------ -------------
Change in net assets from Fiduciary share
transactions.................................. $ 28,140 $ 40,633 $ 14,664 $68,051
============ ============ ============ =============
CLASS A SHARES:
Proceeds from shares issued..................... $ 4,125 $ 4,604 $ 1,283 $ 2,092
Dividends reinvested............................ 7 14 8 9
Cost of shares redeemed......................... (19) (606) (29) --
------------ ------------ ------------ -------------
Change in net assets from Class A share
transactions.................................. $ 4,113 $ 4,012 $ 1,262 $ 2,101
============ ============ ============ =============
CLASS B SHARES:
Proceeds from shares issued..................... $ 7,199 $ 8,459 $ 2,568 $ 5,461
Dividends reinvested............................ 7 22 15 25
Cost of shares redeemed......................... (88) (54) (26) (48)
------------ ------------ ------------ -------------
Change in net assets from Class B share
transactions.................................. $ 7,118 $ 8,427 $ 2,557 $ 5,438
============ ============ ============ =============
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.......................................... 3,000 4,443 1,750 7,112
Reinvested...................................... 1 1 2 2
Redeemed........................................ (217) (448) (297) (324)
------------ ------------ ------------ -------------
Change in Fiduciary Shares...................... 2,784 3,996 1,455 6,790
============ ============ ============ =============
CLASS A SHARES:
Issued.......................................... 397 443 128 203
Reinvested...................................... 1 1 1 1
Redeemed........................................ (2) (57) (3) --
------------ ------------ ------------ -------------
Change in Class A Shares........................ 396 387 126 204
============ ============ ============ =============
CLASS B SHARES:
Issued.......................................... 682 811 254 535
Reinvested...................................... 1 2 2 2
Redeemed........................................ (8) (5) (3) (4)
------------ ------------ ------------ -------------
Change in Class B Shares........................ 675 808 253 533
============ ============ ============ =============
</TABLE>
- ------------
(a) Period from commencement of operations.
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor") are
parties to an investment advisory agreement under which the Advisor is
entitled to receive an annual fee, computed daily and paid monthly, equal
Continued
19
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
to 0.05% of the average net assets of the Investor Growth Fund, the Investor
Growth & Income Fund, the Investor Conservative Growth Fund and the Investor
Balanced Fund, respectively.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and payable monthly, at an annual rate of 0.10%
on the first $500 million of each Fund's average daily net assets, 0.075% of
each Fund's average daily net assets between $500 million and $1 billion, and
0.05% of each Fund's average daily net assets when Fund assets exceed $1
billion. The Advisor also serves as Sub-Administrator to each fund of the
Trust, pursuant to an agreement between the Administrator and the Advisor.
Pursuant to this agreement, the Advisor performs many of the Administrator's
duties, for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A Shares, Class B Shares and, Class C Shares are
subject to a distribution and shareholder services plan (the "Plan") pursuant
to Rule 12b-1 under the 1940 Act. As provided in the Plans, the Trust will
pay the Distributor a fee of 0.35% of the average daily net assets of Class A
Shares of each of the Funds and 1.00% of the average daily net assets of the
Class B Shares and Class C Shares of each of the Funds. Currently, the
Distributor has voluntarily agreed to limit payments under the Plans to 0.25%
of average daily net assets of the Class A Shares of each Fund. Up to 0.25%
of the fees payable under the Plans may be used as compensation for
shareholder services by the Distributor and/or financial institutions and
intermediaries. Fees paid under the Plans may be applied by the Distributor
toward (i) compensation for its services in connection with distribution
assistance or provision of shareholder services; or (ii) payments to
financial institutions and intermediaries such as banks, (including
affiliates of the Advisor), brokers, dealers and other institutions,
including the Distributor's affiliates and subsidiaries as compensation for
services or reimbursement of expenses incurred in connection with
distribution assistance or provision of shareholder services. Fiduciary Class
Shares of each Fund are offered without distribution fees. For the period
ended June 30, 1997, the Distributor received $1,185,022 from commissions
earned on sales of Class A Shares and redemptions of Class B Shares, of
which, the Distributor re-allowed $1,181,695 to affiliated broker-dealers of
the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees and to reimburse the Funds for certain
expenses. For the period ended June 30, 1997, fees in the following amounts
were waived and reimbursed from the funds (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12B-1 FEES FEES
ADVISORY FEES ADMINISTRATION WAIVED REIMBURSED BY
WAIVED FEES WAIVED CLASS A ADMINISTRATOR
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Growth Fund................. $ 6 $16 $ 1 $76
Investor Growth & Income Fund........ 8 20 1 72
Investor Conservative Growth Fund.... 2 7 --* 86
Investor Balanced Fund............... 13 31 --* 71
</TABLE>
* Amount less than $1,000.
Continued
20
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the period
ended June 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- ------
<S> <C> <C>
Investor Growth Fund.................................... $43,799 $5,047
Investor Growth & Income Fund........................... 58,388 6,429
Investor Conservative Growth Fund....................... 21,221 3,432
Investor Balanced Fund.................................. 81,364 6,622
</TABLE>
6. FEDERAL TAX INFORMATION (UNAUDITED):
Capital losses incurred after October 31 within the Fund's fiscal year may be
deferred and treated as occurring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ending June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
---- ------
<S> <C>
Investor Growth Fund.............................................. $ 55
Investor Balanced Fund............................................ 44
</TABLE>
ELIGIBLE DISTRIBUTIONS:
The Trust designates the following percentage of distributions eligible for
the dividends received deductions for corporations.
<TABLE>
<CAPTION>
FUND PERCENTAGE
---- ----------
<S> <C>
Investor Growth Fund........................................... 66.75%
Investor Growth & Income Fund.................................. 52.15%
Investor Conservative Growth Fund.............................. 34.78%
Investor Balanced Fund......................................... 45.62%
</TABLE>
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.09
Net realized and unrealized gains (losses) from investments......................... 1.25
------------
Total from Investment Activities................................................. 1.34
------------
Distributions
From net investment income.......................................................... (0.09)
------------
Total Distributions.............................................................. (0.09)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 11.25
============
Total Return.......................................................................... 13.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 31,318
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 1.70%(c)
Ratio of expenses to average net assets*............................................ 0.77%(c)
Ratio of net investment income to average net assets*............................... 1.13%(c)
Portfolio turnover (d).............................................................. 18.49%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.07
Net realized and unrealized gains (losses) from investments......................... 1.21
------------
Total from Investment Activities................................................. 1.28
------------
Distributions
From net investment income.......................................................... (0.07)
------------
Total Distributions.............................................................. (0.07)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.21
============
Total Return (Excludes Sales Charge).................................................. 12.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $4,439
Ratio of expenses to average net assets............................................. 0.46%(c)
Ratio of net investment income to average net assets................................ 1.82%(c)
Ratio of expenses to average net assets*............................................ 1.62%(c)
Ratio of net investment income to average net assets*............................... 0.66%(c)
Portfolio turnover (d).............................................................. 18.49%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.04
Net realized and unrealized gains (losses) from investments......................... 1.34
------------
Total from Investment Activities................................................. 1.38
------------
Distributions
From net investment income.......................................................... (0.04)
------------
Total Distributions.............................................................. (0.04)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.34
============
Total Return (Excludes Sales Charge).................................................. 13.88%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $7,651
Ratio of expenses to average net assets............................................. 1.20%(c)
Ratio of net investment income to average net assets................................ 0.97%(c)
Ratio of expenses to average net assets*............................................ 2.18%(c)
Ratio of net investment income to average net assets*............................... (0.01%)(c)
Portfolio turnover (d).............................................................. 18.49%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997 (a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.15
Net realized and unrealized gains from investments.................................. 0.93
------------
Total from Investment Activities................................................. 1.08
------------
Distributions
From net investment income.......................................................... (0.15)
------------
Total Distributions.............................................................. (0.15)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 10.93
============
Total Return.......................................................................... 10.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 43,660
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 2.78%(c)
Ratio of expenses to average net assets *........................................... 0.66%(c)
Ratio of net investment income to average net assets*............................... 2.32%(c)
Portfolio turnover(d)............................................................... 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997 (a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.12
Net realized and unrealized gains from investments.................................. 1.02
------------
Total from Investment Activities................................................. 1.14
------------
Distributions
From net investment income.......................................................... (0.12)
------------
Total Distributions.............................................................. (0.12)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.02
============
Total Return (Excludes Sales Charge).................................................. 11.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $4,262
Ratio of expenses to average net assets............................................. 0.46%(c)
Ratio of net investment income to average net assets................................ 2.67%(c)
Ratio of expenses to average net assets*............................................ 1.26%(c)
Ratio of net investment income to average net assets*............................... 1.87%(c)
Portfolio turnover(d)............................................................... 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
GROWTH
& INCOME
FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997 (a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.09
Net realized and unrealized gains (losses) from investments......................... 1.00
------------
Total from Investment Activities................................................. 1.09
------------
Distributions
From net investment income.......................................................... (0.09)
------------
Total Distributions.............................................................. (0.09)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $11.00
============
Total Return (Excludes Sales Charge).................................................. 11.02%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $8,896
Ratio of expenses to average net assets............................................. 1.21%(c)
Ratio of net investment income to average net assets................................ 1.94%(c)
Ratio of expenses to average net assets*............................................ 1.89%(c)
Ratio of net investment income to average net assets*............................... 1.26%(c)
Portfolio turnover(d)............................................................... 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.26
Net realized and unrealized gains (losses) from investments......................... 0.33
------------
Total from Investment Activities................................................. 0.59
------------
Distributions
From net investment income.......................................................... (0.26)
------------
Total Distributions.............................................................. (0.26)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 10.33
============
Total Return.......................................................................... 6.00%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 15,038
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 4.92%(c)
Ratio of expenses to average net assets*............................................ 1.46%(c)
Ratio of net investment income to average net assets*............................... 3.66%(c)
Portfolio turnover (d).............................................................. 28.46%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.22
Net realized and unrealized gains (losses) from investments......................... 0.32
------------
Total from Investment Activities................................................. 0.54
------------
Distributions
From net investment income.......................................................... (0.22)
------------
Total Distributions.............................................................. (0.22)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.32
============
Total Return (Excludes Sales Charge).................................................. 5.46%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $1,299
Ratio of expenses to average net assets............................................. 0.47%(c)
Ratio of net investment income to average net assets................................ 4.76%(c)
Ratio of expenses to average net assets*............................................ 3.05%(c)
Ratio of net investment income to average net assets*............................... 2.18%(c)
Portfolio turnover (d).............................................................. 28.46%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
CONSERVATIVE
GROWTH FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.19
Net realized and unrealized gains (losses) from investments......................... 0.33
------------
Total from Investment Activities................................................. 0.52
------------
Distributions
From net investment income.......................................................... (0.19)
------------
Total Distributions.............................................................. (0.19)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.33
============
Total Return (Excludes Sales Charge).................................................. 5.30%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $2,616
Ratio of expenses to average net assets............................................. 1.21%(c)
Ratio of net investment income to average net assets................................ 4.06%(c)
Ratio of expenses to average net assets*............................................ 3.52%(c)
Ratio of net investment income to average net assets*............................... 1.75%(c)
Portfolio turnover (d).............................................................. 28.46%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------
FIDUCIARY
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $ 10.00
------------
Investment Activities
Net investment income............................................................... 0.21
Net realized and unrealized gains from investments.................................. 0.63
------------
Total from Investment Activities................................................. 0.84
------------
Distributions
From net investment income.......................................................... (0.21)
------------
Total Distributions.............................................................. (0.21)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $ 10.63
============
Total Return.......................................................................... 8.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $ 72,155
Ratio of expenses to average net assets............................................. 0.20%(c)
Ratio of net investment income to average net assets................................ 3.84%(c)
Ratio of expenses to average net assets*............................................ 0.56%(c)
Ratio of net investment income to average net assets*............................... 3.48%(c)
Portfolio turnover (d).............................................................. 12.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------
CLASS A
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.17
Net realized and unrealized gains from investments.................................. 0.66
------------
Total from Investment Activities................................................. 0.83
------------
Distributions
From net investment income.......................................................... (0.17)
------------
Total Distributions.............................................................. (0.17)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.66
============
Total Return (Excludes Sales Charge).................................................. 8.41%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $2,176
Ratio of expenses to average net assets............................................. 0.47%(c)
Ratio of net investment income to average net assets................................ 3.78%(c)
Ratio of expenses to average net assets*............................................ 1.12%(c)
Ratio of net investment income to average net assets*............................... 3.13%(c)
Portfolio turnover (d).............................................................. 12.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
BALANCED
FUND
------------
CLASS B
------------
DECEMBER 10,
1996 THROUGH
JUNE 30,
1997(a)
------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................................................................. $10.00
------------
Investment Activities
Net investment income............................................................... 0.16
Net realized and unrealized gains from investments.................................. 0.65
------------
Total from Investment Activities................................................. 0.81
------------
Distributions
From net investment income.......................................................... (0.16)
------------
Total Distributions.............................................................. (0.16)
------------
NET ASSET VALUE,
END OF PERIOD....................................................................... $10.65
============
Total Return (Excludes Sales Charge).................................................. 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................................................... $5,672
Ratio of expenses to average net assets............................................. 1.22%(c)
Ratio of net investment income to average net assets................................ 2.93%(c)
Ratio of expenses to average net assets*............................................ 1.73%(c)
Ratio of net investment income to average net assets*............................... 2.42%(c)
Portfolio turnover (d).............................................................. 12.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
33
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Investor Growth Fund, the Investor Growth & Income Fund, the Investor
Conservative Growth Fund and the Investor Balanced Fund (four series of The One
Group Family of Mutual Funds), including the schedules of portfolio investments,
as of June 30, 1997, and the related statements of operations, statements of
changes in net assets and the financial highlights for the period then ended.
These financial statements and financial highlights are the responsibility of
The One Group Family of Mutual Funds' management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Investor Growth Fund, the Investor Growth & Income Fund, the Investor
Conservative Growth Fund and the Investor Balanced Fund as of June 30, 1997, the
results of their operations, the changes in their net assets and the financial
highlights for the period then ended, in conformity with generally accepted
accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Treasury Only Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (98.5%):
U.S. Treasury Bills (16.4%):
$ 14,807 7/24/97............................ $ 14,757
13,783 8/7/97 (b)......................... 13,709
5,178 8/14/97............................ 5,146
5,864 8/21/97............................ 5,822
9,830 8/28/97............................ 9,753
2,593 9/4/97............................. 2,569
12,225 9/11/97............................ 12,102
6,186 9/18/97............................ 6,117
3,942 11/13/97........................... 3,864
5,000 3/5/98............................. 4,816
--------
78,655
--------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- --------
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes (82.1%):
$ 8,418 8.50%, 7/15/97..................... $ 8,428
196,434 5.88%, 7/31/97 (b)................. 196,555
20,000 5.50%, 7/31/97..................... 20,001
20,000 8.63%, 8/15/97 (b)................. 20,076
50,000 6.50%, 8/15/97 (b)................. 50,071
50,000 6.00%, 8/31/97..................... 50,014
50,000 5.75%, 9/30/97..................... 50,052
--------
395,197
--------
Total U.S. Treasury Obligations 473,852
--------
Total (Amortized Cost--$473,852) (a) $473,852
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $480,860.
(a) Represents cost for financial reporting purposes and differs from cost for
federal income tax by $8.
(b) A portion of this security was loaned as of June 30, 1997.
See notes to financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (76.7%):
Federal Farm Credit Bank (3.2%):
$ 10,000 5.61%, 11/13/97.................... $ 9,790
25,000 5.45%, 3/3/98...................... 24,952
---------
34,742
---------
Federal Home Loan Bank (4.8%):
10,000 5.80%, 8/12/97..................... 9,998
7,000 5.83%, 12/19/97.................... 7,009
9,750 5.99%, 2/9/98...................... 9,765
25,000 6.12%, 4/17/98..................... 24,996
---------
51,768
---------
Federal Home Loan Mortgage Corp. (6.9%):
50,000 5.50%, 7/2/97...................... 49,993
25,000 5.95%, 6/19/98..................... 24,988
---------
74,981
---------
Federal National Mortgage Assoc. (47.0%):
88,790 5.36%, 7/10/97..................... 88,670
65,000 5.50%, 7/18/97..................... 64,831
19,750 5.64%, 9/3/97...................... 19,735
30,000 5.26%, 9/3/97*..................... 29,997
23,000 5.26%, 9/9/97*..................... 23,001
39,785 5.56%, 9/24/97..................... 39,263
25,000 5.59%, 10/14/97.................... 24,592
25,000 5.65%, 11/3/97..................... 24,510
17,955 5.45%, 11/6/97..................... 17,934
20,000 5.40%, 12/5/97..................... 19,988
25,000 5.52%, 12/18/97.................... 24,348
25,000 5.48%, 1/2/98...................... 24,978
25,000 6.02%, 4/15/98..................... 24,981
48,420 5.89%, 5/21/98..................... 48,382
4,000 5.25%, 6/2/99*..................... 4,000
20,000 5.25%, 7/26/99*.................... 20,000
10,000 5.25%, 9/22/99*.................... 10,000
---------
509,210
---------
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
U.S. GOVERNMENT AGENCY SECURITIES, CONTINUED
Student Loan Marketing Assoc. (14.8%):
$ 25,000 5.32%, 8/4/97*..................... $ 25,001
25,000 5.26%, 8/21/97*.................... 25,001
40,000 5.24%, 11/24/97*................... 40,001
25,000 5.26%, 9/28/98*.................... 25,000
25,000 5.26%, 11/10/98*................... 25,000
10,000 5.28%, 1/13/99*.................... 9,999
10,000 5.29%, 8/2/99*..................... 9,997
---------
159,999
---------
Total U.S. Government Agency Securities 830,700
---------
REPURCHASE AGREEMENTS (23.4%):
73,289 Aubrey G. Lanston & Co., 5.40%,
7/1/97 (collateralized by $56,614
various U.S. Treasury Bonds,
8.75% - 9.88%,
11/15/15 - 5/15/17, market value
$75,446)......................... 73,289
45,000 HSBC Securities, 5.90%, 7/1/97
(collateralized by $46,015
various U.S. Government
Securities, 5.01% - 9.25%,
6/8/98 - 6/27/07, market value
$45,901)......................... 45,000
35,000 Lehman Brothers, 6.13%, 7/1/97
(collateralized by $32,742
various U.S. Government
Securities, 0.00% - 9.05%,
6/10/98 - 8/12/19, market value
$35,691)......................... 35,000
100,000 Prudential Securities, 6.10%,
7/1/97 (collateralized by
$139,882 various U.S. Government
Securities, 0.00% - 7.89%,
7/22/97 - 2/1/25, market value
$102,738) 100,000
---------
Total Repurchase Agreements 253,289
---------
Total (Amortized Cost--$1,083,989) (a) $1,083,989
=========
</TABLE>
- ------------
Percentages indicated are based on net assets of $1,083,438.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market rates. The
rate reflected on the Schedule of Portfolio Investments is the rate in effect
at June 30, 1997.
See notes to financial statements.
7
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands,
except per share amounts)
<S> <C> <C>
TREASURY ONLY GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
------------- ------------
ASSETS:
Investments, at amortized cost......................................... $ 473,852 $ 830,700
Repurchase agreements, at cost......................................... -- 253,289
----------- ------------
Total.................................................................. 473,852 1,083,989
Cash................................................................... 66 1
Interest receivable.................................................... 9,211 4,723
Deferred organization costs............................................ 3 20
Prepaid expenses and other assets...................................... 8 122
----------- ------------
TOTAL ASSETS........................................................... 483,140 1,088,855
----------- ------------
LIABILITIES:
Dividends payable...................................................... 2,179 5,090
Accrued expenses and other payables:
Investment advisory fees.......................................... 34 77
Administration fees............................................... 21 48
Accounting and transfer agent fees................................ 2 2
Other............................................................. 44 200
----------- ------------
TOTAL LIABILITIES...................................................... 2,280 5,417
----------- ------------
NET ASSETS:
Capital................................................................ 480,952 1,083,623
Accumulated undistributed net realized losses from investment
transactions......................................................... (92) (185)
----------- ------------
NET ASSETS............................................................. $ 480,860 $ 1,083,438
=========== ============
Outstanding shares of beneficial interest.............................. 480,950 1,083,623
=========== ============
Net Asset Value:
Offering and redemption price per share.............................. $1.00 $1.00
======= ======
</TABLE>
See notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C>
TREASURY ONLY GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
------------- -------------
INVESTMENT INCOME:
Interest income........................................................ $25,226 $57,712
Income from securities lending......................................... 145 13
---------- ----------
TOTAL INCOME........................................................... 25,371 57,725
---------- ----------
EXPENSES:
Investment advisory fees............................................... 385 849
Administration fees.................................................... 241 530
Custodian and accounting fees.......................................... 23 2
Legal and audit fees................................................... 11 19
Organization costs..................................................... 4 21
Trustees' fees and expenses............................................ 3 5
Transfer agent fees.................................................... 7 1
Registration and filing fees........................................... 58 1
Printing costs......................................................... 8 2
Other.................................................................. 2 7
---------- ----------
TOTAL EXPENSES......................................................... 742 1,437
---------- ----------
Net Investment Income.................................................. 24,629 56,288
---------- ----------
REALIZED LOSSES FROM INVESTMENT TRANSACTIONS:
Net realized losses from investment transactions....................... (16) (119)
---------- ----------
Net increase in net assets resulting from operations................... $24,613 $56,169
========== ==========
</TABLE>
See notes to financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Amounts in Thousands)
<S> <C> <C> <C> <C>
TREASURY ONLY MONEY GOVERNMENT MONEY
MARKET FUND MARKET FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........................ $ 24,629 $ 18,797 $ 56,288 $ 42,135
Net realized gains (losses) from investment
transactions............................... (16) (76) (119) 8
----------- ----------- ----------- -----------
Change in net assets resulting from operations.... 24,613 18,721 56,169 42,143
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................... (24,629) (18,797) (56,288) (42,135)
In excess of net realized gains from
investment transactions.................... -- (21) -- --
----------- ----------- ----------- -----------
Change in net assets from shareholder
distributions................................... (24,629) (18,818) (56,288) (42,135)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................. 1,603,666 1,135,597 4,075,935 2,638,822
Dividends reinvested......................... 3,409 2,487 11,375 10,663
Cost of shares redeemed...................... (1,542,160) (1,010,723) (3,859,366) (2,514,579)
----------- ----------- ----------- -----------
Change in net assets from share transactions...... 64,915 127,361 227,944 134,906
----------- ----------- ----------- -----------
Change in Net Assets.............................. 64,899 127,264 227,825 134,914
NET ASSETS:
Beginning of period.......................... 415,961 288,697 855,613 720,699
----------- ----------- ----------- -----------
End of period................................ $ 480,860 $ 415,961 $ 1,083,438 $ 855,613
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued....................................... 1,603,664 1,135,597 4,075,935 2,638,822
Reinvested................................... 3,409 2,487 11,375 10,663
Redeemed..................................... (1,542,160) (1,010,723) (3,859,366) (2,514,579)
----------- ----------- ----------- -----------
Change in shares.................................. 64,913 127,361 227,944 134,906
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Treasury Only Money
Market Fund and the Government Money Market Fund (individually a "Fund",
collectively the "Funds") only. The Funds are diversified mutual funds and
are not offered in multiple classes.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
-------------------------------- ---------------------------------------------------------
<S> <C>
Treasury Only Money Market Fund High current income with liquidity and stability of
principal with the added assurance of a fund that does
not purchase securities that are subject to repurchase
agreements.
Government Money Market Fund High current income with liquidity and stability of
principal.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the
maturity of the security. In addition, the Funds may not (a) purchase any
instrument with a remaining maturity greater than thirteen months unless
such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
REPURCHASE AGREEMENTS
The Government Money Market Fund may invest in repurchase agreements with
institutions that Banc One Investment Advisors (the "Advisor") has
determined are creditworthy. Each repurchase agreement is recorded at
cost. The Fund requires that the securities purchased in a repurchase
agreement transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of
a counterparty default. The seller, under the repurchase agreement, is
required to maintain the value of the securities held at not less than
the repurchase price, including accrued interest. Repurchase agreements
are considered to be loans by a fund under the 1940 Act.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Interest income, including any discount
or premium, is accrued as earned using the effective interest method.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan
be continuously secured by cash, U.S. Government or U.S.
Continued
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
Government Agency securities, shares of an investment trust or mutual
fund, or any combination of cash and such securities as collateral equal
at all times to at least 100% of the market value plus accrued interest
on the securities lent. The Funds continue to earn interest on securities
lent while simultaneously seeking to earn interest on the investment of
collateral. Collateral is marked to market daily to provide a level of
collateral at least equal to the market value of securities lent. There
may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines
established by the Board of Trustees and when, in the judgement of the
Advisor, the consideration which can be earned currently from such
securities loans justifies the attendant risk. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore,
not considered to be illiquid investments. As of June 30, 1997, the
following Fund had securities with the following amortized cost on loan
(amount in thousands):
<TABLE>
<CAPTION>
AMORTIZED COST
OF LOANED
SECURITIES
---------------
<S> <C>
Treasury Only Money Market Fund.............................. $116,076
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities as of June 30, 1997.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Net investment income for this purpose consists of interest accrued and
discount earned (including both original issue discount and market
discount) less amortization of any market premium and accrued expenses.
Net realized capital gains, if any, are distributed at least annually.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses. Permanent book and tax
basis differences, if any, have been reclassified among the components of
net assets.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization,
including the fees and expenses of registering and qualifying its shares
for distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs, which are
attributable to more than one fund of the Trust, have been allocated
among the respective funds pro-rata, based on the relative net assets of
each Fund. In the event that any of the initial shares are redeemed
during such period by any holder thereof, the related Fund will be
reimbursed by such holder for any unamortized organization costs in the
proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of redemption.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
Continued
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1997
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service Class. Currently, the Trust consists of thirty three active Funds
and, not all Funds can offer all classes of shares. As of June 30, 1997,
there were no shareholders in the Class C or Service Class of the Funds.
Shareholders are entitled to one vote for each full share held and will vote
in the aggregate and not by class or series, except as otherwise expressly
required by law or when the Board of Trustees has determined that the matter
to be voted on affects only the interest of shareholders of a particular
class or series.
4. INVESTMENT ADVISORY, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS:
The Trust and Advisor are parties to an investment advisory agreement under
which the Advisor is entitled to receive a fee, computed daily and paid
monthly, equal to 0.08% of the average daily net assets of each Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly at an annual rate of 0.05% of
each Fund's average daily net assets. The Advisor also serves as
Sub-Administrator to each fund of the Trust, pursuant to an agreement between
the Administrator and the Advisor. Pursuant to this agreement, the Advisor
performs many of the Administrator's duties, for which the Advisor receives a
fee paid by the Administrator.
The One Group Services Company (the "Distributor") and the Trust are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. No compensation is paid to the Distributor for distribution
services for the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
5. FEDERAL TAX INFORMATION (UNAUDITED):
At June 30, 1997 the following Funds have capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRES
--------------------------------------------------------- ------ --------
<S> <C> <C>
Treasury Only Money Market............................... $ 18 2004
Treasury Only Money Market............................... 58 2005
Government Money Market.................................. 8 2002
Government Money Market.................................. 26 2003
Government Money Market.................................. 32 2004
Government Money Market.................................. 119 2005
</TABLE>
Capital losses incurred after October 31 within the Fund's fiscal year may be
deferred and treated as occurring on the first day of the following fiscal
year. The following deferred losses will be treated as arising on the first
day of the fiscal year ending June 30, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
------------------------------------------------------------------ ------
<S> <C>
Treasury Only Money Market........................................ $8
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY ONLY MONEY MARKET FUND
--------------------------------------------------------
APRIL
16,
YEARS ENDED JUNE 30, 1993 TO
-------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------
Investment Activities:
Net investment income.................................... 0.051 0.052 0.051 0.032 0.006
-------- -------- -------- -------- -------
Distributions:
Net investment income.................................... (0.051) (0.052) (0.051) (0.032) (0.006)
-------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD............................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== =======
Total Return............................................... 5.24% 5.38% 5.22% 3.23% 2.96% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................ $480,860 $415,961 $288,697 $217,725 $60,330
Ratio of expenses to average net assets.................. 0.15% 0.17% 0.20% 0.15% 0.07% (b)
Ratio of net investment income to average net assets..... 5.12% 5.23% 5.14% 3.23% 2.95% (b)
Ratio of expenses to average net assets*................. 0.15% 0.17% 0.21% 0.22% 0.33% (b)
Ratio of net investment income to average net assets*.... 5.12% 5.23% 5.13% 3.16% 2.69% (b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
----------------------------------------------------------
JUNE 14,
YEARS ENDED JUNE 30, 1993 TO
---------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993(a)
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- -------- -------- -------- --------
Investment Activities:
Net investment income................................... 0.053 0.055 0.053 0.033 0.001
---------- -------- -------- -------- --------
Distributions:
Net investment income................................... (0.053) (0.055) (0.053) (0.033) (0.001)
---------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD........................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ======== ======== ======== ========
Total Return.............................................. 5.43% 5.61% 5.41% 3.40% 3.28%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $1,083,438 $855,613 $720,699 $692,253 $244,991
Ratio of expenses to average net assets................. 0.14% 0.18% 0.21% 0.11% 0.07%(b)
Ratio of net investment income to average net assets.... 5.31% 5.46% 5.28% 3.41% 3.13%(b)
Ratio of expenses to average net assets*................ 0.14% 0.18% 0.22% 0.20% 0.33%(b)
Ratio of net investment income to average net assets*... 5.31% 5.46% 5.27% 3.32% 2.87%(b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
See notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS JUNE 30, 1997
To the Shareholders and Board of Trustees of
The One Group Family of Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the
Treasury Only Money Market Fund and the Government Money Market Fund (two series
of The One Group Family of Mutual Funds), including the schedules of portfolio
investments, as of June 30, 1997, and the related statements of operations for
the year then ended, statements of changes in net assets for the two years in
the period then ended, and the financial highlights for each of the periods
indicated herein. These financial statements and financial highlights are the
responsibility of The One Group Family of Mutual Funds' management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1997 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Only Money Market Fund and the Government Only Money Market Fund as of
June 30, 1997, the results of their operations, the changes in their net assets
and the financial highlights for the periods indicated herein, in conformity
with generally accepted accounting principles.
Columbus, Ohio Coopers & Lybrand L.L.P.
August 22, 1997
16
<PAGE>
<PAGE>
EXHIBIT(17)(d)
SEMI-ANNUAL REPORTS FOR THE ONE GROUP
FOR THE PERIOD ENDED
DECEMBER 31, 1998
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Report From Your Investment Advisor........................................ 2
Portfolio Performance Review............................................... 4
Schedules of Portfolio Investments.......................................... 6
Statements of Assets and Liabilities........................................ 8
Statements of Operations.................................................... 9
Statements of Changes in Net Assets........................................ 10
Notes to Financial Statements.............................................. 11
Financial Highlights....................................................... 14
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
We are pleased to present this semiannual report for The One Group(R) Family of
Mutual Funds. On the following pages, you will find an overview of the financial
markets and your fund's performance for the period from July 1, 1997, through
December 31, 1997.
DEAR VALUED SHAREHOLDER:
Thank you for continuing to support The One Group Family of Mutual Funds during
an interesting, challenging and ultimately rewarding year for investors.
Despite strong volatility throughout 1997 and turmoil in Asia, the Dow Jones
Industrial Average was up 24.94% for 1997. Never before had the index returned
more than 20% for three consecutive years. The S&P 500 Index soared even higher,
closing the year up 33.36%.
At the same time, and largely the result of low inflation, a strong U.S. dollar
and the flight to quality spurred by the Asian crisis, U.S. bond yields ended
the year on an impressive note. The 30-year Treasury, for example, ended the
year yielding 5.92%, close to its 20-year low. (As bond yields fall, bond prices
go up.)
ONCE AGAIN, A PHILOSOPHY REINFORCED
While the calendar-year returns for both the stock and bond markets are
impressive, events in the final six months of 1997 may be the most memorable. On
August 6, the Dow closed at 8,259, a record high and its peak for the calendar
year. Shortly thereafter, though, volatility rocked the market, as the effects
of the Asian financial crisis worked their way west. These forces culminated on
Monday, October 27, when the Dow plummeted more than 554 points, its
largest-ever point decline.
This drop may be the defining moment for 1997's financial markets, and it
presented a significant challenge for investors. But, rather than panicking,
shareholders of The One Group demonstrated a clear understanding of market
dynamics and the importance of maintaining a long-term investment philosophy.
I am pleased to report that there were no significant redemptions of One Group
shares after "Black Monday." To us, this implies that our investors understand
the potential dangers of selling their investments based on short-term
volatility. In fact, The One Group experienced a record purchase day on Tuesday,
October 28, indicating that investors realize the benefits of staying focused on
the stock market's long-term potential.
TAX BILL CHANGES FACE OF INVESTING
The second half of 1997 may be remembered as much for the jubilance it brought
investors as for the turmoil. The Taxpayer Relief Act of 1997 became law,
ushering in lower capital gains taxes for investors and new investment
opportunities poised to change the face of investing for years to come.
The cut in the capital gains tax rate may make investing in stocks even more
attractive for many investors. As you are planning for your future financial
needs and taking into consideration your appropriate asset allocation, please do
not overlook the impact of the new tax treatment of capital gains.
And, while you're planning for your financial future, take note that the 1997
tax law makes investing in IRAs even more attractive, particularly with the
introduction of the Roth IRA, a new type of account that offers tax-exempt
distributions in retirement. In addition, the Traditional IRA has been enhanced
with many new features.
The One Group can help you incorporate any of these retirement accounts into
your investment plan. Speak to your investment representative or call
1-800-480-4111 for more information on IRAs.
SEEK ADVICE FOR A YEAR'S WORTH OF EVENTS
With 1997's record volatility and the new investment opportunities introduced by
the tax law, now may be an ideal time to meet with your investment professional
and make sure your investment plan remains on track to meet your financial
needs.
As you probably know, your asset allocation--or the way your investment dollars
are strategically distributed among stock, bond and cash investments according
to your goals, risk tolerance and investing time frame--may be the
single-greatest determinant of your long-term investment success. After a year
full of market ups and downs, your asset allocation probably shifted. For
example, stock market appreciation may have caused your allocation to equities
to swing higher than called for in your plan. Your investment professional can
help you evaluate your plan and, if necessary, get it back on track.
2
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Furthermore, your investment representative can help you make the most of the
Taxpayer Relief Act of 1997. Many of the provisions take effect with the 1998
tax year, so make sure you start off the year with the strategy that's most
appropriate for you.
Thank you for investing with The One Group Family of Mutual Funds and for your
ongoing support of the firm's time-tested investment philosophies. We look
forward to helping you achieve your financial goals in 1998 and beyond.
Sincerely,
/s/ DAVID J. KUNDERT
- ---------------------
David J. Kundert
President and CEO,
Banc One Investment Advisors Corporation,
Investment Advisor to The One Group
[DAVID J. KUNDERT PHOTO]
For a prospectus with more complete information on The One Group Investor Funds,
including management fees and expenses, please contact The One Group at
1-800-480-4111. Please read the prospectus carefully before investing.
(2/98)
3
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
ECONOMIC GROWTH REMAINS STRONG
Despite showing a slight slowdown from the first half of the year, U.S. economic
growth during the second half of 1997 remained robust at a growth rate of 3.7%.
For the entire 12-month period, the U.S. economy grew by a 3.8% growth rate.
Firm employment gains and strong consumer confidence fueled the growth rate. The
unemployment rate headed steadily downward, ending the year at 4.7%. The economy
witnessed an average of 301,500 new non-farm jobs being created per month, when
all that is needed to absorb the growth in the labor force and keep the
unemployment rate steady is 150,000.
LONG-TERM INTEREST RATES DECLINE
Slightly higher inflation in 1996 kept long-term interest rates relatively high
throughout much of 1997. With prices climbing 3.3% on a year-over-year basis in
1996, investors feared that inflation would keep that pace or even climb higher
in 1997.
But, as the year unfolded it became apparent that inflation was, indeed, under
control. For the final six months of the year the inflation rate was 2.0%, and
for the entire year prices were up only 1.7%, the best performance in 11 years.
Low prices helped pave the way for a significant decline in long-term interest
rates by the end of the year. Also significant was the impact of the Asian
financial crisis, which caused currency values to plunge and sent financial
markets into turmoil. As worldwide events unfolded during the second half of the
year, it became clear that the Asian economies would weaken. This caused
investors throughout the world to turn to the safety of U.S. Treasury
securities, which helped drive up prices.
As a result of these events, long-term interest rates showed a significant
decline during the second half of 1997--a decline that was much greater than the
economic fundamentals supported. At the end of the year, the yield on the
30-year U.S. Treasury bond was 5.92%, after starting the year at 6.64% and
climbing to a high of 7.17% in early April.
FED REMAINS IDLE
The Federal Reserve remained on the sidelines during the second half of the
year, after raising interest rates just once in all of 1997--a 0.25% increase of
the federal funds rate in March. This lack of monetary policy action kept
short-term interest rates relatively steady for the remainder of the year.
The impact of the Asian currency crisis and market meltdowns may have
contributed to the Fed's decision to keep rates unchanged in the second half of
1997. While strong economic growth certainly created a valid reason for another
rate hike, the Fed resisted the temptation, figuring that the Asian situation
would contribute to slower growth ahead.
LOOKING AHEAD
In terms of U.S. economic growth, the Asian crisis remains a factor that can't
be ignored. Thirty percent of U.S. exports go to Asia, and with many Asian
countries facing currency devaluations of 35% to 80%, consumers in that region
have significantly less purchasing power. Furthermore, there's the possibility
that this currency crisis could spread to Latin America, where another 20% of
U.S. exports are at risk if there are some currency devaluations.
The United States accounts for 28% of the non-Asian global economy, and,
therefore, should be heavily influenced by the change in trade flows from Asia.
Asian stock markets have dropped nearly 70% over the last several months, which
undoubtedly will be reflected in lower overall consumption, particularly for
foreign imports. And, as prices on goods produced in Asia continue to fall, U.S.
imports from that region should go up.
As a result, cheaper goods coming from Asia, and possibly Latin America, should
force domestic competitors to lower their prices (or face sharply lower sales
prospects). This could push the U.S. inflation rate to as low as 1.5% in 1998,
compared to 1.7% in 1997 and 3.3% in 1996. At the same time, fewer U.S. exports
and greater imports should cause economic growth to slow to a 2% year-over-year
average for 1998.
4
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Given all the instability overseas and the impending effects of a slowdown in
the U.S. economy, we believe that the Federal Reserve will lower interest rates
in 1998, probably sometime in the second half of the year. Long-term interest
rates should continue their downward trend, due to lower inflation and lower
economic growth. By the end of the year, we may see the yield on the 30-year
Treasury bond somewhere between 5.5% and 5.75%.
/s/ ANTHONY CHAN
- ------------------
Anthony Chan, Ph.D.
Managing Director and Chief Economist
Banc One Investment Advisors
5
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Treasury Only Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (98.6%):
U.S. Treasury Bills (25.7%):
$125,412 1/22/98 (b)........................ $125,033
4,490 2/5/98............................. 4,467
2,489 2/12/98............................ 2,473
5,000 3/5/98............................. 4,953
52,500 3/26/98............................ 51,861
8,940 11/12/98........................... 8,528
--------
197,315
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes (72.9%):
$100,000 7.88%, 1/15/98..................... $100,090
125,000 5.63%, 1/31/98..................... 124,993
189,177 7.25%, 2/17/98..................... 189,546
75,000 5.13%, 2/28/98..................... 74,950
1,065 7.88%, 4/15/98..................... 1,072
50,000 7.88%, 4/30/98 (b)................. 50,060
5,000 5.25%, 7/31/98..................... 4,990
15,000 6.13%, 8/31/98..................... 15,039
--------
560,740
--------
Total U.S. Treasury Obligations 758,055
--------
Total (Amortized Cost $758,055) (a) $758,055
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $768,616.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (46.2%):
Federal Farm Credit Bank (4.9%):
$ 25,000 5.66%, 1/30/98..................... $ 24,888
25,000 5.45%, 3/3/98...................... 24,988
25,000 5.60%, 10/1/98..................... 24,960
----------
74,836
----------
Federal Home Loan Bank (10.9%):
9,750 5.99%, 2/9/98...................... 9,753
25,000 6.12%, 4/17/98..................... 24,999
45,000 5.90%, 6/19/98..................... 45,049
25,000 5.80%, 9/18/98..................... 25,013
7,550 5.69%, 10/2/98..................... 7,552
20,000 5.68%, 10/16/98.................... 19,989
10,000 5.90%, 10/23/98*................... 9,998
25,000 5.84%, 12/17/98.................... 24,987
----------
167,340
----------
Federal Home Loan Mortgage Corp. (3.7%):
25,000 5.73%, 2/20/98..................... 24,804
6,500 5.72%, 3/17/98..................... 6,501
25,000 5.95%, 6/19/98..................... 24,994
----------
56,299
----------
Federal National Mortgage Assoc. (19.6%):
22,000 5.48%, 1/2/98...................... 22,000
25,000 5.48%, 1/2/98...................... 25,000
45,000 5.55%, 1/28/98..................... 44,815
25,000 5.48%, 2/5/98...................... 24,869
25,000 6.02%, 4/15/98..................... 24,993
25,000 6.08%, 5/6/98...................... 25,031
48,420 5.89%, 5/21/98..................... 48,405
25,000 5.72%, 8/28/98..................... 25,016
20,000 5.71%, 9/9/98...................... 19,982
10,000 5.94%, 11/4/98*.................... 9,997
4,000 5.50%, 6/2/99*..................... 4,000
20,000 5.50%, 7/26/99*.................... 20,000
10,000 5.50%, 9/22/99*.................... 10,000
----------
304,108
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES, CONTINUED:
Student Loan Marketing Assoc. (7.1%):
$ 65,000 5.62%, 9/28/98*.................... $ 64,914
25,000 5.62%, 11/10/98*................... 24,999
10,000 5.64%, 1/13/99*.................... 10,000
10,000 5.65%, 8/2/99*..................... 9,998
----------
109,911
----------
Total U.S. Government Agency Securities 712,494
----------
U.S. TREASURY OBLIGATIONS (1.6%):
U.S. Treasury Notes (1.6%):
25,000 5.25%, 7/31/98..................... 24,949
----------
Total U.S. Treasury Obligations 24,949
----------
REPURCHASE AGREEMENTS (52.2%):
325,000 Barclays De Zoette Wedd Securities,
Inc., 6.67%, 1/2/98
(collateralized by $320,594
various U.S. Government Agency
Securities, 5.95% - 7.00%,
1/8/98 - 8/13/07, market value
$331,501)........................ 325,000
352,000 HSBC Securities, Inc., 6.60%,
1/2/98 (collateralized by
$355,405 various U.S. Government
Agency Securities, 0.00% - 9.65%,
2/2/98 - 11/2/18, market value
$359,041)........................ 352,000
77,000 Lehman Brothers Holdings, Inc.,
5.90%, 1/2/98 (collateralized by
$214,151 various U.S. Treasury
STRIPS, 11/15/04 - 2/15/26,
market value $78,541)............ 77,000
51,233 Prudential Securities, 6.80%,
1/2/98 (collateralized by $73,843
various U.S. Goverment
Securities, 0.00% - 9.25%,
2/4/00 - 10/1/27, market value
$52,532)......................... 51,233
----------
Total Repurchase Agreements 805,233
----------
Total (Amortized Cost $1,542,676) (a) $1,542,676
==========
</TABLE>
- ------------
Percentages indicated are based on net assets of $1,542,248.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Securities having interest rates that reset weekly based on the U.S. Treasury
Bill auctions. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at December 31, 1997.
7
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
TREASURY ONLY GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
------------- -------------
<S> <C> <C>
ASSETS:
Investments, at amortized cost.............................. $758,055 $ 737,443
Repurchase agreements, at cost.............................. -- 805,233
-------- ----------
Total....................................................... 758,055 1,542,676
Cash........................................................ 1 --
Interest receivable......................................... 13,971 7,428
Deferred organization costs................................. 1 10
Prepaid expenses and other assets........................... -- 12
-------- ----------
TOTAL ASSETS................................................ 772,028 1,550,126
-------- ----------
LIABILITIES:
Dividends payable........................................... 3,315 7,697
Accrued expenses and other payables:
Investment advisory fees............................... 51 111
Administration fees.................................... 32 70
Other.................................................. 14 --
-------- ----------
TOTAL LIABILITIES........................................... 3,412 7,878
-------- ----------
NET ASSETS:
Capital..................................................... 768,705 1,542,372
Accumulated undistributed net realized gains (losses) from
investment transactions................................... (89) (124)
-------- ----------
NET ASSETS.................................................. $768,616 $1,542,248
======== ==========
Outstanding shares of beneficial interest................... 768,703 1,542,372
======== ==========
Net Asset Value:
Offering and redemption price per share................... $1.00 $1.00
======== =======
</TABLE>
See notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
TREASURY ONLY GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income............................................. $16,252 $39,842
Income from securities lending.............................. 85 3
------- -------
TOTAL INCOME................................................ 16,337 39,845
------- -------
EXPENSES:
Investment advisory fees.................................... 246 561
Administration fees......................................... 153 351
Custodian and accounting fees............................... 14 24
Legal and audit fees........................................ 2 --
Organization costs.......................................... 2 10
Trustees' fees and expenses................................. 4 4
Transfer agent fees......................................... 5 2
Registration and filing fees................................ 15 67
Printing costs.............................................. 1 1
Other....................................................... 18 3
------- -------
TOTAL EXPENSES.............................................. 460 1,023
------- -------
Net Investment Income....................................... 15,877 38,822
------- -------
REALIZED GAINS (LOSSES) FROM INVESTMENT TRANSACTIONS:
Net realized gains (losses) from investment transactions.... 3 61
------- -------
Net increase in net assets resulting from operations........ $15,880 $38,883
======= =======
</TABLE>
See notes to financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
TREASURY ONLY MONEY GOVERNMENT MONEY
MARKET FUND MARKET FUND
-------------------------- --------------------------
<S> <C> <C> <C> <C>
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
----------- ----------- ----------- -----------
<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................... $ 15,877 $ 24,629 $ 38,822 $ 56,288
Net realized gains (losses) from investment
transactions............................. 3 (16) 61 (119)
----------- ----------- ----------- -----------
Change in net assets resulting from
operations.................................... 15,880 24,613 38,883 56,169
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................. (15,877) (24,629) (38,822) (56,288)
----------- ----------- ----------- -----------
Change in net assets from shareholder
distributions................................. (15,877) (24,629) (38,822) (56,288)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................ 1,093,772 1,603,666 2,956,522 4,075,935
Dividends reinvested....................... 1,501 3,409 7,351 11,375
Cost of shares redeemed.................... (807,520) (1,542,160) (2,505,124) (3,859,366)
----------- ----------- ----------- -----------
Change in net assets from share transactions.... 287,753 64,915 458,749 227,944
----------- ----------- ----------- -----------
Change in Net Assets............................ 287,756 64,899 458,810 227,825
NET ASSETS:
Beginning of period........................ 480,860 415,961 1,083,438 855,613
----------- ----------- ----------- -----------
End of period.............................. $ 768,616 $ 480,860 $ 1,542,248 $ 1,083,438
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued..................................... 1,093,772 1,603,664 2,956,522 4,075,935
Reinvested................................. 1,501 3,409 7,351 11,375
Redeemed................................... (807,520) (1,542,160) (2,505,124) (3,859,366)
----------- ----------- ----------- -----------
Change in shares................................ 287,753 64,913 458,749 227,944
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
(Unaudited)
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Treasury Only Money
Market Fund and the Government Money Market Fund (individually a "Fund",
collectively the "Funds") only. The Funds are diversified mutual funds and
are not offered in multiple classes.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Treasury Only Money Market Fund High current income with liquidity and stability of
principal with the added assurance of a fund that does
not purchase securities that are subject to repurchase
agreements.
Government Money Market Fund High current income with liquidity and stability of
principal.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the
maturity of the security. In addition, the Funds may not (a) purchase any
instrument with a remaining maturity greater than thirteen months unless
such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
REPURCHASE AGREEMENTS
The Government Money Market Fund may invest in repurchase agreements with
institutions that are deemed by Banc One Investment Advisors Corporation
(the "Advisor") to be of good standing and creditworthy under guidelines
established by the Board of Trustees. Each repurchase agreement is
recorded at cost. The Fund requires that the securities purchased in a
repurchase agreement transaction be transferred to the custodian in a
manner sufficient to enable the Fund to obtain those securities in the
event of a counterparty default. The seller, under the repurchase
agreement, is required to maintain the value of the securities held at
not less than the repurchase price, including accrued interest.
Repurchase agreements are considered to be loans by a fund under the 1940
Act.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Interest income, including any discount
or premium, is accrued as earned using the effective interest method.
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Interest income, including any discount
or premium, is accrued as earned using the effective interest method.
Continued
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan
be continuously secured by cash, U.S. Government or U.S. Government
Agency securities, shares of an investment trust or mutual fund, or any
combination of cash and such securities as collateral equal at all times
to at least 100% of the market value plus accrued interest on the
securities lent. The Funds continue to earn interest on securities lent
while simultaneously seeking to earn interest on the investment of
collateral. Collateral is marked to market daily to provide a level of
collateral at least equal to the market value of securities lent. There
may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines
established by the Board of Trustees and when, in the judgment of the
Advisor, the consideration which can be earned currently from such
securities loans justifies the attendant risks. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore,
not considered to be illiquid investments. As of December 31, 1997, the
following Fund had securities with the following amortized cost on loan
(amount in thousands):
<TABLE>
<CAPTION>
AMORTIZED COST
OF LOANED
SECURITIES
--------------
<S> <C>
Treasury Only Money Market Fund............................. $171,768
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities as of December 31, 1997.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Net investment income for this purpose consists of interest accrued and
discount earned (including both original issue discount and market
discount) less amortization of any market premium and accrued expenses.
Net realized capital gains, if any, are distributed at least annually.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses. Permanent book and tax
basis differences, if any, have been reclassified among the components of
net assets.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization,
including the fees and expenses of registering and qualifying its shares
for distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs, which are
attributable to more than one fund of the Trust, have been allocated
among the respective funds pro-rata, based on the relative net assets of
each Fund. In the event that any of the initial shares are redeemed
during such period by any holder thereof, the related Fund will be
reimbursed by
Continued
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
such holder for any unamortized organization costs in the proportion as
the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary, Class A, Class B, Class C and
Service Class. Currently, the Trust consists of thirty-three active Funds,
and not all Funds offer all classes of shares. As of December 31, 1997, there
were no shareholders in the Service Class. Shareholders are entitled to one
vote for each full share held and will vote in the aggregate and not by class
or series, except as otherwise expressly required by law or when the Board of
Trustees has determined that the matter to be voted on affects only the
interest of shareholders of a particular class or series.
4. INVESTMENT ADVISORY, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS:
The Trust and Advisor are parties to an investment advisory agreement under
which the Advisor is entitled to receive a fee, computed daily and paid
monthly, equal to 0.08% of the average daily net assets of each Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administrative agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly at an annual rate of 0.05% of
each Fund's average daily net assets. The Advisor also serves as
Sub-Administrator to each fund of the Trust, pursuant to an agreement between
the Administrator and the Advisor. Pursuant to this agreement, the Advisor
performs many of the Administrator's duties, for which the Advisor receives a
fee paid by the Administrator.
The One Group Services Company (the "Distributor") and the Trust are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. No compensation is paid to the Distributor for distribution
services for the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
13
<PAGE>
-----------------------------------------------------------------------------
The One Group Family of Mutual Funds
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY ONLY MONEY MARKET FUND
--------------------------------------------------------------------
SIX MONTHS APRIL 16,
ENDED YEARS ENDED JUNE 30, 1993 TO
DECEMBER 31, ----------------------------------------- JUNE 30,
1997 1997 1996 1995 1994 1993(A)
------------ -------- -------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------
Investment Activities:
Net investment income...................... 0.026 0.051 0.052 0.051 0.032 0.006
-------- -------- -------- -------- -------- -------
Distributions:
Net investment income...................... (0.026) (0.051) (0.052) (0.051) (0.032) (0.006)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD.............................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== =======
Total Return................................. 2.64%(b) 5.24% 5.38% 5.22% 3.23% 2.96%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $768,616 $480,860 $415,961 $288,697 $217,725 $60,330
Ratio of expenses to average net assets.... 0.15%(c) 0.15% 0.17% 0.20% 0.15% 0.07%(c)
Ratio of net investment income to average
net assets............................... 5.18%(c) 5.12% 5.23% 5.14% 3.23% 2.95%(c)
Ratio of expenses to average net assets*... 0.15%(c) 0.15% 0.17% 0.21% 0.22% 0.33%(c)
Ratio of net investment income to average
net assets*.............................. 5.18%(c) 5.12% 5.23% 5.13% 3.16% 2.69%(c)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------
SIX MONTHS JUNE 14,
ENDED YEARS ENDED JUNE 30, 1993 TO
DECEMBER 31, ---------------------------------------------- JUNE 30,
1997 1997 1996 1995 1994 1993(a)
------------ ---------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- -------- -------- -------- --------
Investment Activities:
Net investment income.................... 0.028 0.053 0.055 0.053 0.033 0.001
---------- ---------- -------- -------- -------- --------
Distributions:
Net investment income.................... (0.028) (0.053) (0.055) (0.053) (0.033) (0.001)
---------- ---------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD............................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ======== ======== ======== ========
Total Return............................... 2.82%(b) 5.43% 5.61% 5.41% 3.40% 3.28%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........ $1,542,248 $1,083,438 $855,613 $720,699 $692,253 $244,991
Ratio of expenses to average net
assets................................. 0.15%(c) 0.14% 0.18% 0.21% 0.11% 0.07%(c)
Ratio of net investment income to average
net assets............................. 5.53%(c) 5.31% 5.46% 5.28% 3.41% 3.13%(c)
Ratio of expenses to average net
assets*................................ 0.15%(c) 0.14% 0.18% 0.22% 0.20% 0.33%(c)
Ratio of net investment income to average
net assets*............................ 5.53%(c) 5.31% 5.46% 5.27% 3.32% 2.87%(c)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
15
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
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, including
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] TOG-F-039
<PAGE>
Money
Market Funds
Semi- Annual Report
For the six months ended December 31, 1997
U.S. Treasury Securities
Money Market Fund
Prime Money Market Fund
Municipal Money Market Fund
Ohio Municipal Money Market Fund
[THE ONE GROUP FAMILY OF MUTUAL FUNDS LOGO]
<PAGE>
----------------------------------------------------------
Important Customer Information. Investment Products:
* are not deposits or obligations of or guaranteed by,
BANC ONE CORPORATION or any of its affiliates,
* are not insured by the FDIC, and
----
* are subject to investment risks, including possible FDIC
loss of the principal amount invested. LOGO
----
-----------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Report From Your Investment Advisor........................................ 2
Portfolio Performance Review............................................... 4
Schedules of Portfolio Investments.......................................... 6
Statements of Assets and Liabilities....................................... 18
Statements of Operations................................................... 19
Statements of Changes in Net Assets........................................ 20
Notes to Financial Statements.............................................. 22
Financial Highlights....................................................... 28
1
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
We are pleased to present this semiannual report for The One Group(R) Family of
Mutual Funds. On the following pages, you will find an overview of the financial
markets and your fund's performance for the period from July 1, 1997, through
December 31, 1997.
DEAR VALUED SHAREHOLDER:
Thank you for continuing to support The One Group Family of Mutual Funds during
an interesting, challenging and ultimately rewarding year for investors.
Despite strong volatility throughout 1997 and turmoil in Asia, the Dow Jones
Industrial Average was up 24.94% for 1997. Never before had the index returned
more than 20% for three consecutive years. The S&P 500 Index soared even higher,
closing the year up 33.36%.
At the same time, and largely the result of low inflation, a strong U.S. dollar
and the flight to quality spurred by the Asian crisis, U.S. bond yields ended
the year on an impressive note. The 30-year Treasury, for example, ended the
year yielding 5.92%, close to its 20-year low. (As bond yields fall, bond prices
go up.)
ONCE AGAIN, A PHILOSOPHY REINFORCED
While the calendar-year returns for both the stock and bond markets are
impressive, events in the final six months of 1997 may be the most memorable. On
August 6, the Dow closed at 8,259, a record high and its peak for the calendar
year. Shortly thereafter, though, volatility rocked the market, as the effects
of the Asian financial crisis worked their way west. These forces culminated on
Monday, October 27, when the Dow plummeted more than 554 points, its
largest-ever point decline.
This drop may be the defining moment for 1997's financial markets, and it
presented a significant challenge for investors. But, rather than panicking,
shareholders of The One Group demonstrated a clear understanding of market
dynamics and the importance of maintaining a long-term investment philosophy.
I am pleased to report that there were no significant redemptions of One Group
shares after "Black Monday." To us, this implies that our investors understand
the potential dangers of selling their investments based on short-term
volatility. In fact, The One Group experienced a record purchase day on Tuesday,
October 28, indicating that investors realize the benefits of staying focused on
the stock market's long-term potential.
TAX BILL CHANGES FACE OF INVESTING
The second half of 1997 may be remembered as much for the jubilance it brought
investors as for the turmoil. The Taxpayer Relief Act of 1997 became law,
ushering in lower capital gains taxes for investors and new investment
opportunities poised to change the face of investing for years to come.
The cut in the capital gains tax rate may make investing in stocks even more
attractive for many investors. As you are planning for your future financial
needs and taking into consideration your appropriate asset allocation, please do
not overlook the impact of the new tax treatment of capital gains.
And, while you're planning for your financial future, take note that the 1997
tax law makes investing in IRAs even more attractive, particularly with the
introduction of the Roth IRA, a new type of account that offers tax-exempt
distributions in retirement. In addition, the Traditional IRA has been enhanced
with many new features.
The One Group can help you incorporate any of these retirement accounts into
your investment plan. Speak to your investment representative or call
1-800-480-4111 for more information on IRAs.
SEEK ADVICE FOR A YEAR'S WORTH OF EVENTS
With 1997's record volatility and the new investment opportunities introduced by
the tax law, now may be an ideal time to meet with your investment professional
and make sure your investment plan remains on track to meet your financial
needs.
As you probably know, your asset allocation--or the way your investment dollars
are strategically distributed among stock, bond and cash investments according
to your goals, risk tolerance and investing time frame--may be the
single-greatest determinant of your long-term investment success. After a year
full of market ups and downs, your asset allocation probably shifted. For
example, stock market appreciation may have caused your allocation to equities
to swing higher than called for in your plan. Your investment professional can
help you evaluate your plan and, if necessary, get it back on track.
2
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Furthermore, your investment representative can help you make the most of the
Taxpayer Relief Act of 1997. Many of the provisions take effect with the 1998
tax year, so make sure you start off the year with the strategy that's most
appropriate for you.
Thank you for investing with The One Group Family of Mutual Funds and for your
ongoing support of the firm's time-tested investment philosophies. We look
forward to helping you achieve your financial goals in 1998 and beyond.
Sincerely,
LOGO
David J. Kundert
President and CEO,
Banc One Investment Advisors Corporation,
Investment Advisor to The One Group
David J. Kundert photo
For a prospectus with more complete information on The One Group Investor Funds,
including management fees and expenses, please contact The One Group at
1-800-480-4111. Please read the prospectus carefully before investing.
(2/98)
3
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
ECONOMIC GROWTH REMAINS STRONG
Despite showing a slight slowdown from the first half of the year, U.S. economic
growth during the second half of 1997 remained robust at a growth rate of 3.7%.
For the entire 12-month period, the U.S. economy grew by a 3.8% growth rate.
Firm employment gains and strong consumer confidence fueled the growth rate. The
unemployment rate headed steadily downward, ending the year at 4.7%. The economy
witnessed an average of 301,500 new non-farm jobs being created per month, when
all that is needed to absorb the growth in the labor force and keep the
unemployment rate steady is 150,000.
LONG-TERM INTEREST RATES DECLINE
Slightly higher inflation in 1996 kept long-term interest rates relatively high
throughout much of 1997. With prices climbing 3.3% on a year-over-year basis in
1996, investors feared that inflation would keep that pace or even climb higher
in 1997.
But, as the year unfolded it became apparent that inflation was, indeed, under
control. For the final six months of the year the inflation rate was 2.0%, and
for the entire year prices were up only 1.7%, the best performance in 11 years.
Low prices helped pave the way for a significant decline in long-term interest
rates by the end of the year. Also significant was the impact of the Asian
financial crisis, which caused currency values to plunge and sent financial
markets into turmoil. As worldwide events unfolded during the second half of the
year, it became clear that the Asian economies would weaken. This caused
investors throughout the world to turn to the safety of U.S. Treasury
securities, which helped drive up prices.
As a result of these events, long-term interest rates showed a significant
decline during the second half of 1997--a decline that was much greater than the
economic fundamentals supported. At the end of the year, the yield on the
30-year U.S. Treasury bond was 5.92%, after starting the year at 6.64% and
climbing to a high of 7.17% in early April.
FED REMAINS IDLE
The Federal Reserve remained on the sidelines during the second half of the
year, after raising interest rates just once in all of 1997--a 0.25% increase of
the federal funds rate in March. This lack of monetary policy action kept
short-term interest rates relatively steady for the remainder of the year.
The impact of the Asian currency crisis and market meltdowns may have
contributed to the Fed's decision to keep rates unchanged in the second half of
1997. While strong economic growth certainly created a valid reason for another
rate hike, the Fed resisted the temptation, figuring that the Asian situation
would contribute to slower growth ahead.
LOOKING AHEAD
In terms of U.S. economic growth, the Asian crisis remains a factor that can't
be ignored. Thirty percent of U.S. exports go to Asia, and with many Asian
countries facing currency devaluations of 35% to 80%, consumers in that region
have significantly less purchasing power. Furthermore, there's the possibility
that this currency crisis could spread to Latin America, where another 20% of
U.S. exports are at risk if there are some currency devaluations.
The United States accounts for 28% of the non-Asian global economy, and,
therefore, should be heavily influenced by the change in trade flows from Asia.
Asian stock markets have dropped nearly 70% over the last several months, which
undoubtedly will be reflected in lower overall consumption, particularly for
foreign imports. And, as prices on goods produced in Asia continue to fall, U.S.
imports from that region should go up.
As a result, cheaper goods coming from Asia, and possibly Latin America, should
force domestic competitors to lower their prices (or face sharply lower sales
prospects). This could push the U.S. inflation rate to as low as 1.5% in 1998,
compared to 1.7% in 1997 and 3.3% in 1996. At the same time, fewer U.S. exports
and greater imports should cause economic growth to slow to a 2% year-over-year
average for 1998.
4
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Given all the instability overseas and the impending effects of a slowdown in
the U.S. economy, we believe that the Federal Reserve will lower interest rates
in 1998, probably sometime in the second half of the year. Long-term interest
rates should continue their downward trend, due to lower inflation and lower
economic growth. By the end of the year, we may see the yield on the 30-year
Treasury bond somewhere between 5.5% and 5.75%.
/s/ Anthony Chan
Anthony Chan, Ph.D.
Managing Director and Chief Economist
Banc One Investment Advisors
5
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
U.S. Treasury Securities Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (16.7%):
U.S. Treasury Bills (9.2%):
$ 55,000 3/5/98 (b)......................... $ 54,484
150,000 3/26/98............................ 148,202
25,000 6/25/98............................ 24,348
100,000 11/12/98........................... 95,398
----------
322,432
----------
U.S. Treasury Notes (7.5%):
120,000 5.25%, 7/31/98..................... 119,759
95,000 6.13%, 8/31/98..................... 95,232
50,000 5.88%, 10/31/98.................... 50,113
----------
265,104
----------
Total U.S. Treasury Obligations 587,536
----------
REPURCHASE AGREEMENTS (83.6%):
175,000 Aubrey G. Lanston & Co., 6.50%,
1/2/98 (Collateralized by
$169,891 various U.S. Treasury
Securities, 5.88% - 6.63%,
11/15/05 - 2/15/27, market
value - $179,385)................ 175,000
175,000 Barclays De Zoette Wedd, 6.63%,
1/2/98 (Collateralized by
$202,633 various U.S. Treasury
Securities, 0.00% - 12.38%,
7/31/98 - 2/15/26, market
value - $178,501)................ 175,000
160,000 CIBC Wood Gundy, 6.50%, 1/2/98
(Collateralized by $121,298
various U.S. Treasury Securities,
7.25% - 12.00%,
8/15/13 - 8/15/22, market
value - $163,604)................ 160,000
299,317 Deutsche Morgan Grenfell, 6.80%,
1/2/98 (Collateralized by
$291,824 various U.S. Treasury
Securities, 0.00% - 12.50%,
8/15/98 - 5/15/21, market
value - $305,303)................ 299,317
250,000 Deutsche Morgan Grenfell, 7.30%,
1/5/98 (Collateralized by
$243,743 various U.S. Treasury
Securities, 0.00% - 12.50%,
8/15/98 - 5/15/21, market
value - $255,000)................ 250,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS, CONTINUED:
$ 170,000 Donaldson, Lufkin & Jenrette,
6.50%, 1/2/98 (Collateralized by
$143,145 various U.S. Treasury
Securities, 5.63% - 10.38%,
2/15/99 - 2/15/19, market
value - $173,400)................ $ 170,000
165,000 Dresdner Securities, 5.00%, 1/2/98
(Collateralized by $140,996
various U.S. Treasury Securities,
6.25% - 8.13%, 8/15/21 - 8/15/25,
market value - $167,391)......... 165,000
865,000 Goldman Sachs, 6.53%, 1/2/98
(Collateralized by $799,232
various U.S. Treasury Securities,
0.00% - 13.13%,
1/2/98 - 11/15/27, market
value - $882,300)................ 865,000
175,000 HSBC Securities, 6.55%, 1/2/98
(Collateralized by $307,505
various U.S. Treasury Securities,
0.00% - 11.75%,
6/30/02 - 2/15/27, market
value - $178,504)................ 175,000
175,000 J.P. Morgan Securities, 6.30%,
1/2/98 (Collateralized by
$169,587 various U.S. Treasury
Securities, 5.63% - 7.25%,
12/31/99 - 8/15/26, market
value - $178,501)................ 175,000
175,000 Lehman Brothers Holding, Inc.,
6.40%, 1/2/98 (Collateralized by
$377,778 various U.S. Treasury
Securities, 0.00%,
11/15/98 - 2/15/23, market
value - $178,503)................ 175,000
160,000 Morgan Stanley, 6.20%, 1/2/98
(Collateralized by $158,825 U.S.
Treasury Notes, 6.75% - 7.50%,
6/30/99 - 11/15/01, market
value - $163,282)................ 160,000
----------
Total Repurchase Agreements 2,944,317
----------
Total (Amortized Cost $3,531,853) (a) $3,531,853
==========
</TABLE>
- ------------
See notes to financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Percentages indicated are based on net assets of $3,521,750.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
7
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Prime Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
CERTIFICATES OF DEPOSIT (3.5%):
Banking (3.5%):
$ 25,000 Bankers Trust New York Corp.,
6.11%, 3/25/98................... $ 24,998
25,000 Bankers Trust New York Corp.,
6.00%, 7/7/98.................... 24,995
25,000 Bankers Trust New York Corp.,
5.88%, 7/14/98................... 24,996
20,000 Bankers Trust New York Corp.,
5.92%, 7/17/98................... 19,997
25,000 Bankers Trust New York Corp.,
5.91%, 8/7/98.................... 24,994
----------
Total Certificates of Deposit 119,980
----------
COMMERCIAL PAPER (52.5%):
Automotive (1.9%):
40,000 American Honda Finance Corp.,
5.63%, 1/30/98................... 39,818
25,000 Mitsubishi Motors Credit of
America, Inc., 6.38%, 2/25/98.... 24,757
----------
64,575
----------
Banking (1.6%):
25,000 Abbey National North America,
5.54%, 3/16/98................... 24,716
20,000 Galicia Funding Corp., 5.75%,
3/2/98........................... 19,808
10,000 Garanti Funding Corp., 5.75%,
5/1/98........................... 9,808
----------
54,332
----------
Computer Software (3.6%):
18,200 CSC Enterprises, 5.61%, 1/6/98..... 18,186
19,000 CSC Enterprises, 5.63%, 2/5/98..... 18,896
25,850 CSC Enterprises, 5.66%, 2/10/98.... 25,687
30,000 CSC Enterprises, 5.70%, 2/12/98.... 29,801
30,000 CSC Enterprises, 5.75%, 3/4/98..... 29,703
----------
122,273
----------
Construction (2.1%):
27,000 Cemex, SA de CV, 5.56%, 1/8/98..... 26,971
20,000 Cemex, SA de CV, 5.62%, 1/26/98.... 19,922
15,000 Cemex, SA de CV, 5.62%, 1/29/98.... 14,934
10,000 Cemex, SA de CV, 5.62%, 2/11/98.... 9,936
----------
71,763
----------
Consumer Goods & Services (0.7%):
25,000 Newell Co., 5.60%, 2/3/98.......... 24,872
----------
Financial Services (21.0%):
35,497 Banner Receivables Corp., 6.00%,
1/12/98.......................... 35,432
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Financial Services, continued:
$ 50,000 Banner Receivables Corp., 5.65%,
1/23/98.......................... $ 49,828
40,000 Banner Receivables Corp., 6.20%,
1/26/98.......................... 39,828
29,795 Banner Receivables Corp., 6.04%,
2/17/98.......................... 29,560
25,000 Broadway Capital, 6.20%, 1/23/98... 24,905
32,450 Broadway Capital, 6.02%, 1/27/98... 32,309
30,371 Broadway Capital, 6.20%, 2/4/98.... 30,193
9,300 Broadway Capital, 6.15%, 2/17/98... 9,225
40,000 Broadway Capital, 6.20%, 2/18/98... 39,669
25,000 Broadway Capital, 6.05%, 2/20/98... 24,790
30,000 CXC, Inc., 5.55%, 1/14/98.......... 29,940
42,000 CXC, Inc., 5.63%, 2/4/98........... 41,777
13,160 Gotham Funding Corp., 6.35%,
1/5/98........................... 13,151
20,000 Gotham Funding Corp., 6.34%,
1/8/98........................... 19,975
26,473 Gotham Funding Corp., 6.20%,
1/30/98.......................... 26,340
13,595 Gotham Funding Corp., 6.28%,
2/2/98........................... 13,519
25,000 Gotham Funding Corp., 6.33%,
2/11/98.......................... 24,820
20,337 Gotham Funding Corp., 6.05%,
2/17/98.......................... 20,176
40,000 Gotham Funding Corp., 6.25%,
2/24/98.......................... 39,625
50,000 Kitty Hawk Funding Corp., 5.78%,
3/17/98.......................... 49,398
38,639 Old Line Funding Corp., 6.07%,
2/5/98........................... 38,411
14,155 Old Line Funding Corp., 5.82%,
2/20/98.......................... 14,041
20,000 Variable Funding Capital Corp.,
5.88%, 1/27/98................... 19,915
44,085 Variable Funding Capital Corp.,
5.77%, 3/19/98................... 43,541
----------
710,368
----------
Gas & Electric Utility (5.5%):
24,582 AES Shady Point, Inc., 5.62%,
1/16/98.......................... 24,524
20,000 AES Shady Point, Inc., 5.69%,
1/22/98.......................... 19,934
46,918 Cogentrix of Richmond, Inc., 5.85%,
1/13/98.......................... 46,827
19,418 Cogentrix of Richmond, Inc., 5.90%,
1/15/98.......................... 19,373
29,406 Cogentrix of Richmond, Inc., 5.90%,
1/16/98.......................... 29,334
</TABLE>
Continued
8
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Prime Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Gas & Electric Utility, continued:
$ 25,000 National Rural Utilities Finance
Corp., 5.54%, 2/12/98............ $ 24,838
20,000 National Rural Utilities Finance
Corp., 5.54%, 2/17/98............ 19,855
----------
184,685
----------
Industrial Goods & Services (0.8%):
28,700 Hosokawa Micron International,
Inc., 6.25%, 1/26/98............. 28,575
----------
Insurance (3.4%):
40,000 Safeco Credit Co., 5.67%, 2/2/98... 39,799
50,000 Safeco Credit Co., 5.85%,
2/23/98.......................... 49,569
25,000 Safeco Credit Co., 5.76%,
3/11/98.......................... 24,724
----------
114,092
----------
Office Equipment & Services (1.6%):
26,000 Xerox Mexicana SA de CV, 5.66%,
1/15/98.......................... 25,943
27,097 Xerox Mexicana SA de CV, 5.80%,
2/9/98........................... 26,927
----------
52,870
----------
Oil & Gas Exploration (2.7%):
27,000 Pemex Capital, Inc., 5.70%,
4/9/98........................... 26,581
25,000 Pemex Capital, Inc., 5.70%,
4/22/98.......................... 24,561
10,000 Petroleo Brasileiro SA, Series C,
5.55%, 3/18/98................... 9,883
30,000 Petroleo Brasileiro SA, Series C,
5.54%, 3/27/98................... 29,607
----------
90,632
----------
Pharmaceuticals (1.8%):
23,000 Akzo Nobel, Inc., 5.55%, 2/24/98... 22,809
20,000 Akzo Nobel, Inc., 5.67%, 3/20/98... 19,754
20,000 Akzo Nobel, Inc., 5.67%, 3/23/98... 19,745
----------
62,308
----------
Real Estate (4.3%):
50,000 75 State Street Capital Corp.,
5.90%, 1/21/98................... 49,836
50,000 Countrywide Home Loans, 6.70%,
1/5/98........................... 49,962
46,300 Countrywide Home Loans, 6.15%,
1/29/98.......................... 46,079
----------
145,877
----------
Retail (1.5%):
11,950 Sotheby's, Inc., 5.93%, 1/21/98.... 11,911
10,000 Sotheby's, Inc., 6.00%, 1/26/98.... 9,958
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Retail, continued:
$ 30,000 Sotheby's, Inc., 6.00%, 1/28/98.... $ 29,865
----------
51,734
----------
Total Commercial Paper 1,778,956
----------
CORPORATE NOTES & BONDS (4.7%):
Banking (1.5%):
25,000 Abbey National, 5.88%, 12/22/98.... 24,987
25,000 PNC Bank N.A., 6.05%, 5/28/98...... 24,991
----------
49,978
----------
Brokerage Services (1.2%):
25,000 Bear Stearns Co., Inc., 6.30%,
4/16/98.......................... 25,000
15,000 Credit Suisse First Boston, 6.12%,
3/31/98.......................... 14,996
----------
39,996
----------
Computer Hardware (2.0%):
43,500 IBM Credit Corp., 5.75%, 1/20/98... 43,499
25,000 IBM Credit Corp., 6.07%, 5/19/98... 25,000
----------
68,499
----------
Total Corporate Notes & Bonds 158,473
----------
FUNDING AGREEMENTS (9.8%):
50,000 Allstate Life Insurance Co., 5.86%,
8/31/98*......................... 50,000
160,000 General American Life Insurance
Co., 5.89%, 2/19/98*............. 160,000
60,000 Peoples Security Life Insurance
Co., 5.85%, 9/1/98*.............. 60,000
35,000 Providian Life & Health Insurance
Co., 6.01%, 9/1/98*.............. 35,000
25,000 Providian Life & Health Insurance
Co., 6.01%, 11/1/98*............. 25,000
----------
Total Funding Agreements 330,000
----------
U.S. GOVERNMENT AGENCY SECURITIES (1.5%):
Student Loan Marketing Assoc. (1.5%):
50,000 5.62%, 9/28/98*.................... 50,000
----------
Total U.S. Government Agency Securities 50,000
----------
YANKEE & EURODOLLAR (16.0%):
Banking (16.0%):
40,000 ABN Amro Bank NV, 6.27%, 4/17/98... 39,997
50,000 Bank of Nova Scotia, 5.89%,
12/15/98......................... 50,005
</TABLE>
Continued
9
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Prime Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
YANKEE & EURODOLLAR, CONTINUED:
Banking, continued:
$ 50,000 Bank of Nova Scotia - SCIOTABANK,
5.95%, 6/30/98................... $ 49,986
25,000 Bayerische Landesbank, 5.81%,
12/17/98......................... 24,984
30,000 Bayerische Verinsbank AG, 5.70%,
10/6/98.......................... 29,987
25,000 Canadian Imperial Bank of Commerce,
5.94%, 10/21/98.................. 24,988
22,000 Deutsche Bank A.G., 6.20%,
4/8/98........................... 22,005
23,500 Dresdner Bank A.G., 5.85%,
2/13/98.......................... 23,500
25,000 National Australia Bank, 5.74%,
10/13/98......................... 24,991
12,000 Rabobank Nederland, 5.75%,
2/3/98........................... 11,997
12,000 Rabobank Nederland, 5.53%,
4/1/98........................... 11,834
25,000 Royal Bank of Canada, 6.08%,
5/20/98.......................... 24,997
25,000 Royal Bank of Canada, 6.05%,
6/8/98........................... 24,995
25,000 Societe Generale, 5.85%, 3/3/98.... 24,999
25,000 Societe Generale, 6.18%, 5/6/98.... 24,998
26,000 Societe Generale, 5.86%, 7/21/98... 25,981
25,000 Societe Generale, 5.97%, 9/15/98... 24,992
25,000 Societe Generale, 5.88%,
12/16/98......................... 24,993
25,000 Swiss Bank Corp., 5.90%, 8/28/98... 24,992
25,000 Swiss Bank Corp., 5.83%,
12/16/98......................... 24,984
----------
Total Yankee & Eurodollar 540,205
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS (11.9%):
$ 67,114 Lehman Brothers Holdings, Inc.,
5.90%, 1/2/98 (Collateralized by
$265,245 various U.S. Government
Agency Securities, 0.00%,
6/25/12 - 11/29/19, market
value - $68,457)................. $ 67,114
175,000 Lehman Brothers Holdings, Inc.,
6.50%, 1/2/98 (Collateralized by
$586,050 various U.S. Government
Agency Securities, 0.00%,
5/15/98 - 2/15/27, market
value - $178,503)................ 175,000
160,000 Prudential Securities, Inc., 6.80%,
1/20/98 (collateralized by
$245,566 various U.S. Government
Agency Securities, 0.00% - 9.00%,
2/28/98 - 12/18/27, market
value - $164,513)................ 160,000
----------
Total Repurchase Agreements 402,114
----------
Total (Amortized Cost $3,379,728) (a) $3,379,728
==========
</TABLE>
- ------------
Percentages indicated are based on net assets of $3,384,126.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities. The interest rate, which will change periodically,
is based upon an index of market rates. The rate reflected on the Schedule of
Portfolio Investments is the rate in effect at December 31, 1997.
See notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
DAILY DEMAND NOTES (8.6%):
Alabama (1.2%):
$ 4,100 Phenix City, IDR for Mead, AMT,
5.10%, 3/1/31, LOC: Bayerische
Landesbank*....................... $ 4,100
3,000 Phenix City, IDR for Mead, Series
93-A, AMT, 5.10%, 6/1/28, LOC:
Toronto Dominion Bank*............ 3,000
--------
7,100
--------
Illinois (0.6%):
3,400 Health Facilities Authority Revenue,
Central Dupage - Healthcorp
Project, 5.10%, 11/1/20, LOC:
Rabobank*......................... 3,400
--------
Michigan (1.4%):
5,700 Township Economic Development Corp.,
Mead Escanaba Paper, 5.00%,
11/1/16, LOC: Swiss Bank*......... 5,700
2,600 University of Michigan, Hospital
Revenues, Series 92A, 5.10%,
12/1/19*.......................... 2,600
--------
8,300
--------
Missouri (0.3%):
2,000 Development Finance Board, Union
Station Project, 1997 B, 4.50%,
12/1/03, LOC: CIBC*............... 2,000
--------
Ohio (0.6%):
800 State Air Quality Development
Authority, Cincinnati Gas &
Electric, 4.50%, 12/1/15, LOC:
J.P. Morgan*...................... 800
1,600 State Air Quality Development
Authority, Cincinnati Gas &
Electric, 4.50%, 12/1/15, LOC:
Union Bank of Switzerland*........ 1,600
1,000 Twinsburg Ohio, IDR, United
Stationers Project, AMT, 5.35%,
12/1/11, LOC: PNC Bank*........... 1,000
--------
3,400
--------
Oregon (0.4%):
2,500 Port of Portland, PCR, Reynolds
Metals, 5.00%, 12/1/09, LOC: Bank
of Nova Scotia*................... 2,500
--------
Texas (2.5%):
11,400 Matagorda County, IDR, Houston Light
& Power, 4.95%, 11/1/28, AMBAC.... 11,400
3,500 North Central Health Facility
Development Corp. Revenue,
Presbyterian Medical Center,
Series D, 5.00%, 12/1/15, MBIA*... 3,500
--------
14,900
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
DAILY DEMAND NOTES, CONTINUED:
Washington (0.6%):
$ 1,250 Health Care Facilities, Fred
Hutchinson, Series A, 5.10%,
1/1/18, LOC: Morgan Guaranty*..... $ 1,250
2,110 Health Care Facilities, Fred
Hutchinson, Series B, 5.10%,
1/1/18, LOC: Morgan Guaranty*..... 2,110
--------
3,360
--------
Wyoming (1.0%):
6,200 Sublette County, PCR, 5.10%, 7/1/17,
GTY: Exxon*....................... 6,200
--------
Total Daily Demand Notes 51,160
--------
MONTHLY DEMAND NOTES (2.5%):
Indiana (2.5%):
14,800 Gary Environmental Improvement
Revenue, U.S. Steel Corp. Project,
4.05%, 7/15/02, LOC: Bank of Nova
Scotia*........................... 14,800
--------
Total Monthly Demand Notes 14,800
--------
MUNICIPAL NOTES (16.6%):
California (2.5%):
15,000 State Revenue Anticipation Notes,
4.50%, 6/30/98.................... 15,048
--------
Colorado (1.7%):
10,000 State General Fund, Series A, 4.50%,
6/26/98........................... 10,031
--------
Idaho (0.4%):
2,500 State Transportation, GO, 4.63%,
6/30/98........................... 2,509
--------
Michigan (3.4%):
20,000 State Note, GO, 4.50%, 9/30/98...... 20,108
--------
New Mexico (1.7%):
10,000 State Tax & Revenue Anticipation
Notes, 4.50%, 6/30/98............. 10,031
--------
Texas (1.7%):
10,000 State Tax & Revenue Anticipation
Notes, Series 97A, 4.75%,
8/31/98........................... 10,058
--------
Wisconsin (5.2%):
11,405 Green Bay, Area Public School
District, 3.84%, 2/2/98........... 11,405
20,000 State Operating Notes, 4.50%,
6/15/98........................... 20,059
--------
31,464
--------
Total Municipal Notes 99,249
--------
</TABLE>
Continued
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
PUT BONDS (3.9%):
Arizona (1.0%):
$ 6,000 Cochise County, PCR, Arizona
Electric Power Corp., Series A,
AMT, 3.50%, 9/1/24................ $ 6,000
--------
Missouri (0.7%):
4,175 State Environmental Improvement &
Energy, Union Electric Co., Series
B, 3.95%, 6/1/14, LOC: Union Bank
of Switzerland.................... 4,175
--------
North Dakota (0.4%):
2,100 Mercer County, Solid Waste Disposal
Revenue, National Rural Utility
Power Project, Series U, 3.80%,
12/1/18........................... 2,100
--------
Ohio (1.8%):
11,000 Housing Finance Agency, Series 1997
A-2, AMT, 3.65%, 3/2/98, GIC:
AIG............................... 11,000
--------
Total Put Bonds 23,275
--------
TAX FREE COMMERCIAL PAPER (8.0%):
Alabama (2.4%):
5,000 Phenix IDR, Mead Paper, AMT, 3.75%,
1/26/98, LOC: ABN AMRO............ 5,000
5,000 Phenix IDR, Mead Paper, AMT, 3.75%,
1/28/98, LOC: ABN AMRO............ 5,000
4,000 Phenix IDR, Mead Paper, AMT, 3.80%,
2/2/98, LOC: ABN AMRO............. 4,000
--------
14,000
--------
Arizona (0.3%):
2,000 Mesa Municipal Development Corp.,
3.70%, 1/15/98, LOC: West Deutsche
Landesbank........................ 2,000
--------
Michigan (1.3%):
7,500 State Builders Authority Revenue,
3.75%, 3/2/98, LOC: CIBC.......... 7,500
--------
Ohio (1.4%):
5,100 Air Quality Development Authority,
CEI, 3.80%, 1/14/98, FGIC......... 5,100
3,500 Water Development Authority, CEI,
3.75%, 2/2/98, FGIC............... 3,500
--------
8,600
--------
Pennsylvania (1.0%):
6,100 Delaware IDR, Philadelphia Electric,
3.70%, 1/21/98, FGIC.............. 6,100
--------
Texas (0.8%):
5,000 Brazos River Utilities, AMT, 3.80%,
2/6/98, LOC: Union Bank of
Switzerland....................... 5,000
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
TAX FREE COMMERCIAL PAPER, CONTINUED:
West Virginia (0.8%):
$ 4,500 State Public Authority Energy
Revenue, Morgantown Assoc.
Project, AMT, 3.90%, 2/9/98, LOC:
Swiss Bank........................ $ 4,500
--------
Total Tax Free Commercial Paper .............. 47,700
--------
WEEKLY DEMAND NOTES (60.1%):
Alaska (1.0%):
5,900 Anchorage, Higher Education Revenue,
Alaska Pacific University, 3.75%,
7/1/17, LOC: Seattle-First
National Bank*.................... 5,900
--------
Arkansas (1.8%):
8,100 Clark County, Solid Waste Disposal
Revenue, Reynolds Metals Co.
Project, AMT, 3.95%, 8/1/22, LOC:
Trust Co. Bank*................... 8,100
2,900 Clark County, Solid Waste Disposal,
AMT, 3.95%, 8/1/22, LOC: SunTrust
Bank.............................. 2,900
--------
11,000
--------
Colorado (1.9%):
3,000 Housing Finance Authority, Pool I,
Series B, Coventry Village, 3.85%,
10/15/16, FNMA*................... 3,000
2,500 Student Obligation Bond Authority,
90-A, AMT, 3.75%, 9/1/24, SLMA*... 2,500
5,600 Student Obligation Bond Authority,
AMT, 3.75%, 7/1/20, SLMA*......... 5,600
--------
11,100
--------
District of Columbia (1.6%):
9,705 Metro Washington DC Airports,
Authority Trust Receipts, 4.30%,
10/1/16, LIQ: Societe Generale*... 9,705
--------
Florida (1.7%):
10,000 State Housing Finance Authority,
Woodlands Apt. Project 85S, 3.65%,
12/1/17, LOC: Citibank*........... 10,000
--------
Georgia (5.3%):
13,000 De Kalb Private Hospital Authority
Revenue, Egleston Children's
Hospital, Series A, 3.70%, 3/1/24,
LOC: SunTrust Bank*............... 13,000
3,735 Gwinnett County Housing Authority,
Herrington Woods Apts., Series
96A, AMT, 4.31%, 9/15/26, LOC:
KeyBank*.......................... 3,735
</TABLE>
Continued
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Georgia, continued:
$15,000 Municipal Electric Authority, 3.85%,
1/1/26, LOC: ABN-AMRO*............ $ 15,000
--------
31,735
--------
Illinois (8.1%):
11,300 Chicago O'Hare International Airport
Revenue, Second Lien, Series B,
AMT, 3.75%, 1/1/18, LOC: Societe
Generale*......................... 11,300
3,700 Development Authority, Presbyterian
Home Lake Forrest Place Project,
4.00%, 9/1/31, LOC: LaSalle
National Bank*.................... 3,700
5,200 Development Finance Authority
Revenue, Aurora Central Catholic
High School, 4.00%, 4/1/24, LOC:
Northern Trust*................... 5,200
4,500 Development Finance Authority
Revenue, Roosevelt University
Project, 4.00%, 4/1/25, LOC:
American National Bank*........... 4,500
5,900 Development Finance Authority
Revenue, Special Facility, Little
City Foundation, 4.00%, 2/1/19,
LOC: LaSalle National Bank*....... 5,900
1,625 Development Finance Authority
Revenue, St. Paul's House Project,
4.00%, 2/1/25, LOC: LaSalle
National Bank*.................... 1,625
3,000 Health Facilities Authority Revenue,
Washington & Jane Smith Home,
3.85%, 7/1/26,
LOC: Comerica Bank*............... 3,000
7,640 Jacksonville Industrial Project
Revenue, AGI, Inc. Project, AMT,
4.25%, 2/1/26, LOC: Bank of
America*.......................... 7,640
1,230 Lombard IDR, Chicago Roll Co.
Project, 4.45%, 2/1/10, LOC:
American National Bank*........... 1,230
2,000 Orland Hills, Multi-Family Mortgage
Revenue, 88th Avenue Project,
4.00%, 12/1/04, LOC: LaSalle
National Bank*.................... 2,000
2,500 Regional Transportation Authority
Trust Receipts, 4.25%, 6/1/25,
LIQ: Societe Generale*............ 2,500
--------
48,595
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Indiana (8.0%):
$ 2,300 Health Facility Financing Authority
Revenue, Capital Access Designated
Pool, 3.75%, 12/1/02, LOC:
Comerica Bank*.................... $ 2,300
14,600 Health Facility Financing Authority,
Rehabilitation Hospital, Inc.,
3.70%, 11/1/20, LOC: National Bank
of Detroit*....................... 14,600
5,400 Hospital Equipment Financing
Authority, Revenue Insured, Series
A, 3.75%, 12/1/15, MBIA........... 5,400
5,600 Indianapolis Economic Development
Revenue, Children's Museum
Project, 4.15%, 10/1/25, LOC:
National Bank of Detroit*......... 5,600
3,450 Jasper Economic Development Revenue,
Best Chairs, Inc. Project, AMT,
4.40%, 3/1/19, LOC: PNC Bank*..... 3,450
16,200 Rockport, PCR, Indiana & Michigan
Electric Co., Series A, 3.85%,
8/1/14, LOC: Swiss Bank*.......... 16,200
--------
47,550
--------
Kentucky (0.6%):
3,500 Mayfield, League of Cities Lease
Finance Program 96, 3.90%, 7/1/26,
LOC: PNC Bank*.................... 3,500
--------
Michigan (5.9%):
19,500 Higher Education Student Loan,
Series B, AMT, 3.75%, 10/1/13,
AMBAC*............................ 19,500
1,560 State Strategic Fund, Limited
Obligation, Wayne Disposal Oakland
Project, AMT, 4.00%, 3/1/05, LOC:
Credit Suisse-First Boston*....... 1,560
13,940 Wayne County Airport Revenue
(Detroit Airport), Series B, AMT,
3.75%, 12/1/16, LOC: Bayerische
Landesbank*....................... 13,940
--------
35,000
--------
Nevada (6.5%):
11,200 Clark County, IDR, Nevada Power Co.
Project, Series A, 3.95%, 10/1/30,
LOC: Barclays Bank*............... 11,200
5,000 Clark County, Limited Tax GO, 1996
Las Vegas Convention Trust
Receipts, 4.25%, 7/1/26, FSA, LIQ:
Societe Generale*................. 5,000
</TABLE>
Continued
13
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Nevada, continued:
$ 2,215 Clark County, PCR, Nevada Power Co.
Project, Series C, 3.85%, 10/1/30,
LOC: Barclays Bank*............... $ 2,215
9,300 Lancaster County, Hospital
Authority, Bryan Memorial
Hospital, 3.65%, 6/1/12, MBIA*.... 9,300
11,000 Municipal Securities Trust Receipts,
SGB 31, GO, 4.25%, 3/1/23, LIQ:
Societe Generale*................. 11,000
--------
38,715
--------
Ohio (4.5%):
3,500 Franklin County Hospital Revenue,
Holy Cross Health Systems, 4.15%,
6/1/16, LIQ: Morgan Guaranty*..... 3,500
7,900 State Air Quality Development
Authority Revenue, JMG Funding
Ltd. Partnership, Series A, AMT,
3.90%, 4/1/28, LOC: Societe
Generale*......................... 7,900
5,300 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, AMT, 3.90%, 4/1/29,
LOC: Societe Generale*............ 5,300
2,800 State Air Quality Development
Revenue Bond, Timken Co. Project,
AMT, 3.70%, 6/1/01, LOC: Credit
Suisse*........................... 2,800
5,500 State Water Development Authority
Revenue, Timken Co. Project,
3.70%, 5/1/7, LOC: Wachovia
Bank*............................. 5,500
2,000 State Water Development Authority,
Timken Co. Project, 3.70%, 6/1/01,
LOC: Credit Suisse*............... 2,000
--------
27,000
--------
Pennsylvania (1.7%):
10,115 New Castle Area Jameson Hospital,
3.85%, 7/1/26, FSA*............... 10,115
--------
South Carolina (0.3%):
1,700 Cherokee County, Industrial Revenue,
Oshkosh Truck Corp. Project, AMT,
4.20%, 8/1/19, LOC: Bank of Nova
Scotia*........................... 1,700
--------
Tennessee (0.6%):
3,800 Oak Ridge Industrial Development
Board, Economic Development
Revenue, Limited Obligation,
3.90%, 5/1/09, LOC: ABN AMRO*..... 3,800
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ------------------------------------ ---------
<C> <S> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Texas (6.5%):
$14,100 Capital Health Facilities
Development Corp., Island on Lake
Travis Ltd. Project, AMT, 3.75%,
12/1/16, LOC: Credit Suisse*...... $ 14,100
4,000 Lower Colorado River Authority,
Texas Electricity Revenue, 3.65%,
1/1/13, MBIA*..................... 4,000
12,000 Panhandle Plains Higher Education
Inc., Student Loan Revenue, Series
A, AMT, 3.75%, 6/1/21, SLMA*...... 12,000
8,400 Panhandle Plains Higher Education
Inc., Student Loan Revenue, Series
A, AMT, 3.75%, 6/1/23, SLMA*...... 8,400
--------
38,500
--------
Utah (1.9%):
1,200 Salt Lake City Airport Revenue, Sub-
Series A, AMT, 3.75%, 6/1/98, LOC:
Credit Suisse*.................... 1,200
10,000 University Revenues , Auxiliary &
Campus Facilities, Series A,
3.85%, 4/1/27, LOC: Bank of Nova
Scotia*........................... 10,000
--------
11,200
--------
Washington (1.1%):
3,925 Pierce County, NN Baking Co., AMT,
4.30%, 7/1/03, LOC: U.S. Bank of
Washington*....................... 3,925
2,500 State GO, Municipal Securities,
Trust Receipts, 4.25%, 7/1/16,
LIQ: Societe Generale*............ 2,500
--------
6,425
--------
West Virginia (1.1%):
2,300 Marion County Community Solid Waste
Disposal Facility Revenue, Grant
Town, AMT, 3.80%, 10/1/17, LOC:
National Westminister*............ 2,300
4,500 Marion County, Community Solid Waste
Disposal Facility Revenue, Grant
Town, AMT, 3.75%, 10/1/17, LOC:
National Westminister*............ 4,500
--------
6,800
--------
Total Weekly Demand Notes 358,340
--------
Total (Amortized Cost $594,524) (a) $594,524
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $596,488.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
Continued
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based upon an index of market rates. The
rate reflected on the Schedule of Portfolio Investments is the rate in effect
at December 31, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
FGIC Insured by Financial Guaranty Insurance Corp.
FSA Insured by Financial Security Assurance
GIC Guaranteed Investment Contract
GO General Obligation
GTY Guaranty
FNMA Federal National Mortgage Association
IDR Industrial Development Revenue
LIQ Liquidity Agreement
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
SLMA Student Loan Marketing Association
</TABLE>
See notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<C> <S> <C>
ANTICIPATION NOTES (24.8%):
Ohio (22.2%):
$2,000 Butler County ,GO, Sewer System,
BAN, 4.29%, 8/6/98............... $ 2,004
675 Butler County, BAN, GO, 4.10%,
3/20/98.......................... 676
500 Chagrin Falls School District, BAN,
4.50%, 2/10/98................... 500
1,000 Dublin City School District Notes,
GO, 4.33%, 5/13/98............... 1,001
2,090 Kent City Service Center, BAN,
4.50%, 4/9/98.................... 2,092
1,000 Lucas County Metro Sewer & Water,
GO, 4.11%, 10/21/98,............. 1,002
2,000 Northwest School District, 4.84%,
6/17/98.......................... 2,009
1,000 Ontario Village Board, 4.20%,
12/23/98......................... 1,002
2,175 Pickerington, Limited Tax GO, BAN,
4.13%, 6/26/98................... 2,178
2,800 Summit County, GO, Series A, 4.5%,
6/4/98........................... 2,807
600 Union County, Limited Tax GO, BAN,
4.17%, 6/25/98................... 601
2,000 University of Cincinnati, General
Receipts, BAN, 4.04%, 3/19/98.... 2,001
1,500 University of Cincinnati, General
Receipts, BAN, 4.25%, 3/19/98.... 1,502
2,250 Westlake City School District
Library Improvements, 4.39%,
6/10/98.......................... 2,256
-------
21,631
-------
Puerto Rico (2.6%):
2,500 Puerto Rico Commonwealth Tax &
Revenue, Series A, 4.50%,
7/30/98.......................... 2,511
-------
Total Anticipation Notes 24,142
-------
DAILY DEMAND NOTES (3.9%):
Ohio (3.9%):
200 Paulding, Solid Waste, Lafarge
Corp., AMT, 5.00%, 8/1/26, LOC:
Royal Bank of Canada*............ 200
1,200 State Air Quality Development
Authority, Cincinnati Gas &
Electric, 4.50%, 12/1/15,
LOC: J.P. Morgan*................ 1,200
700 State Air Quality Development
Authority, Cincinnati Gas &
Electric Series A, 5.00%, 9/1/30,
LOC: ABN AMRO*................... 700
1,700 Twinsburg, IDR, United Stationers
Project, AMT, 5.35%, 12/1/11,
LOC: PNC Bank*................... 1,700
-------
Total Daily Demand Notes 3,800
-------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<C> <S> <C>
MONTHLY DEMAND NOTES (5.0%):
Ohio (5.0%):
$4,900 Housing Finance Agency, Kenwood
Retirement Project, 3.80%,
12/1/15, LOC: Morgan Guaranty*... $ 4,900
-------
Total Monthly Demand Notes 4,900
-------
MUNICIPAL BONDS (0.9%):
Ohio (0.9%):
830 State Infrastructure, Series R,
4.00%, 8/1/98.................... 832
-------
Total Municipal Bonds 832
-------
PUT BOND (4.1%):
Ohio (4.1%):
4,000 Housing Finance Agency, Series 1997
A-2, AMT, 3.65%, 3/2/98,
GIC: AIG......................... 4,000
-------
Total Put Bond 4,000
-------
TAX FREE COMMERCIAL PAPER (4.1%):
Ohio (4.1%):
2,000 Air Quality Development Authority
Revenue, Cleveland Electric
Illuminating Co., 3.75%, 3/5/98,
FGIC............................. 2,000
2,000 Air Quality Development Authority
Revenue, Cleveland Electric
Illuminating Co., 3.80%, 1/5/98,
FGIC............................. 2,000
-------
Total Tax Free Commercial Paper 4,000
-------
WEEKLY DEMAND NOTES (60.0%):
Ohio (60.0%):
1,000 Butler County, Meadow Ridge
Apartments, AMT, 4.00%, 11/15/30,
FNMA*............................ 1,000
2,000 Butler County, Middletown Hospital
Facilities, 4.10%, 11/1/17, LOC:
Star Bank, N.A.*................. 2,000
4,000 Cleveland Airport System, Series D,
3.75%, 1/1/27, LOC: Toronto
Dominion Bank*................... 4,000
1,000 Cuyahoga County, Hospital Revenue,
Cleveland Clinic Foundation,
Series A, 3.60%, 1/1/26, LOC:
Morgan Guaranty*................. 1,000
300 Cuyahoga County, IDR, Allen Group,
Inc., 3.75%, 4/1/12, LOC:
Dresdner Bank*................... 300
</TABLE>
Continued
16
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<C> <S> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Ohio, continued:
$1,600 Cuyahoga County, IDR, Allen Group,
Inc., 3.60%, 12/1/15, LOC: Union
Bank of Switzerland*............. $ 1,600
1,500 Franklin County, Hospital Revenue,
Lutheran City, Inc. Project,
4.15%, 5/1/15, LOC: National Bank
of Detroit*...................... 1,500
1,300 Franklin County, Inland Products,
Inc., 4.15%, 6/1/04, LOC: PNC
Bank*............................ 1,300
2,000 Franklin County, Multifamily
Housing Revenue, Stonebridge
Apartments, AMT, 4.40%, 6/1/27,
LOC: Star Bank, N.A.*............ 2,000
2,000 Geauga County, IDR, General Signal
Corp., 4.20%, 4/1/04, LOC:
Wachovia Bank*................... 2,000
3,325 Hamilton County, Health Alliance of
Cincinnati, Series B, 3.70%,
1/1/18, MBIA*.................... 3,325
2,000 Hamilton County, Hospital
Facilities Revenue, Bethesda
Hospital, 4.00%, 2/15/24, LOC:
Rabobank Nederland*.............. 2,000
1,500 Hamilton County, Hospital
Facilities Revenue, Children's
Hospital Medical Center, 4.10%,
5/15/17, LOC: PNC Bank*.......... 1,500
1,000 Hamilton County, Hospital
Facilities Revenue, Health
Alliance, Series F, 3.70%,
1/1/18, MBIA*.................... 1,000
3,000 Housing Finance Agency, Spring
Valley Apartments, AMT, 4.31%,
12/15/29, LOC: Key Bank*......... 3,000
500 Montgomery County, Sisters of
Charity Health Care, 4.15%,
5/15/25, LIQ: Toronto
Dominion*........................ 500
1,915 Ohio State University, General
Receipts, Series B, 4.05%,
12/1/06, SBPA: National
Westminister Bank*............... 1,915
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
- --------- ----------------------------------- ---------
<C> <S> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Ohio, continued:
$1,000 Ross County, Ohio Hospital
Facilities, Medical Center
Project, 4.15%, 12/1/20, LOC:
Fifth Third Bank*................ $ 1,000
4,000 Solid Waste Disposal Revenue, USG
Corp. Project, 3.65%, 8/1/32,
LOC: Chase Mahattan Bank*........ 4,000
2,000 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, AMT, 3.90%, 4/1/29,
LOC: Societe Generale*........... 2,000
2,300 State Air Quality Development
Authority, JMG Funding Ltd.
Partnership, Series A, AMT,
3.90%, 4/1/28, LOC: Societe
Generale*........................ 2,300
3,000 State Air Quality Development
Revenue Bond, Timken Co. Project,
AMT, 3.70%, 6/1/01, LOC: Credit
Suisse*.......................... 3,000
935 State Higher Educational
Facilities, Mount Union College,
4.15%, 9/1/20, LOC: National Bank
of Detroit*...................... 935
2,000 Student Loan Funding Corp., 3.70%,
12/29/98, LOC: Bank of
America*......................... 2,000
2,000 Student Loan Funding Corp., 3.80%,
1/1/07, LOC: National
Westminister Bank*............... 2,000
2,000 Water Development Authority,
Cleveland Electric, Series B,
3.80%, 8/1/20, LOC: First
National Bank of Chicago*........ 2,000
5,000 Water Development Authority, Philip
Morris Co. Inc. Project, 3.80%,
9/1/18*.......................... 4,999
2,000 Water Development Authority, Timken
Co. Project, 3.70%, 6/1/01, LOC:
Credit Suisse*................... 2,000
2,100 Wooster, IDR, Allen Group, Inc.,
3.90%, 12/1/10, LOC: Union Bank
of Switzerland*.................. 2,100
-------
Total Weekly Demand Notes 58,274
-------
Total (Amortized Cost $99,948) (a) $99,948
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $97,240.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity agreements. The interest rate,
which will change periodically, is based an index of market rates. The rate
reflected on the Schedule of Portfolio Investments is the rate in effect at
December 31, 1997.
Continued
17
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Money Market Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
<TABLE>
<S> <C>
AMT Alternative Minimum Tax Paper
BAN Bond Anticipated Notes
FGIC Insured by Financial Guaranty Insurance Corp.
FNMA Insured by Federal National Mortgage Association
GIC Guaranteed Investment Contract
GO General Obligation
IDR Industrial Development Revenue
LIQ Liquidity Agreement
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Association
PCR Pollution Control Revenue
SBPA Stand by Bond Purchase Agreement
</TABLE>
See notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
U.S. TREASURY OHIO
SECURITIES MUNICIPAL MUNICIPAL
MONEY MARKET PRIME MONEY MONEY MARKET MONEY MARKET
FUND MARKET FUND FUND FUND
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at amortized cost................ $ 587,536 $2,977,614 $594,524 $99,948
Repurchase agreements, at cost................ 2,944,317 402,114 -- --
---------- ---------- -------- -------
Total......................................... 3,531,853 3,379,728 594,524 99,948
Cash.......................................... -- -- -- 19
Interest receivable........................... 5,657 21,323 4,122 687
Prepaid expenses and other assets............. 39 41 33 1
---------- ---------- -------- -------
TOTAL ASSETS.................................. 3,537,549 3,401,092 598,679 100,655
---------- ---------- -------- -------
LIABILITIES:
Cash overdraft................................ 3 10 234 --
Dividends payable............................. 14,322 15,171 1,728 285
Payable to brokers for investments
purchased................................... -- -- -- 3,087
Accrued expenses and other payables:
Investment advisory fees.................. 762 850 129 21
Administration fees....................... 419 440 79 8
12b-1 fees................................ 173 120 21 8
Other..................................... 120 375 -- 6
---------- ---------- -------- -------
TOTAL LIABILITIES............................. 15,799 16,966 2,191 3,415
---------- ---------- -------- -------
NET ASSETS:
Capital....................................... 3,521,483 3,384,113 596,622 97,331
Undistributed (distributions in excess of)
net investment income....................... 43 7 (130) (75)
Accumulated undistributed net realized gains
(losses) from investment transactions....... 224 6 (4) (16)
---------- ---------- -------- -------
NET ASSETS.................................... $3,521,750 $3,384,126 $596,488 $97,240
========== ========== ======== =======
Net Assets
Fiduciary................................. $2,680,843 $2,825,130 $500,105 $62,322
Class A................................... 840,788 558,256 96,383 34,918
Class B................................... 119 740 -- --
---------- ---------- -------- -------
Total......................................... $3,521,750 $3,384,126 $596,488 $97,240
========== ========== ======== =======
Outstanding units of beneficial interest
Fiduciary................................. 2,680,619 2,825,121 500,226 62,363
Class A................................... 840,743 558,253 96,396 34,944
Class B................................... 119 740 -- --
---------- ---------- -------- -------
Total......................................... 3,521,481 3,384,114 596,622 97,307
========== ========== ======== =======
Net asset value--offering and redemption price
per share (Fiduciary, Class A and Class B
shares)..................................... $1.00 $1.00 $1.00 $1.00
======= ====== ======= ========
</TABLE>
See notes to financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
U.S. TREASURY OHIO
SECURITIES MUNICIPAL MUNICIPAL
MONEY MARKET PRIME MONEY MONEY MARKET MONEY MARKET
FUND MARKET FUND FUND FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................... $85,419 $92,747 $10,905 $1,739
Dividend income........................... -- -- 94 34
Income from securities lending............ 97 -- -- --
------- ------- ------- ------
TOTAL INCOME.............................. 85,516 92,747 10,999 1,773
------- ------- ------- ------
EXPENSES:
Investment advisory fees.................. 5,357 5,601 1,029 143
Administration fees....................... 2,514 2,629 482 78
12b-1 fees (Class A)...................... 918 654 128 42
12b-1 fees (Class B)...................... 1 3 -- --
Custodian and accounting fees............. 111 105 17 5
Legal and audit fees...................... 76 57 2 --
Trustees' fees and expenses............... 29 35 3 1
Transfer agent fees....................... 561 204 17 12
Registration and filing fees.............. 530 564 60 5
Printing costs............................ 239 251 16 3
Other..................................... 169 78 5 --
------- ------- ------- ------
Total expense before waivers.............. 10,505 10,181 1,759 289
Less waivers.............................. (1,761) (1,296) (335) (61)
------- ------- ------- ------
NET EXPENSES.............................. 8,744 8,885 1,424 228
------- ------- ------- ------
Net Investment Income..................... 76,772 83,862 9,575 1,545
------- ------- ------- ------
REALIZED GAINS (LOSSES) FROM INVESTMENT
TRANSACTIONS:
Net realized gains (losses) from
investment transactions................. 73 6 9 --
------- ------- ------- ------
Net increase in net assets
resulting from operations............... $76,845 $83,868 $ 9,584 $1,545
======= ======= ======= ======
</TABLE>
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
U.S. TREASURY
SECURITIES MONEY PRIME MONEY
MARKET FUND MARKET FUND
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
----------- ----------- ----------- -----------
<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............................. $ 76,772 $ 121,830 $ 83,862 $ 140,355
Net realized gains (losses) from investment
transactions.................................... 73 190 6 27
----------- ----------- ----------- -----------
Change in net assets resulting from operations........ 76,845 122,020 83,868 140,382
----------- ----------- ----------- -----------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income........................ (60,691) (105,790) (71,929) (124,100)
From net realized gains from investment
transactions.................................... -- (5) -- --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income........................ (16,079) (16,039) (11,918) (16,246)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income........................ (2) (1) (15) (9)
----------- ----------- ----------- -----------
Change in net assets from shareholder distributions... (76,772) (121,835) (83,862) (140,355)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued....................... 4,339,234 6,413,072 4,018,513 6,677,852
Dividends reinvested.............................. 5,101 9,274 8,060 16,726
Cost of shares redeemed........................... (3,596,247) (5,604,396) (3,539,485) (6,299,509)
----------- ----------- ----------- -----------
Change in net assets from share transactions.......... 748,088 817,950 487,088 395,069
----------- ----------- ----------- -----------
Change in Net Assets.................................. 748,161 818,135 487,094 395,096
NET ASSETS:
Beginning of period............................... 2,773,589 1,955,454 2,897,032 2,501,936
----------- ----------- ----------- -----------
End of period..................................... $ 3,521,750 $ 2,773,589 $ 3,384,126 $ 2,897,032
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued............................................ 4,339,234 6,413,072 4,018,514 6,677,852
Reinvested........................................ 5,101 9,274 8,060 16,726
Redeemed.......................................... (3,596,247) (5,604,396) (3,539,485) (6,299,509)
=========== =========== =========== ===========
Change in shares...................................... 748,088 817,950 487,089 395,069
=========== =========== =========== ===========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of Period..................................... $ 43 $ 43 $ 7 $ 7
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
MUNICIPAL MONEY OHIO MUNICIPAL MONEY
MARKET FUND MARKET FUND
--------------------------- --------------------------
<S> <C> <C> <C> <C>
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
-------- ----------- --------- ---------
<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income.............................. $ 9,575 $ 16,457 $ 1,545 $ 2,727
Net realized gains (losses) from investment
transactions..................................... 9 (10) -- (15)
-------- ----------- --------- ---------
Change in net assets resulting from operations......... 9,584 16,447 1,545 2,712
-------- ----------- --------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income......................... (8,173) (15,228) (1,081) (1,662)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income......................... (1,402) (1,229) (464) (1,065)
-------- ----------- --------- ---------
Change in net assets from shareholder distributions.... (9,575) (16,457) (1,545) (2,727)
-------- ----------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued........................ 733,272 1,311,970 138,413 359,395
Dividends reinvested............................... 762 1,285 409 1,067
Cost of shares redeemed............................ (653,160) (1,308,167) (128,503) (370,573)
-------- ----------- --------- ---------
Change in net assets from share transactions........... 80,874 5,088 10,319 (10,111)
-------- ----------- --------- ---------
Change in Net Assets................................... 80,883 5,078 10,319 (10,126)
NET ASSETS:
Beginning of period................................ 515,605 510,527 86,921 97,047
-------- ----------- --------- ---------
End of period...................................... $596,488 $ 515,605 $ 97,240 $ 86,921
======== =========== ========= =========
SHARE TRANSACTIONS:
Issued............................................. 733,272 1,311,970 138,413 359,395
Reinvested......................................... 762 1,285 410 1,067
Redeemed........................................... (653,158) (1,308,167) (128,503) (370,573)
======== =========== ========= =========
Change in shares....................................... 80,876 5,088 10,320 (10,111)
======== =========== ========= =========
Undistributed (distributions in excess of) net
investment income included in net assets:
End of Period...................................... $ (130) $ (130) $ (75) $ (75)
======== =========== ========= =========
</TABLE>
See notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
(Unaudited)
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 U.S. Treasury Securities
Money Market Fund, the Prime Money Market Fund, the Municipal Money Market
Fund, and the Ohio Municipal Money Market Fund (individually, a "Fund";
collectively, the "Funds") only. Each Fund is a diversified mutual fund,
except the Ohio Municipal Money Market Fund which is non-diversified.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
U.S. Treasury Securities Money Market Fund Current income with liquidity and stability of
principal.
Prime Money Market Fund Current income with liquidity and stability of
principal.
Municipal Money Market Fund As high a level of current interest income
exempt from Federal income tax as is consistent
with capital preservation and stability of
principal.
Ohio Municipal Money Market Fund As high a level of current interest income
exempt from Federal income tax and Ohio
personal income tax as is consistent with
capital preservation and stability of
principal.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Securities are valued utilizing the amortized cost method permitted in
accordance with Rule 2a-7 under the 1940 Act. Under the amortized cost
method, discount or premium is amortized on a constant basis to the maturity
of the security. In addition, the Funds may not (a) purchase any instrument
with a remaining maturity greater than thirteen months unless such instrument
is subject to a demand feature, or (b) maintain a dollar-weighted average
maturity which exceeds 90 days.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that are
deemed by Banc One Investment Advisors Corporation (the "Advisor") to be of
good standing and creditworthy under guidelines established by the Board of
Trustees. Each repurchase agreement is recorded at cost. The Fund requires
that the securities purchased in a repurchase transaction be transferred to
the custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities
held at not less than the repurchase price, including accrued interest.
Repurchase agreements are considered to be loans by a fund under the 1940
Act.
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses on sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgment of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risks. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of December 31, 1997, the following Fund had
securities with the following amortized cost on loan (amount in thousands):
<TABLE>
<CAPTION>
AMORTIZED COST
OF LOANED
SECURITIES
--------------
<S> <C>
U.S. Treasury Securities Money Market Fund.................. $55,000
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities as of December 31, 1997.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Net income for this purpose consists of interest accrued and discount
earned (including both original issue discount and market discount) less
amortization of any market premium and accrued expenses. Net realized
capital gains, if any, are distributed at least annually. Dividends are
declared separately for each class. No class has preferential dividend
rights; differences in per share dividend rates are due to differences in
separate class expenses.
Net investment income and net capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are prima-
Continued
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
rily due to differing treatments of expiring capital loss carryforwards
and deferrals of certain losses. Permanent book and tax differences, if
any, have been reclassified among the components of net assets.
FEDERAL INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies as defined in applicable sections of the Internal Revenue Code,
and to make distributions of net investment income and net realized
capital gains sufficient to relieve it from all, or substantially all,
federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more 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 and
Class C Shares. In addition, the U.S. Treasury Securities Money Market Fund
and the Prime Money Market Fund are authorized to issue Class B and Service
Class Shares. As of December 31, 1997 there were no shareholders in Class C
or the Service Class. Shareholders are entitled to one vote for each full
share held and will vote in the aggregate and not by class or series, except
as otherwise expressly required by law or when the Board of Trustees has
determined that the matter to be voted on affects only the interest of
shareholders of a particular class or series. The following is a summary of
transactions in Fund shares for the periods ending December 31, 1997 and June
30, 1997:
Continued
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
U.S. TREASURY SECURITIES PRIME MONEY
MONEY MARKET FUND MARKET FUND
------------------------- -------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
DECEMBER JUNE 30, DECEMBER JUNE 30,
31, 31,
1997 1997 1997 1997
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................. $3,349,216 $ 4,920,570 $2,888,951 $ 4,681,923
Dividends reinvested.................................... 221 521 1,050 1,986
Cost of shares redeemed................................. (2,912,026) (4,522,461) (2,628,645) (4,306,729)
----------- ----------- ----------- -----------
Change in net assets from Fiduciary share
transactions.......................................... 437,411 398,630 261,356 377,180
=========== =========== =========== ===========
CLASS A SHARES:
Proceeds from shares issued............................. $ 989,817 $ 1,492,429 $1,128,875 $ 1,994,727
Dividends reinvested.................................... 4,878 8,752 6,997 14,734
Cost of shares redeemed................................. (684,088) (1,081,910) (910,262) (1,992,191)
----------- ----------- ----------- -----------
Change in net assets from Class A share transactions.... $ 310,607 $ 419,271 $ 225,610 $ 17,270
=========== =========== =========== ===========
CLASS B SHARES:
Proceeds from shares issued............................. $ 201 73 $ 687 1,202
Dividends reinvested.................................... 2 1 13 6
Cost of shares redeemed................................. (133) (25) (578) (589)
----------- ----------- ----------- -----------
Change in net assets from Class B share transactions.... $ 70 49 $ 122 619
=========== =========== =========== ===========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................. 3,349,216 4,920,570 2,888,953 4,681,923
Reinvested.............................................. 221 521 1,050 1,986
Redeemed................................................ (2,912,026) (4,522,461) (2,628,645) (4,306,729)
----------- ----------- ----------- -----------
Change in Fiduciary Shares.............................. 437,411 398,630 261,358 377,180
=========== =========== =========== ===========
CLASS A SHARES:
Issued.................................................. 989,817 1,492,429 1,128,875 1,994,727
Reinvested.............................................. 4,878 8,752 6,997 14,734
Redeemed................................................ (684,088) (1,081,910) (910,262) (1,992,191)
----------- ----------- ----------- -----------
Change in Class A Shares................................ 310,607 419,271 225,610 17,270
=========== =========== =========== ===========
CLASS B SHARES:
Issued.................................................. 201 73 686 1,202
Reinvested.............................................. 2 1 13 6
Redeemed................................................ (133) (25) (578) (589)
----------- ----------- ----------- -----------
Change in Class B Shares................................ 70 49 121 619
=========== =========== =========== ===========
</TABLE>
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(Amounts in Thousands)
OHIO MUNICIPAL MONEY
MUNICIPAL MONEY MARKET MARKET FUND
FUND
------------------------- -------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
DECEMBER JUNE 30, DECEMBER JUNE 30,
31, 31,
1997 1997 1997 1997
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................. $ 523,926 $ 1,104,184 $ 87,709 $ 178,921
Dividends reinvested.................................... 79 138 34 87
Cost of shares redeemed................................. (491,326) (1,096,700) (81,863) (178,473)
=========== =========== =========== ===========
Change in net assets from Fiduciary share
transactions.......................................... $ 32,679 $ 7,622 $ 5,880 $ 535
=========== =========== =========== ===========
CLASS A SHARES:
Proceeds from shares issued............................. $ 209,346 $ 207,786 $ 50,704 $ 180,474
Dividends reinvested.................................... 683 1,147 375 980
Cost of shares redeemed................................. (161,834) (211,467) (46,640) (192,100)
----------- ----------- ----------- -----------
Change in net assets from Class A share transactions.... $ 48,195 $ (2,534) $ 4,439 $ (10,646)
=========== =========== =========== ===========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................. 523,926 1,104,184 87,710 178,921
Reinvested.............................................. 79 138 35 87
Redeemed................................................ (491,325) (1,096,700) (81,863) (178,473)
----------- ----------- ----------- -----------
Change in Fiduciary Shares.............................. 32,680 7,622 5,882 535
----------- ----------- ----------- -----------
CLASS A SHARES:
Issued.................................................. 209,346 207,786 50,703 180,474
Reinvested.............................................. 683 1,147 375 980
Redeemed................................................ (161,833) (211,467) (46,640) (192,100)
----------- ----------- ----------- -----------
Change in Class A Shares................................ 48,196 (2,534) 4,438 (10,646)
=========== =========== =========== ===========
</TABLE>
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor, are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to 0.35% of the average daily net assets of the U.S.
Treasury Securities Money Market Fund, the Prime Money Market Fund and the
Municipal Money Market Fund and 0.30% of the average daily net assets of the
Ohio Municipal Money Market Fund.
The Trust and The One Group Services Company (the "Administrator"), a
wholly-owned subsidiary of The BISYS Group, Inc., are parties to an
administration agreement under which the Administrator provides services for
a fee that is computed daily and paid monthly, at an annual rate of 0.20% on
each Fund's average daily net assets on the first $1.5 billion of Trust net
assets (excluding the Investor Growth Fund, the Investor Growth & Income
Fund, the Investor Conservative Growth Fund and the Investor Balanced Fund
(the "Investor Funds") and the Treasury Only Money Market Fund and the
Government Money Market Fund (the "Institutional Money Market Funds")); 0.18%
on the next $0.5 billion of Trust net assets (excluding the Investor Funds
and the Institutional Money Market Funds); and 0.16% on Trust net assets
(excluding the Investor Funds and the Institutional Money Market Funds) over
$2 billion. The Advisor also serves as Sub-Administrator to each Fund of the
Trust, pursuant to an agreement between the Administrator and the Advisor.
Pursuant to this agreement, the
Continued
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
Advisor performs many of the Administrator's duties, for which the Advisor
receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A Shares, Class B Shares, Class C Shares and Service
Class Shares are subject to distribution and shareholder services plans (the
"Plans") pursuant to Rule 12b-1 under the 1940 Act. As provided in the Plans,
the Trust will pay the Distributor a fee of 0.25% of the average daily net
assets of Class A shares of each of the Funds, 1.00% of the average daily net
assets of Class B and Class C Shares and 0.75% of the average daily net
assets of the Service Class Shares of each of the Funds. The Distributor has
voluntarily agreed to limit payments under the Plans to 0.55% of average
daily net assets of the Service Class Shares of each Fund. Up to 0.25% of the
fees payable under the Plans may be used as compensation of 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.
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, Administrator and the Distributor voluntarily agreed to waive a
portion of their fees. For the six months ended December 31, 1997, fees in
the following amounts were waived from the Funds (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12B-1 FEES
ADVISORY FEES ADMINISTRATION WAIVED
WAIVED FEES WAIVED CLASS A
------------- -------------- ----------
<S> <C> <C> <C>
U.S. Treasury Securities Money Market Fund................. $1,444 $233 $ 84
Prime Money Market Fund.................................... 957 276 63
Municipal Money Market Fund................................ 294 27 14
Ohio Municipal Money Market Fund........................... 26 31 4
</TABLE>
5. CONCENTRATION OF CREDIT RISK:
The Ohio Municipal Money Market Fund invests primarily in debt obligations
issued by the State of Ohio and its political subdivisions, agencies and
public authorities to obtain funds for various public purposes. The Fund is
more susceptible to economic and political factors adversely affecting
issuers of Ohio's specific municipal securities than are municipal bond funds
that are not concentrated in these issuers to the same extent.
Continued
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES MONEY MARKET FUND
----------------------------------------------------------------------------------------
FIDUCIARY
----------------------------------------------------------------------------------------
SIX MONTHS
ENDED
YEARS ENDED JUNE 30,
----------------------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ ---------- ---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- -------- --------
Investment Activities
Net investment income........... 0.026 0.050 0.052 0.050 0.030 0.029
---------- ---------- ---------- ---------- -------- --------
Less: Distributions
Net investment income........... (0.026) (0.050)(a) (0.052) (0.050) (0.030) (0.029)
---------- ---------- ---------- ---------- -------- --------
NET ASSET VALUE,
END OF PERIOD................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ======== ========
Total Return...................... 2.58%(b) 5.07% 5.34% 5.07% 3.01% 2.89%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)......................... $2,680,843 $2,243,376 $1,844,590 $1,178,091 $969,326 $492,862
Ratio of expenses to average net
assets........................ 0.52%(c) 0.46% 0.42% 0.41% 0.40% 0.45%
Ratio of net investment income
to average net assets......... 5.08%(c) 4.95% 5.17% 4.96% 3.02% 2.85%
Ratio of expenses to average net
assets*....................... 0.63%(c) 0.57% 0.56% 0.59% 0.58% 0.67%
Ratio of net investment income
to average net assets*........ 4.97%(c) 4.84% 5.03% 4.78% 2.84% 2.63%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Includes $.000002 short term capital gain.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES MONEY MARKET FUND
-------------------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------------------
SIX MONTHS
ENDED
YEARS ENDED JUNE 30,
-------------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ -------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- ------- ------- -------
Investment Activities
Net investment income.................. 0.024 0.047 0.050 0.047 0.027 0.026
-------- -------- -------- ------- ------- -------
Less: Distributions
Net investment income.................. (0.024) (0.047)(a) (0.050) (0.047) (0.027) (0.026)
-------- -------- -------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======= ======= =======
Total Return............................. 2.45%(b) 4.81% 5.08% 4.81% 2.76% 2.63%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...... $840,788 $530,164 $110,864 $98,723 $53,423 $30,759
Ratio of expenses to average net
assets............................... 0.79%(c) 0.72% 0.67% 0.66% 0.63% 0.65%
Ratio of net investment income to
average net assets................... 4.80%(c) 4.71% 4.92% 4.71% 2.81% 2.52%
Ratio of expenses to average net
assets*.............................. 0.92%(c) 0.93% 0.91% 0.94% 0.87% 1.02%
Ratio of net investment income to
average net assets*.................. 4.67%(c) 4.50% 4.68% 4.43% 2.57% 2.15%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Includes $.000002 short term capital gain.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES
MONEY MARKET FUND
------------------------------
<S> <C> <C>
CLASS B
------------------------------
<CAPTION>
SIX MONTHS NOVEMBER 21,
ENDED 1996 TO
DECEMBER 31, JUNE 30,
1997 1997(A)
------ ------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $1.000 $1.000
------ ------
Investment Activities
Net investment income..................................... 0.020 0.024
------ ------
Less: Distributions
Net investment income..................................... (0.020) (0.024)(b)
------ ------
NET ASSET VALUE,
END OF PERIOD............................................. $1.000 $1.000
====== ======
Total Return................................................ 2.01%(c) 2.44%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 119 $ 49
Ratio of expenses to average net assets................... 1.53%(d) 1.48%(d)
Ratio of net investment income to average net assets...... 4.06%(d) 3.97%(d)
Ratio of expenses to average net assets*.................. 1.64%(d) 1.59%(d)
Ratio of net investment income to average net assets*..... 3.95%(d) 3.86%(d)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Includes $.000002 short term capital gain.
(c) Not annualized.
(d) Annualized.
See notes to financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
------------------------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
YEARS ENDED JUNE 30,
------------------------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ ---------- ---------- ---------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ---------- --------
Investment Activities
Net investment income......... 0.027 0.051 0.054 0.052 0.031 0.030
---------- ---------- ---------- ---------- ---------- --------
Less: Distributions
Net investment income......... (0.027) (0.051) (0.054) (0.052) (0.031) (0.030)
---------- ---------- ---------- ---------- ---------- --------
NET ASSET VALUE,
END OF PERIOD................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ========== ========
Total Return.................... 2.69%(a) 5.20% 5.49% 5.34% 3.19% 3.09%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)....................... $2,825,130 $2,563,768 $2,186,562 $1,965,416 $1,600,876 $979,275
Ratio of expenses to average
net assets.................. 0.51%(b) 0.48% 0.44% 0.41% 0.40% 0.44%
Ratio of net investment income
to average net assets....... 5.28%(b) 5.08% 5.34% 5.27% 3.18% 3.05%
Ratio of expenses to average
net assets*................. 0.59%(b) 0.56% 0.55% 0.57% 0.59% 0.62%
Ratio of net investment income
to average net assets*...... 5.20%(b) 5.00% 5.23% 5.12% 2.99% 2.87%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
--------------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED
YEARS ENDED JUNE 30,
--------------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ -------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- ------- -------
Investment Activities
Net investment income................. 0.025 0.048 0.051 0.050 0.027 0.030
-------- -------- -------- -------- ------- -------
Less: Distributions
Net investment income................. (0.025) (0.048) (0.051) (0.050) (0.027) (0.030)
-------- -------- -------- -------- ------- -------
NET ASSET VALUE,
END OF PERIOD......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======= =======
Total Return............................ 2.56%(a) 4.94% 5.22% 5.08% 2.93% 2.83%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $558,256 $332,646 $315,374 $201,968 $74,759 $61,106
Ratio of expenses to average net
assets.............................. 0.79%(b) 0.73% 0.69% 0.67% 0.65% 0.65%
Ratio of net investment income to
average net assets.................. 5.01%(b) 4.83% 5.09% 5.02% 2.92% 2.67%
Ratio of expenses to average net
assets*............................. 0.89%(b) 0.91% 0.90% 0.92% 0.90% 0.99%
Ratio of net investment income to
average net assets*................. 4.91%(b) 4.65% 4.88% 4.77% 2.67% 2.33%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements.
33
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
------------------------------
<S> <C> <C>
CLASS B
------------------------------
<CAPTION>
SIX MONTHS NOVEMBER 21,
ENDED 1996 TO
DECEMBER 31, JUNE 30,
1997 1997(A)
------ ------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $1.000 $1.000
------ ------
Investment Activities
Net investment income..................................... 0.022 0.026
------ ------
Less: Distributions
Net investment income..................................... (0.022) (0.026)
------ ------
NET ASSET VALUE,
END OF PERIOD............................................. 1.000 1.000
====== ======
Total Return................................................ 2.18%(b) 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 740 $ 618
Ratio of expenses to average net assets................... 1.51%(c) 1.51%(c)
Ratio of net investment income to average net assets...... 4.29%(c) 4.16%(c)
Ratio of expenses to average net assets*.................. 1.59%(c) 1.59%(c)
Ratio of net investment income to average net assets*..... 4.21%(c) 4.08%(c)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
----------------------------------------------------------------------------------
FIDUCIARY
----------------------------------------------------------------------------------
SIX MONTHS
ENDED
YEARS ENDED JUNE 30,
----------------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income............... 0.017 0.031 0.033 0.032 0.021 0.021
-------- -------- -------- -------- -------- --------
Less: Distributions
Net investment income............... (0.017) (0.031) (0.033) (0.032) (0.021) (0.021)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return.......................... 1.67%(a) 3.19% 3.34% 3.28% 2.16% 2.15%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $500,105 $467,420 $459,807 $437,743 $352,702 $175,277
Ratio of expenses to average net
assets............................ 0.44%(b) 0.43% 0.41% 0.41% 0.40% 0.46%
Ratio of net investment income to
average net assets................ 3.30%(b) 3.16% 3.29% 3.26% 2.13% 2.12%
Ratio of expenses to average net
assets*........................... 0.55%(b) 0.55% 0.59% 0.59% 0.60% 0.66%
Ratio of net investment income to
average net assets*............... 3.19%(b) 3.04% 3.11% 3.08% 1.93% 1.92%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements.
35
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
-----------------------------------------------------------------------------
CLASS A
-----------------------------------------------------------------------------
SIX MONTHS
ENDED
YEARS ENDED JUNE 30,
-----------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income.................... 0.015 0.029 0.030 0.030 0.021 0.019
------- ------- ------- ------- ------- -------
Less: Distributions
Net investment income.................... (0.015) (0.029) (0.030) (0.030) (0.021) (0.019)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD............................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return............................... 1.54%(a) 2.97% 3.08% 3.02% 1.96% 1.89%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........ $96,383 $48,185 $50,720 $56,518 $41,595 $18,932
Ratio of expenses to average net
assets................................. 0.72%(b) 0.68% 0.66% 0.66% 0.65% 0.66%
Ratio of net investment income to average
net assets............................. 3.02%(b) 2.91% 3.04% 3.01% 1.92% 1.82%
Ratio of expenses to average net
assets*................................ 0.86%(b) 0.90% 0.94% 0.94% 0.91% 1.01%
Ratio of net investment income to average
net assets*............................ 2.88%(b) 2.69% 2.76% 2.73% 1.66% 1.47%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements.
36
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
------------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------------
SIX MONTHS JUNE 9,
ENDED 1993 TO
YEARS ENDED JUNE 30,
----------------------------------------------
DECEMBER 31, JUNE 30,
1997 1997 1996 1995 1994 1993(A)
------------ ------- ------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income................... 0.017 0.032 0.033 0.032 0.022 0.013
------- ------- ------- ------- ------- -------
Less: Distributions
Net investment income................... (0.017) (0.032) (0.032) (0.032) (0.022) (0.013)
In excess of net investment income...... -- -- (0.001) -- -- --
------- ------- ------- ------- ------- -------
Total Distributions................... (0.017) (0.032) (0.033) (0.032) (0.022) (0.013)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return.............................. 1.69%(b) 3.22% 3.34% 3.20% 2.25% 2.14%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $62,322 $56,442 $55,915 $51,806 $55,375 $ 3,500
Ratio of expenses to average net
assets................................ 0.39%(c) 0.40% 0.41% 0.41% 0.34% 0.08%(b)
Ratio of net investment income to
average net assets.................... 3.34%(c) 3.17% 3.19% 3.13% 2.29% 2.07%(b)
Ratio of expenses to average net
assets*............................... 0.51%(c) 0.53% 0.71% 0.60% 0.57% 0.51%(b)
Ratio of net investment income to
average net assets*................... 3.22%(c) 3.04% 2.89% 2.94% 2.06% 1.64%(b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
37
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
---------------------------------------------------------------------------------
CLASS A
---------------------------------------------------------------------------------
SIX MONTHS JANUARY 26,
ENDED 1993 TO
YEARS ENDED JUNE 30,
----------------------------------------------
DECEMBER 31, JUNE 30,
1997 1997 1996 1995 1994 1993(A)
------------ ------- ------- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income................. 0.016 0.029 0.030 0.029 0.021 0.009
------- ------- ------- ------- ------- -------
Less: Distributions
Net investment income................. (0.016) (0.029) (0.029) (0.029) (0.021) (0.009)
In excess of net investment income.... -- -- (0.001) -- -- --
------- ------- ------- ------- ------- -------
Total Distributions................. (0.016) (0.029) (0.030) (0.029) (0.021) (0.009)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return............................ 1.56%(b) 2.96% 3.08% 2.98% 2.09% 2.34%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $34,918 $30,479 $41,132 $35,790 $37,356 $25,125
Ratio of expenses to average net
assets.............................. 0.67%(c) 0.65% 0.66% 0.63% 0.44% 0.26%(b)
Ratio of net investment income to
average net assets.................. 3.06%(c) 2.90% 2.94% 2.91% 2.05% 2.03%(b)
Ratio of expenses to average net
assets*............................. 0.82%(c) 0.88% 1.06% 0.95% 0.94% 0.92%(b)
Ratio of net investment income to
average net assets*................. 2.91%(c) 2.67% 2.54% 2.59% 1.55% 1.37%(b)
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
38
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
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, including
management fees and expenses,
you may obtain a prospectus from
The One Group Services Company.
Read the prospectus carefully
before investing.
BANC ONE
INVESTMENT [LOGO]
ADVISORS
CORPORATION
TOG-F-034-AN(8/97)
<PAGE>
Growth
Funds
Semi-Annual Report
For the six months ended December 31, 1997
Asset Allocation Fund
Income Equity Fund
Equity Index Fund
Value Growth Fund
Large Company Value Fund
Disciplined Value Fund
Large Company Growth Fund
Growth Opportunities Fund
Small Capitalization Fund
International Equity Index Fund
[THE ONE GROUP FAMILY OF MUTUAL FUNDS LOGO]
<PAGE>
----------------------------------------------------------
Important Customer Information. Investment Products:
* are not deposits or obligations of, or guaranteed by,
BANC ONE CORPORATION or any of its affiliates,
* are not insured by the FDIC, and
----
* are subject to investment risks, including possible FDIC
loss of the principal amount invested. LOGO
----
-----------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Report From Your Investment Advisor........................................ 2
Portfolio Performance Review............................................... 4
Schedules of Portfolio Investments......................................... 7
Statements of Assets and Liabilities....................................... 56
Statements of Operations................................................... 60
Statements of Changes in Net Assets........................................ 62
Notes to Financial Statements.............................................. 66
Financial Highlights....................................................... 79
1
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
We are pleased to present this semiannual report for The One Group(R) Family of
Mutual Funds. On the following pages, you will find an overview of the financial
markets and your fund's performance for the period from July 1, 1997, through
December 31, 1997.
DEAR VALUED SHAREHOLDER:
Thank you for continuing to support The One Group Family of Mutual Funds during
an interesting, challenging and ultimately rewarding year for investors.
Despite strong volatility throughout 1997 and turmoil in Asia, the Dow Jones
Industrial Average was up 24.94% for 1997. Never before had the index returned
more than 20% for three consecutive years. The S&P 500 Index soared even higher,
closing the year up 33.36%.
At the same time, and largely the result of low inflation, a strong U.S. dollar
and the flight to quality spurred by the Asian crisis, U.S. bond yields ended
the year on an impressive note. The 30-year Treasury, for example, ended the
year yielding 5.92%, close to its 20-year low. (As bond yields fall, bond prices
go up.)
ONCE AGAIN, A PHILOSOPHY REINFORCED
While the calendar-year returns for both the stock and bond markets are
impressive, events in the final six months of 1997 may be the most memorable. On
August 6, the Dow closed at 8,259, a record high and its peak for the calendar
year. Shortly thereafter, though, volatility rocked the market, as the effects
of the Asian financial crisis worked their way west. These forces culminated on
Monday, October 27, when the Dow plummeted more than 554 points, its
largest-ever point decline.
This drop may be the defining moment for 1997's financial markets, and it
presented a significant challenge for investors. But, rather than panicking,
shareholders of The One Group demonstrated a clear understanding of market
dynamics and the importance of maintaining a long-term investment philosophy.
I am pleased to report that there were no significant redemptions of One Group
shares after "Black Monday." To us, this implies that our investors understand
the potential dangers of selling their investments based on short-term
volatility. In fact, The One Group experienced a record purchase day on Tuesday,
October 28, indicating that investors realize the benefits of staying focused on
the stock market's long-term potential.
TAX BILL CHANGES FACE OF INVESTING
The second half of 1997 may be remembered as much for the jubilance it brought
investors as for the turmoil. The Taxpayer Relief Act of 1997 became law,
ushering in lower capital gains taxes for investors and new investment
opportunities poised to change the face of investing for years to come.
The cut in the capital gains tax rate may make investing in stocks even more
attractive for many investors. As you are planning for your future financial
needs and taking into consideration your appropriate asset allocation, please do
not overlook the impact of the new tax treatment of capital gains.
And, while you're planning for your financial future, take note that the 1997
tax law makes investing in IRAs even more attractive, particularly with the
introduction of the Roth IRA, a new type of account that offers tax-exempt
distributions in retirement. In addition, the Traditional IRA has been enhanced
with many new features.
The One Group can help you incorporate any of these retirement accounts into
your investment plan. Speak to your investment representative or call
1-800-480-4111 for more information on IRAs.
SEEK ADVICE FOR A YEAR'S WORTH OF EVENTS
With 1997's record volatility and the new investment opportunities introduced by
the tax law, now may be an ideal time to meet with your investment professional
and make sure your investment plan remains on track to meet your financial
needs.
As you probably know, your asset allocation--or the way your investment dollars
are strategically distributed among stock, bond and cash investments according
to your goals, risk tolerance and investing time frame--may be the
single-greatest determinant of your long-term investment success. After a year
full of market ups and downs, your asset allocation probably shifted. For
example, stock market appreciation may have caused your allocation to equities
to swing higher than called for in your plan. Your investment professional can
help you evaluate your plan and, if necessary, get it back on track.
2
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Furthermore, your investment representative can help you make the most of the
Taxpayer Relief Act of 1997. Many of the provisions take effect with the 1998
tax year, so make sure you start off the year with the strategy that's most
appropriate for you.
Thank you for investing with The One Group Family of Mutual Funds and for your
ongoing support of the firm's time-tested investment philosophies. We look
forward to helping you achieve your financial goals in 1998 and beyond.
Sincerely,
LOGO
David J. Kundert
President and CEO,
Banc One Investment Advisors Corporation,
Investment Advisor to The One Group
David J. Kundert photo
For a prospectus with more complete information on The One Group Investor Funds,
including management fees and expenses, please contact The One Group at
1-800-480-4111. Please read the prospectus carefully before investing.
(2/98)
3
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
ECONOMIC GROWTH REMAINS STRONG
Despite showing a slight slowdown from the first half of the year, U.S. economic
growth during the second half of 1997 remained robust at a growth rate of 3.7%.
For the entire 12-month period, the U.S. economy grew by a 3.8% growth rate.
Firm employment gains and strong consumer confidence fueled the growth rate. The
unemployment rate headed steadily downward, ending the year at 4.7%. The economy
witnessed an average of 301,500 new non-farm jobs being created per month, when
all that is needed to absorb the growth in the labor force and keep the
unemployment rate steady is 150,000.
LONG-TERM INTEREST RATES DECLINE
Slightly higher inflation in 1996 kept long-term interest rates relatively high
throughout much of 1997. With prices climbing 3.3% on a year-over-year basis in
1996, investors feared that inflation would keep that pace or even climb higher
in 1997.
But, as the year unfolded it became apparent that inflation was, indeed, under
control. For the final six months of the year the inflation rate was 2.0%, and
for the entire year prices were up only 1.7%, the best performance in 11 years.
Low prices helped pave the way for a significant decline in long-term interest
rates by the end of the year. Also significant was the impact of the Asian
financial crisis, which caused currency values to plunge and sent financial
markets into turmoil. As worldwide events unfolded during the second half of the
year, it became clear that the Asian economies would weaken. This caused
investors throughout the world to turn to the safety of U.S. Treasury
securities, which helped drive up prices.
As a result of these events, long-term interest rates showed a significant
decline during the second half of 1997--a decline that was much greater than the
economic fundamentals supported. At the end of the year, the yield on the
30-year U.S. Treasury bond was 5.92%, after starting the year at 6.64% and
climbing to a high of 7.17% in early April.
FED REMAINS IDLE
The Federal Reserve remained on the sidelines during the second half of the
year, after raising interest rates just once in all of 1997--a 0.25% increase of
the federal funds rate in March. This lack of monetary policy action kept
short-term interest rates relatively steady for the remainder of the year.
The impact of the Asian currency crisis and market meltdowns may have
contributed to the Fed's decision to keep rates unchanged in the second half of
1997. While strong economic growth certainly created a valid reason for another
rate hike, the Fed resisted the temptation, figuring that the Asian situation
would contribute to slower growth ahead.
LOOKING AHEAD
In terms of U.S. economic growth, the Asian crisis remains a factor that can't
be ignored. Thirty percent of U.S. exports go to Asia, and with many Asian
countries facing currency devaluations of 35% to 80%, consumers in that region
have significantly less purchasing power. Furthermore, there's the possibility
that this currency crisis could spread to Latin America, where another 20% of
U.S. exports are at risk if there are some currency devaluations.
The United States accounts for 28% of the non-Asian global economy, and,
therefore, should be heavily influenced by the change in trade flows from Asia.
Asian stock markets have dropped nearly 70% over the last several months, which
undoubtedly will be reflected in lower overall consumption, particularly for
foreign imports. And, as prices on goods produced in Asia continue to fall, U.S.
imports from that region should go up.
As a result, cheaper goods coming from Asia, and possibly Latin America, should
force domestic competitors to lower their prices (or face sharply lower sales
prospects). This could push the U.S. inflation rate to as low as 1.5% in 1998,
compared to 1.7% in 1997 and 3.3% in 1996. At the same time, fewer U.S. exports
and greater imports should cause economic growth to slow to a 2% year-over-year
average for 1998.
4
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Given all the instability overseas and the impending effects of a slowdown in
the U.S. economy, we believe that the Federal Reserve will lower interest rates
in 1998, probably sometime in the second half of the year. Long-term interest
rates should continue their downward trend, due to lower inflation and lower
economic growth. By the end of the year, we may see the yield on the 30-year
Treasury bond somewhere between 5.5% and 5.75%.
/s/ Anthony Chan
Anthony Chan, Ph.D.
Managing Director and Chief Economist
Banc One Investment Advisors
5
<PAGE>
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
OBSTACLES EMERGE, BUT MARKET PERSEVERES
Despite facing its most formidable challenge in years--the Asian financial
crisis, which led to turmoil in equity markets worldwide--the U.S. stock market
continued to climb during the second half of 1997. For the final six months of
the year, the market, as measured by the S&P 500 Index, returned 10.58%,
bringing its total return for the 1997 calendar year to an impressive 33.36%.
The Dow Jones Industrial Average suffered its worst single-day point decline on
October 27, but bounced back to gain 4.01% in the second half of the year. For
the 12-month period ended December 31, 1997, the Dow was up 24.94%, marking the
first time that the index posted returns greater than 20% for three years in a
row.
Once again, the "Goldilocks Economy" helped fuel the market's growth. Everything
was "just right." Inflation remained lower than expected, interest rates
declined and unemployment hit record lows. This led to stronger-than-expected
economic growth and helped push corporate earnings growth to levels that were
better than anticipated.
We are pleased to report that The One Group domestic stock funds provided
attractive results for the six-month and one-year periods ended December 31,
1997. Returns for the U.S. Funds were particularly strong for the 12-month
period.
DIFFERENT STYLES SHARE THE LIMELIGHT
Overall, large-company growth stocks retained their leadership position during
1997, but their outperformance versus other equity styles was not as great as it
had been in recent years. In fact, there was significant style rotation during
the second half of the year, underscoring the importance of investing in
multiple equity styles to capture performance advantages.
During the summer months, for example, investors favored the stocks of small and
mid-size growth companies. In the fourth quarter, investors focused on defensive
equity strategies, and mid-size value stocks became the best relative
performers.
In terms of economic sectors, three offered notable performance. The technology
sector suffered severe volatility during the six-month period, due mostly to the
events in Asia. The utilities sector lagged most of the year but staged a
comeback in the fourth quarter, as investors turned to stocks that typically
provide a defensive hedge. The financial sector remained strong throughout the
entire year.
INTERNATIONAL MARKET HARD-HIT BY ASIAN CRISIS
The Asian currency crisis and resulting market meltdown had the greatest impact
in the international equity arena, where returns, as measured by the Europe,
Australia and Far East Gross Domestic Product (EAFE GDP) Index, fell 5.46% in
the second half of 1997. For the 12-month period, the EAFE GDP Index was up only
5.95%.
Much of this poor performance was due to the Japanese market, which comprises
25% of the Index, and the rest of the Far East contingent. At the same time, the
dollar's strength versus other currencies magnified the downturn in U.S.
dollars. On the bright side, though, several European countries rebounded from
recession to post strong relative performance--stronger than the S&P 500, in
some cases.
STOCKS SHOULD COOL FROM RECORD-BREAKING PACE
While domestic stocks should enjoy another positive year in 1998, it's unlikely
that the record-breaking pace of the last three years will continue.
We believe that conditions remain favorable for another year of positive
returns, but we think that the market environment will be much more volatile due
to worldwide deflationary fears and high valuation levels. It's important to
remember, though, that in 1995, 1996 and early 1997 we saw extremely low levels
of volatility. What we should see in 1998 is a return to more "normal" levels of
volatility.
While the economy should remain favorable for stocks, economic growth should
slow in 1998, which could cause earnings to moderate. In fact, for the first
time in several years, earnings growth will likely move from double digits to
single digits. But what may be even more important than earnings growth is
earnings reliability. Slower economic growth and the fallout from the Asian
situation will make it extremely important for companies to meet their earnings
expectations.
On the international front, we believe that European stocks are well positioned
for another strong year. On the other hand, economic problems in Japan and the
rest of Asia should lead to dramatically slower growth for Asia.
All of these factors underscore the importance of maintaining a disciplined
approach to equity investing. We encourage our investors to remain diversified
among a variety of stock types and to stay focused on long-term returns.
LOGO
Richard R. Jandrain III
Senior Managing Director of Equity Securities
Banc One Investment Advisors Corporation
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
6
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
ASSET BACKED SECURITIES (2.6%):
20 Advanta Credit Card Master Trust,
5.95%, 8/31/99.................... $ 20
298 Advanta Mortgage Loan Trust, Series
1994-3, Class A2, 7.60%,
7/25/10........................... 302
600 Case Equipment Loan Trust, Series
1996-B, Class A3, 6.65%,
9/15/03........................... 609
480 Green Tree Financial Corp., Series
1996-3, Class A3, 6.70%,
5/15/27........................... 486
800 Greentree Financial Corp., Series
1996-7, Class A4, 6.80%,
10/15/27.......................... 822
67 KeyCorp Auto Grantor Trust, Series
1995-A A, 5.80%, 7/15/00.......... 67
500 Nationsbank Auto Owner Trust 1996-A
A3, 6.38%, 7/15/00................ 502
525 Olympic Automobile Receivables
Trust, 6.05%, 8/15/02............. 524
1,025 Olympic Automobile Receivables
Trust, Series 1996-B, Class A4,
6.70%, 3/15/02.................... 1,034
630 The Money Store Home Equity Trust,
Series 1993-C, 5.18%, 7/15/06..... 624
181 The Money Store Home Equity Trust,
Series 1994-B, Class A2, 6.80%,
2/15/13........................... 184
67 Union Federal Savings Bank Trust,
Series 1994 A A, 5.08%, 5/15/00... 67
--------
Total Asset Backed Securities 5,241
--------
COMMERCIAL PAPER (3.8%):
Financial Services (3.8%):
7,905 Merrill Lynch, 5.81%, 3/19/98....... 7,810
--------
Total Commercial Paper 7,810
--------
COMMON STOCKS (51.4%):
Business Equipment & Service (0.4%):
7 Jacobs Engineering Group, Inc....... 178
20 Service Corp. International......... 720
--------
898
--------
Capital Goods (3.6%):
11 Cooper Industries, Inc.............. 544
14 Emerson Electric Co................. 790
38 General Electric Co................. 2,803
10 Harsco Corp......................... 431
6 Hubbell, Inc., Class B.............. 306
12 Mark IV Industries, Inc............. 271
6 Precision Castparts................. 338
19 Teleflex, Inc....................... 725
26 Tyco International.................. 1,167
--------
7,375
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Durable (0.9%):
19 Autozone, Inc. (c).................. $ 554
25 Chrysler Corp....................... 862
11 Lear Corp. (b)...................... 508
--------
1,924
--------
Consumer Non-Durable (5.2%):
31 Archer-Daniels-Midland Co........... 670
21 Coca Cola Co........................ 1,419
19 ConAgra, Inc........................ 637
6 Estee Lauder Companies, Class A..... 314
19 Intimate Brands, Inc. (c)........... 457
14 McCormick & Co., Inc................ 398
18 Newell Companies, Inc............... 774
35 PepsiCo, Inc........................ 1,279
47 Philip Morris Co., Inc.............. 2,114
8 Proctor & Gamble Co................. 615
13 Quaker Oats Co...................... 686
11 Revlon, Inc. (b).................... 396
22 RJR Nabisco Holdings Corp........... 821
--------
10,580
--------
Consumer Services (2.9%):
10 Belo (A.H.) Corp., Series A......... 561
21 Cendant Corp. (c)................... 729
18 Hasbro, Inc......................... 575
23 Hilton Hotels Corp.................. 687
10 MGM Grand, Inc. (b)(c).............. 375
17 Tele-Communications, Inc............ 479
9 Telecom-TCI Ventures Group, Series
A................................. 265
15 Time Warner, Inc.................... 923
3 Tricon Global Restaurants........... 97
16 Viacom, Inc......................... 651
7 Walt Disney Co...................... 644
--------
5,986
--------
Energy (4.3%):
9 Ashland, Inc........................ 489
11 Atlantic Richfield Co............... 857
8 Devon Energy Corp................... 312
8 Dresser Industries, Inc............. 319
38 Exxon Corp.......................... 2,324
16 Mobil Corp.......................... 1,155
25 Royal Dutch Petroleum, NY Shares.... 1,349
20 Tosco Corp. (c)..................... 764
20 USX-Marathon Group.................. 682
10 Weatherford Enterra, Inc............ 455
--------
8,706
--------
Financial Services (9.1%):
5 Allstate Corp....................... 473
6 American Express Co................. 500
9 American International Group,
Inc............................... 941
9 Charter One Financial, Inc.......... 587
</TABLE>
Continued
7
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
9 Chase Manhattan Corp................ $ 1,007
4 Cigna Corp.......................... 675
11 Equitable Co., Inc.................. 537
22 Federal National Mortgage Assoc..... 1,267
7 First American Bank Corp............ 509
23 First Union Corp. (c)............... 1,189
15 Fleet Financial Group, Inc.......... 1,147
8 Hartford Financial Services Group... 777
16 Morgan Stanley Dean Witter
Discover.......................... 952
21 Nationsbank......................... 1,265
16 PNC Bank Corp....................... 902
10 Provident Co., Inc.................. 390
13 Regions Financial Corp.............. 527
14 Southtrust Corp..................... 856
10 State Street Corp................... 570
7 TransAmerica Corp................... 692
24 Travelers Group, Inc................ 1,293
8 Washington Mutual, Inc.............. 491
3 Wells Fargo & Co.................... 916
--------
18,463
--------
Health Care (5.7%):
17 Abbott Labs......................... 1,141
13 American Home Products Corp......... 979
9 Amgen, Inc. (b)..................... 498
12 Baxter International, Inc........... 625
18 Bristol Myers Squibb Co............. 1,723
6 Cardinal Health, Inc. (c)........... 436
23 Eli Lilly & Co...................... 1,580
10 Guidant Corp........................ 647
15 Healthsouth Corp.................... 427
7 Johnson & Johnson................... 435
13 Medpartners, Inc.................... 291
9 Merck & Co., Inc.................... 967
6 Pfizer, Inc......................... 447
14 Tenet Healthcare Corp............... 474
7 Warner-Lambert Co................... 856
--------
11,526
--------
Raw Materials (2.2%):
9 Betzdearborn, Inc................... 556
14 Crompton & Knowles Corp............. 371
14 Du Pont (EI) de Nemours & Co........ 841
17 Ferro Corp.......................... 417
20 Morton International, Inc........... 674
13 Nalco Chemical Co................... 506
12 Olin Corp........................... 572
14 Praxair, Inc........................ 630
--------
4,567
--------
Retail (3.1%):
26 CompUSA, Inc........................ 800
14 Dayton Hudson Corp.................. 911
16 Gymboree............................ 441
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail, continued:
28 Just For Feet, Inc. (b)............. $ 364
23 Kroger Co. (b)...................... 850
35 Officemax, Inc. (b)................. 504
9 Outback Steakhouse, Inc. (c)........ 270
18 Toys R Us, Inc. (b)................. 556
40 Wal-Mart Stores, Inc................ 1,558
--------
6,254
--------
Shelter (1.3%):
25 Kaufman & Broad Home Corp........... 570
16 Kimberly Clark Corp................. 765
11 Leggett & Platt, Inc................ 456
9 Masco Corp.......................... 468
12 Pentair, Inc........................ 435
--------
2,694
--------
Technology (7.7%):
6 Altera Corp. (b).................... 186
18 Analog Devices, Inc. (b)(c)......... 485
10 BMC Software, Inc. (b).............. 623
12 Boeing Co........................... 573
22 Cadence Design Systems, Inc. (c).... 534
23 Cisco Systems, Inc. (b)............. 1,257
20 Compaq Computer Corp. (b)........... 1,134
14 Dell Computer Corp. (b)............. 1,168
5 General Motors, Class H............. 166
12 Hewlett Packard Co.................. 750
28 Intel Corp.......................... 1,946
17 International Business Machines..... 1,809
6 Lockheed Martin Corp................ 591
8 Lucent Technologies, Inc............ 623
20 Microsoft Corp. (b)................. 2,597
16 Orbital Sciences Corp. (b).......... 467
3 Raytheon Co., Class A............... 125
17 Teradyne, Inc. (b).................. 547
--------
15,581
--------
Utilities (5.0%):
14 AES Corp. (b)....................... 653
10 Century Telephone Enterprises....... 498
11 Florida Power & Light, Inc.......... 657
19 General Public Utilities Corp....... 779
23 GTE Corp............................ 1,212
26 LCI International, Inc. (c)......... 803
10 MCN Corp............................ 392
6 National Fuel Gas Co................ 278
26 New York State Electric & Gas....... 919
20 SBC Communications, Inc............. 1,428
</TABLE>
Continued
8
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
19 Sprint Corp......................... $ 1,102
16 Texas Utilities..................... 677
26 Worldcom, Inc. (c).................. 793
--------
10,191
--------
Total Common Stocks 104,745
--------
CORPORATE BONDS (11.4%):
Banking, Finance & Insurance (7.1%):
$1,000 Association Corp., 8.27%, 11/8/01... 1,069
1,000 Bankamerica Corp., 8.13%, 2/1/02.... 1,063
500 Chrysler Financial Corp., 5.88%,
2/7/01............................ 497
1,070 Circuit City Credit Card Master
Trust, 6.38%, 8/15/05............. 1,077
1,000 First Hawaiian, Inc., 6.25%,
8/15/00........................... 998
610 Ford Credit Auto Loan Master Trust,
5.50%, 2/15/03.................... 603
500 Ford Motor Credit Corp., 8.38%,
1/15/00........................... 522
250 General Motors Acceptance Corp.,
7.00%, 3/1/00..................... 254
1,250 General Motors Acceptance Corp.,
8.25%, 2/24/04.................... 1,361
1,000 Goldman Sachs Group, 7.20%, 3/1/07,
144 A............................. 1,053
750 Huntington National Bank, 6.75%,
6/15/03........................... 764
250 Lehman Brothers Holdings, Inc.,
6.38%, 6/1/98..................... 250
300 Lehman Brothers Holdings, Inc.,
8.88%, 11/1/98.................... 307
500 Lehman Brothers, Inc., 9.88%,
10/15/00.......................... 544
550 MBNA Master Credit Card, 5.40%,
3/15/99........................... 546
800 McDonnell Douglas Corp., 9.30%,
9/11/02........................... 834
307 McDonnell Douglas Corp., 6.45%,
12/5/02........................... 309
750 Midland Bank PLC, 6.95%, 3/15/11.... 770
250 Nationsbank Texas, 6.75%, 8/15/00... 254
1,000 Society National Bank, 6.75%,
6/15/03........................... 1,019
500 Suntrust Banks, 7.38%, 7/1/02....... 519
--------
14,613
--------
Industrials (2.5%):
250 Anheuser Busch Co., 8.75%,
12/1/99........................... 262
500 Campbell Soup Co., 5.63%, 9/15/03... 487
250 Coca-Cola Co., 7.88%, 9/15/98....... 253
500 Dayton Hudson Corp., 7.25%,
9/1/04............................ 520
200 Du Pont (EI) de Nemours & Co.,
8.70%, 2/7/01..................... 215
250 Ford Motor Co., 9.00%, 9/15/01...... 271
200 Illinois Tool Works, 7.50%,
12/1/98........................... 202
500 J C Penney & Co., 5.38%, 11/15/98... 496
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Industrials, continued:
$ 250 Johnson & Johnson, 7.38%, 6/29/02... $ 262
1,000 Occidental Petroleum, 9.25%,
8/1/19............................ 1,249
750 Sears Roebuck Acceptance, 7.13%,
5/2/03............................ 776
--------
4,993
--------
Transportation (0.3%):
500 Union Pacific Co., 7.60%, 5/1/05.... 533
--------
Utilities (1.5%):
500 AT&T Corp., 6.00%, 8/1/00 (c)....... 497
750 AT&T Corp., 7.50%, 6/1/06........... 806
250 Duke Power Co., 7.00%, 7/1/00....... 255
250 Southern California Edison, 7.50%,
4/15/99........................... 254
675 Virginia Electric & Power, 9.15%,
6/10/99........................... 705
500 Virginia Electric & Power, 6.63%,
4/1/03............................ 509
--------
3,026
--------
Total Corporate Bonds 23,165
--------
FEDERAL AGENCY DEBENTURES (1.0%):
Federal National Mortgage Assoc. (1.0%):
1,000 5.55%, 9/8/98....................... 997
1,000 5.53%, 2/10/99...................... 996
--------
Total Federal Agency Debentures 1,993
--------
U.S. GOVERNMENT AGENCY MORTGAGES (12.8%):
Federal Home Loan Mortgage Corp. (4.8%):
135 10.00%, 9/1/03, Pool #E30407........ 143
295 8.00%, 3/1/08, Pool #E45796......... 305
943 7.00%, 1/1/12, Pool #E66116......... 957
313 10.50%, 10/1/20, Pool #D24679....... 347
765 8.00%, 4/1/25, Pool #C00401......... 795
837 8.00%, 5/1/25, Pool #D60455......... 870
457 7.00%, 2/1/26, Pool #D69343......... 463
947 6.50%, 2/1/26, Pool #D68124......... 938
680 6.50%, 2/1/26, Pool #D68616......... 673
487 7.00%, 3/1/26, Pool #D69430......... 492
913 7.50%, 5/1/26, Pool #C00460......... 937
806 8.50%, 7/1/26, Pool #C00472......... 842
957 7.00%, 10/1/26, Pool #D75494........ 967
1,000 7.50%, 12/1/27...................... 1,023
--------
9,752
--------
Federal National Conventional Loan (0.5%):
380 8.00%, 6/1/24, Pool #250085......... 395
650 8.00%, 6/1/24, Pool #270402......... 675
--------
1,070
--------
Federal National Mortgage Assoc. (2.9%):
275 6.40%, 3/25/03...................... 275
250 6.40%, 1/13/04...................... 250
864 6.50%, 5/1/11, Pool #337195......... 865
</TABLE>
Continued
9
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Asset Allocation Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 892 7.00%, 7/1/25, Pool #317252......... $ 901
854 6.50%, 2/1/26, Pool #337115......... 846
844 7.50%, 5/1/26, Pool #344916......... 865
917 7.00%, 5/1/26, Pool #346269......... 926
866 7.50%, 11/1/26, Pool #363626........ 886
--------
5,814
--------
Government National Mortgage Assoc. (4.6%):
709 5.50%, 4/20/11, Pool #2222.......... 677
113 8.00%, 4/15/17, Pool #192100........ 119
72 8.00%, 5/15/22, Pool #329176........ 75
88 6.50%, 1/15/24, Pool #376656........ 88
229 8.00%, 4/15/24, Pool #376038........ 239
1,114 8.00%, 8/15/24, Pool #394024........ 1,161
1,333 7.00%, 8/15/25, Pool #413007........ 1,348
977 6.50%, 4/15/26, Pool #416192........ 967
962 6.50%, 4/15/26, Pool #424185........ 952
842 7.50%, 5/15/26, Pool #375345........ 864
985 7.00%, 5/15/26, Pool #375344........ 995
858 8.50%, 1/15/27, Pool #432266........ 901
1,000 7.50%, 12/15/27, Pool #455358....... 1,025
--------
9,411
--------
Total U.S. Government Agency Mortgages 26,047
--------
U.S. TREASURY OBLIGATIONS (14.2%):
U.S. Treasury Bills (0.2%):
55 1/22/98 (d)......................... 55
95 2/5/98 (d).......................... 95
40 2/19/98 (d)......................... 40
115 2/26/98 (d)......................... 114
55 3/12/98 (d)......................... 54
--------
358
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Bonds (5.2%):
$ 750 11.25%, 2/15/15 (c)................. $ 1,176
1,900 7.50%, 11/15/16..................... 2,218
4,700 8.13%, 8/15/19 (c).................. 5,877
1,000 7.88%, 2/15/21 (c).................. 1,228
--------
10,499
--------
U.S. Treasury Notes (8.8%):
500 7.25%, 2/15/98 (c).................. 501
600 9.00%, 5/15/98...................... 608
200 8.88%, 2/15/99...................... 207
300 5.88%, 3/31/99...................... 301
3,250 7.00%, 4/15/99 (c).................. 3,304
300 6.00%, 10/15/99..................... 302
250 7.75%, 11/30/99 (c)................. 259
1,000 7.75%, 1/31/00 (c).................. 1,040
1,000 6.50%, 5/31/01 (c).................. 1,023
6,500 6.50%, 8/31/01 (c).................. 6,661
2,000 6.63%, 3/31/02 (c).................. 2,064
150 6.25%, 2/15/03 (c).................. 153
1,500 6.50%, 5/15/05 (c).................. 1,563
--------
17,986
--------
Total U.S. Treasury Obligations 28,843
--------
REPURCHASE AGREEMENTS (2.4%):
4,876 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $5,105 U.S.
Treasury Bills, 6/25/98, market
value $4,974)..................... 4,876
--------
Total Repurchase Agreements 4,876
--------
Total (Cost $179,677) (a)....................... $202,720
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $203,458.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $24,268
Unrealized depreciation..................................... (1,173)
-------
Net unrealized appreciation................................. $23,095
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
(d) Serves as collateral for futures contracts.
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- --------- ------------- --------- -------
<C> <S> <C> <C>
34 Long S&P 500 March 1998 Futures $8,270 $8,322
</TABLE>
See notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
COMMON STOCKS (90.9%):
Business Equipment & Services (2.0%):
63 Automatic Data Processing, Inc....... $ 3,867
200 Browning-Ferris Industries, Inc.
(b)................................ 7,400
225 Dun & Bradstreet Corp................ 6,961
--------
18,228
--------
Capital Goods (5.2%):
215 Cooper Industries, Inc............... 10,535
97 Deere & Co........................... 5,656
358 General Electric Co.................. 26,269
100 Johnson Controls, Inc................ 4,775
--------
47,235
--------
Consumer Durable (2.2%):
57 Briggs & Stratton Corp............... 2,778
60 Chrysler Corp........................ 2,111
300 Ford Motor Co........................ 14,606
--------
19,495
--------
Consumer Non-Durable (15.1%):
120 American Greetings Corp., Class A.... 4,695
254 Campbell Soup Co..................... 14,741
120 Clorox Co............................ 9,488
242 Coca Cola Co......................... 16,123
464 ConAgra, Inc......................... 15,225
120 Eastman Kodak Co. (b)................ 7,298
171 H.J. Heinz Co........................ 8,689
135 International Flavors & Fragrances,
Inc. (c)........................... 6,953
150 McCormick & Co., Inc................. 4,200
40 Newell Co., Inc...................... 1,703
140 PepsiCo, Inc......................... 5,101
411 Philip Morris Co., Inc............... 18,617
180 Procter & Gamble Co. (b)............. 14,366
104 Quaker Oats Co....................... 5,486
110 RJR Nabisco Holdings Corp............ 4,125
--------
136,810
--------
Consumer Services (1.1%):
140 McGraw-Hill Co., Inc. (b)............ 10,360
--------
Energy (10.0%):
160 Amoco Corp........................... 13,620
100 Atlantic Richfield Co................ 8,013
150 Dresser Industries, Inc. (b)......... 6,291
321 Exxon Corp........................... 19,666
130 Halliburton Co....................... 6,752
220 Mobil Corp........................... 15,881
350 Royal Dutch Petroleum Co............. 18,966
50 USX-Marathon Group................... 1,688
--------
90,877
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (17.9%):
130 Allstate Corp........................ $ 11,814
231 American Express Co.................. 20,613
19 Bank of New York Co., Inc............ 1,087
257 BankAmerica Corp..................... 18,761
73 Chase Manhattan Corp................. 7,997
50 Citicorp............................. 6,322
13 Comerica, Inc........................ 1,143
216 Federal National Mortgage Assoc...... 12,326
120 First Tennessee National Corp. (b)... 8,010
50 First Union Corp..................... 2,563
120 J.P. Morgan & Co., Inc............... 13,545
181 Lincoln National Corp................ 14,141
10 Marsh & Mclennan Co.................. 753
116 National City Corp................... 7,627
65 Norwest Corp......................... 2,511
42 Regions Financial Corp............... 1,772
200 Reliastar Financial Corp............. 8,238
41 Southtrust Corp...................... 2,601
6 SunAmerica, Inc...................... 774
95 TransAmerica Corp.................... 10,118
80 U.S. Bancorp......................... 8,955
--------
161,671
--------
Health Care (12.0%):
45 Abbott Labs.......................... 2,950
205 American Home Products Co............ 15,683
276 Baxter International, Inc............ 13,921
241 Bristol Myers Squibb Co.............. 22,765
118 Merck & Co., Inc..................... 12,484
135 Pfizer, Inc.......................... 10,066
244 Schering Plough Corp................. 15,159
125 Warner Lambert Co.................... 15,500
--------
108,528
--------
Multi-Industry (0.7%):
80 Minnesota Mining & Manufacturing
Co................................. 6,565
Raw Materials (4.5%):
169 Dow Chemical Co...................... 17,129
140 Du Pont (EI) de Nemours & Co......... 8,409
160 Nalco Chemical Co.................... 6,330
83 Olin Corp. (b)....................... 3,891
220 Pall Corp. (b)....................... 4,551
--------
40,310
--------
Retail (3.0%):
178 Albertsons, Inc. (b)................. 8,433
173 May Department Stores Co............. 9,117
185 Wal-Mart Stores, Inc................. 7,296
80 Walgreen Co.......................... 2,510
--------
27,356
--------
</TABLE>
Continued
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter (2.0%):
85 Kimberly Clark Corp.................. $ 4,192
275 Sonoco Products Co................... 9,539
85 Weyerhaeuser Co...................... 4,170
--------
17,901
--------
Technology (5.6%):
113 AMP, Inc. (b)........................ 4,746
100 Boeing Co............................ 4,894
127 Hewlett Packard Co................... 7,938
96 International Business Machines...... 10,038
60 Lockheed Martin Corp. (b)............ 5,910
60 United Technologies Corp............. 4,369
175 Xerox Corp. (b)...................... 12,916
--------
50,811
--------
Transportation (0.6%):
50 Norfolk Southern Corp................ 1,541
60 Union Pacific Corp................... 3,746
--------
5,287
--------
Utilities (9.0%):
181 AT&T Corp............................ 11,078
190 BellSouth Corp....................... 10,699
147 Central & South West Corp. (b)....... 3,978
20 El Paso Natural Gas Co............... 1,330
160 Entergy Corp......................... 4,790
240 GTE Corp............................. 12,540
120 Ku Energy Corp....................... 4,710
33 New Century Energies, Inc............ 1,596
50 Northern States Power Co............. 2,931
130 Questar Corp......................... 5,801
230 SBC Communications, Inc.............. 16,849
90 Sprint Corp.......................... 5,276
--------
81,578
--------
Total Common Stocks 823,012
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
CONVERTIBLE BONDS (4.1%):
$7,725 Alza Corp., 5.00%, 5/1/06............ $ 8,053
2,500 Athena Neurosciences, 4.75%,
11/15/04, Callable 11/15/00 @
102.7.............................. 2,547
6,500 Hilton Hotels Corp., 5.00%,
5/15/06............................ 7,150
725 Home Depot, Inc., 3.25%, 10/1/01,
Callable 10/1/99 @ 100.81.......... 982
6,000 Masco Corp., 5.25%, 2/15/12.......... 7,215
5,500 Medical Care International, 6.75%,
10/1/06............................ 5,321
6,000 Pep Boys-Manny, Moe & Jack, 4.00%,
9/1/99............................. 5,903
--------
Total Convertible Bonds 37,171
--------
PREFERRED STOCKS (2.6%):
140 Corning Delaware..................... 8,627
110 Crown Cork & Seal Co................. 5,170
110 Cyprus Amax Minerals Co.............. 5,253
55 Microsoft Corp....................... 4,943
--------
Total Preferred Stocks 23,993
--------
REPURCHASE AGREEMENTS (2.5%):
22,722 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $19,334 U.S.
Treasury Bonds, 7.50%, 11/15/24,
market value $23,177).............. 22,722
--------
Total Repurchase Agreements 22,722
--------
Total (Cost $499,296) (a) $906,898
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $905,702.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $410,325
Unrealized depreciation..................................... (2,723)
--------
Net unrealized appreciation................................. $407,602
========
</TABLE>
(b) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMERCIAL PAPER (1.7%):
Financial Services (1.7%):
$3,000 CXC, Inc., 5.82%, 3/19/98........... $ 2,964
3,000 Ford Motor Co., 5.78%, 3/19/98...... 2,964
2,275 General Electric, 5.78%, 3/19/98.... 2,248
8,095 Merrill Lynch, 5.67%, 3/19/98....... 7,996
--------
Total Commercial Paper 16,172
--------
COMMON STOCKS (97.9%):
Business Equipment & Services (1.9%):
37 Automatic Data Processing, Inc...... 2,254
26 Browning-Ferris Industries, Inc..... 973
11 Canadian Moore Corp., Ltd........... 166
10 Ceridian Corp. (b).................. 438
21 Cognizant Corp...................... 935
9 Computer Sciences Corp. (b)......... 777
11 Deluxe Corp......................... 365
21 Dun & Bradstreet Corp............... 656
8 Ecolab, Inc......................... 451
19 Equifax, Inc........................ 663
56 First Data Corp..................... 1,632
13 H & R Block......................... 567
16 Ikon Office Solutions (c)........... 450
15 Interpublic Group Co., Inc.......... 762
3 John H. Harland Co.................. 70
38 Laidlaw, Inc........................ 515
6 National Service Industries, Inc.... 309
19 Omnicom Group, Inc.................. 814
19 Pitney Bowes, Inc................... 1,670
19 R.R. Donnelley & Sons Co. (c)....... 710
10 Ryder Systems, Inc.................. 328
7 Safety-Kleen Corp................... 202
31 Service Corp. International......... 1,153
57 WMX Technologies, Inc............... 1,554
--------
18,414
--------
Capital Goods (5.7%):
3 Aeroquip-Vickers, Inc............... 150
11 Black & Decker Corp................. 422
9 Case Corp........................... 538
48 Caterpillar, Inc.................... 2,318
5 Cincinnati Milacron, Inc............ 126
15 Cooper Industries, Inc.............. 732
5 Crane Co............................ 237
5 Cummins Engine, Inc. (c)............ 300
32 Deere & Co.......................... 1,843
28 Dover Corp.......................... 1,006
56 Emerson Electric Co................. 3,136
11 Fluor Corp.......................... 396
5 Foster Wheeler Corp................. 131
407 General Electric Co................. 29,896
6 General Signal Corp................. 272
7 Grainger W.W., Inc.................. 664
6 Harnischfeger Industries, Inc....... 220
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Capital Goods, continued:
16 Honeywell, Inc...................... $ 1,082
30 Illinois Tool Works................. 1,792
20 Ingersoll Rand Co................... 794
10 Johnson Controls, Inc............... 491
1 Nacco Industries, Inc............... 84
10 Navistar International Corp. (b).... 239
6 Owens-Corning Fiberglass Corp....... 220
9 Paccar, Inc......................... 493
14 Parker-Hannifin Corp................ 644
23 PPG Industries, Inc................. 1,298
22 Sherwin-Williams Co................. 604
8 Snap-On, Inc........................ 352
11 Stanley Works....................... 518
19 Thermo Electron Corp. (b)(c)........ 823
7 Timken Co........................... 239
66 Tyco International, Ltd............. 2,966
--------
55,026
--------
Consumer Durable (2.3%):
19 Autozone, Inc. (b)(c)............... 548
2 Briggs & Stratton Corp.............. 115
84 Chrysler Corp....................... 2,960
10 Cooper Tire & Rubber Co............. 256
12 Dana Corp........................... 588
10 Eaton Corp.......................... 876
8 Echlin, Inc......................... 287
148 Ford Motor Co....................... 7,189
91 General Motors Corp................. 5,509
23 Genuine Parts Co.................... 770
19 Goodyear Tire & Rubber Co........... 1,211
14 ITT Industries, Inc................. 453
13 Maytag Corp......................... 472
0 Meritore Automotive, Inc. (d)....... 0
10 Whirlpool Corp...................... 523
--------
21,757
--------
Consumer Non-Durable (11.9%):
6 Alberto Culver Co., Class B......... 207
10 American Greetings Corp., Class A... 372
62 Anheuser Busch Co., Inc............. 2,707
72 Archer-Daniels-Midland Co........... 1,567
17 Avon Products, Inc.................. 1,037
3 Ball Corp........................... 111
7 Bemis Co............................ 305
9 Brown-Forman Corp., Class B......... 486
58 Campbell Soup Co.................... 3,384
13 Clorox Co........................... 1,048
309 Coca Cola Co........................ 20,559
36 Colgate Palmolive Co................ 2,677
60 ConAgra, Inc........................ 1,958
5 Coors Adolph Co., Class B........... 154
</TABLE>
Continued
13
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
18 CPC International................... $ 1,950
16 Crown Cork & Seal Co. (c)........... 780
42 Eastman Kodak Co.................... 2,542
5 Fleming Co., Inc.................... 63
23 Fort James Corp..................... 898
22 Fortune Brands Inc.................. 806
10 Fruit of The Loom, Inc., Class A
(b)............................... 249
20 General Mills, Inc.................. 1,423
69 Gillette Co. (c).................... 6,960
46 H.J. Heinz Co....................... 2,328
19 Hershey Foods Corp.................. 1,186
14 International Flavors & Fragrances,
Inc............................... 702
5 Jostens, Inc........................ 116
52 Kellogg Co. (c)..................... 2,566
10 Liz Claiborne, Inc.................. 401
20 Newell Co........................... 851
36 Nike, Inc., Class B (c)............. 1,409
192 PepsiCo, Inc........................ 7,007
303 Philip Morris Co., Inc.............. 13,709
8 Pioneer Hi-Bred International,
Inc............................... 879
6 Polaroid Corp....................... 292
168 Proctor & Gamble Co................. 13,447
17 Quaker Oats Co...................... 876
13 Ralston Purina Group................ 1,212
7 Reebok International Ltd. (b)....... 209
19 Rubbermaid, Inc..................... 482
5 Russell Corp........................ 129
60 Sara Lee, Corp...................... 3,383
46 Seagram Co., Ltd. (c)............... 1,502
2 Springs Industries, Inc., Class A... 91
9 Supervalu, Inc...................... 369
22 Sysco Corp.......................... 1,023
8 Tupperware Corp..................... 223
79 Unilever N V........................ 4,944
24 UST, Inc............................ 902
17 V.F. Corp........................... 759
14 Wrigley (Wm.) Junior Co............. 1,148
--------
114,388
--------
Consumer Services (4.2%):
12 Brunswick Corp...................... 366
88 CBS Corp............................ 2,584
96 Cendant Corp. (b)(c)................ 3,312
12 Clear Channel Communications (b).... 961
41 Comcast Corp., Class A.............. 1,305
12 Dow Jones & Co., Inc................ 645
35 Gannett, Inc........................ 2,166
12 Harrah's Entertainment, Inc. (b).... 236
16 Hasbro, Inc......................... 508
31 Hilton Hotels Corp.................. 922
14 ITT Corp. (b)....................... 1,189
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Services, continued:
5 King World Productions, Inc. (b).... $ 263
12 Knight-Ridder, Inc.................. 632
16 Marriott International, Inc......... 1,091
34 Mattel, Inc......................... 1,283
13 McGraw-Hill Co., Inc................ 937
6 Meredith Corp....................... 226
22 Mirage Resorts, Inc. (b)............ 496
12 New York Times Co., Class A......... 807
63 Tele-Communications, Inc., Class A
(b)............................... 1,749
71 Time Warner, Inc.................... 4,381
13 Times Mirror Co., Class A (c)....... 795
16 Tribune Co.......................... 1,016
59 U.S. West, Inc. (b)................. 2,651
45 Viacom, Inc., Class B (b)........... 1,848
84 Walt Disney Co...................... 8,346
--------
40,715
--------
Energy (8.3%):
11 Amerada Hess Corp. (c).............. 625
61 Amoco Corp.......................... 5,227
7 Anadarko Petroleum Corp............. 443
11 Apache Corp......................... 393
8 Ashland, Inc........................ 441
40 Atlantic Richfield Co............... 3,224
20 Baker Hughes, Inc................... 892
22 Burlington Northern................. 970
81 Chevron Corp. (c)................... 6,216
22 Dresser Industries, Inc............. 919
308 Exxon Corp.......................... 18,866
31 Halliburton Co...................... 1,621
2 Helmerich & Payne, Inc.............. 161
7 Kerr McGee Corp..................... 426
7 McDermott International, Inc........ 265
98 Mobil Corp.......................... 7,066
40 Occidental Petroleums Corp. (c)..... 1,172
12 Oryx Energy Co. (b)................. 316
6 Pennzoil Co......................... 404
33 Phillips Petroleum Co............... 1,587
11 Rowan Cos., Inc. (b)................ 327
266 Royal Dutch Petroleum Co............ 14,415
62 Schlumberger Ltd. (c)............... 4,954
9 Sun, Inc............................ 389
22 Tenneco, Inc........................ 862
65 Texaco, Inc......................... 3,550
31 Union Pacific Resources Group,
Inc............................... 750
31 Unocal Corp......................... 1,187
36 USX-Marathon Group.................. 1,212
7 Western Atlas, Inc. (b)............. 533
--------
79,413
--------
</TABLE>
Continued
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (16.7%):
54 Allstate Corp....................... $ 4,918
59 American Express Co................. 5,257
30 American General Corp. (c).......... 1,623
88 American International Group, Inc.
(c)............................... 9,569
20 Aon Corp............................ 1,161
72 Banc One Corp. (c).................. 3,887
47 Bank of New York Co., Inc........... 2,729
88 BankAmerica Corp.................... 6,428
18 Bankboston Corp..................... 1,726
12 Bankers Trust New York Corp......... 1,359
26 Barnett Banks, Inc.................. 1,842
17 BB&T Corp........................... 1,076
7 Beneficial Corp..................... 575
33 Charles Schwab Corp................. 1,373
53 Chase Manhattan Corp................ 5,767
22 Chubb Corp.......................... 1,639
10 Cigna Corp.......................... 1,644
6 Cincinnati Financial Corp........... 816
57 Citicorp............................ 7,212
14 Comerica, Inc....................... 1,236
22 Conseco, Inc........................ 1,018
26 Corestates Financial Corp........... 2,062
13 Country Wide Credit................. 549
88 Federal Home Loan Mortgage Corp..... 3,695
132 Federal National Mortgage Assoc..... 7,535
20 Fifth Third Bancorp................. 1,615
37 First Chicago NBD Corp.............. 3,064
70 First Union Corp.................... 3,584
32 Fleet Financial Group, Inc.......... 2,397
10 General Re Corp..................... 2,138
8 Golden West Financial Corp.......... 755
17 Green Tree Financial Corp. (c)...... 445
12 H.F. Ahmanson & Co.................. 813
14 Hartford Financial Services Group... 1,342
13 Household International, Inc. (c)... 1,695
24 Huntington Bancshares (c)........... 857
23 J.P. Morgan & Co., Inc. (c)......... 2,578
9 Jefferson Pilot Corp................ 715
27 KeyCorp............................. 1,912
13 Lincoln National Corp............... 999
20 Marsh & McLennan Co................. 1,521
11 MBIA, Inc........................... 702
62 MBNA Corp........................... 1,701
31 Mellon Bank Corp.................... 1,891
41 Merrill Lynch & Co.................. 3,007
15 MGIC Investment Corp................ 991
73 Morgan Stanley Dean Witter
Discover.......................... 4,322
28 National City Corp.................. 1,808
88 NationsBank Corp.................... 5,378
92 Norwest Corp........................ 3,546
38 PNC Bank Corp....................... 2,176
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
9 Progressive Corp., Ohio............. $ 1,031
12 Providian Financial................. 533
7 Republic N Y Corp................... 788
15 SAFECO Corp......................... 752
11 St. Paul Co., Inc................... 880
20 State Street Corp................... 1,164
23 Sunamerica, Inc. (c)................ 973
27 SunTrust Banks, Inc................. 1,903
21 Synovus Financial Corp. (c)......... 671
18 Torchmark Corp...................... 765
8 TransAmerica Corp................... 873
141 Travelers Group, Inc................ 7,615
31 U.S. Bancorp........................ 3,471
19 UNUM Corp........................... 1,028
14 USF & G Corp. (c)................... 312
21 Wachovia Corp....................... 1,704
31 Washington Mutual, Inc.............. 1,980
11 Wells Fargo & Co. (c)............... 3,820
--------
158,911
--------
Health Care (11.2%):
97 Abbott Labs......................... 6,345
18 Aetna (c)........................... 1,299
8 Allergan, Inc....................... 275
11 Alza Corp. (b)...................... 338
80 American Home Products Co........... 6,139
33 Amgen, Inc. (b)..................... 1,786
7 Bard C.R., Inc...................... 223
7 Bausch & Lomb, Inc.................. 294
34 Baxter International, Inc........... 1,725
16 Becton Dickinson & Co. (c).......... 809
14 Biomet, Inc......................... 368
24 Boston Scientific Corp. (b)(c)...... 1,106
124 Bristol Myers Squibb Co............. 11,753
14 Cardinal Health, Inc. (c)........... 1,014
83 Columbia/HCA Healthcare Corp. (c)... 2,449
138 Eli Lilly & Co...................... 9,632
18 Guidant Corp........................ 1,121
25 HBO & Co............................ 1,176
43 Healthsouth Corp. (b)(c)............ 1,196
20 Humana, Inc. (b).................... 419
165 Johnson & Johnson................... 10,894
10 Mallinckrodt Group, Inc............. 365
8 Manor Care, Inc..................... 283
60 Medtronic, Inc...................... 3,113
150 Merck & Co., Inc.................... 15,933
6 Millipore Corp...................... 200
160 Pfizer, Inc......................... 11,928
63 Pharmacia & Upjohn, Inc............. 2,307
91 Schering Plough Corp................ 5,662
2 Shared Medical Systems Corp. (c).... 148
</TABLE>
Continued
15
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care, continued:
11 St. Jude Medical Center, Inc.
(b)(c)............................ $ 326
36 Tenet Healthcare Corp. (b).......... 1,186
8 U.S. Surgical, Corp................. 232
23 United Healthcare Corp.............. 1,132
34 Warner Lambert Co................... 4,182
--------
107,358
--------
Multi-Industry (1.3%):
70 Allied Signal, Inc.................. 2,724
29 Corning, Inc. (c)................... 1,063
4 FMC Corp. (b)....................... 293
9 Harcourt General, Inc............... 517
15 Loews Corp.......................... 1,549
52 Minnesota Mining & Manufacturing
Co................................ 4,276
20 Textron, Inc........................ 1,280
16 TRW, Inc............................ 850
13 Whittman Corp....................... 332
--------
12,884
--------
Raw Materials (3.3%):
14 Air Products & Chemical, Inc........ 1,148
28 Alcan Aluminum Ltd.................. 769
22 Allegheny Teledyne, Inc............. 561
22 Aluminum Co. of America (c)......... 1,525
13 Armco, Inc. (b)..................... 63
5 ASARCO, Inc......................... 122
14 Avery Dennison Corp................. 623
7 B. F. Goodrich Co. (c).............. 275
45 Barrick Gold Corp................... 831
28 Battle Mountain Gold Co............. 165
14 Bethlehem Steel Corp. (b)........... 116
12 Cyprus Amax Minerals Co............. 185
29 Dow Chemical Co..................... 2,941
140 Du Pont (EI) de Nemours & Co........ 8,436
10 Eastman Chemical Co................. 610
16 Echo Bay Mines Ltd. (b)(c).......... 38
18 Engelhard Corp...................... 312
25 Freeport-McMoran Copper & Gold,
Class B........................... 394
8 Great Lakes Chemical Corp........... 363
13 Hercules, Inc....................... 660
18 Homestake Mining Co. (c)............ 156
21 Inco Ltd............................ 351
6 Inland Steel Industries, Inc........ 105
73 Monsanto Co......................... 3,063
18 Morton International, Inc........... 622
9 Nalco Chemical Co................... 344
19 Newmont Mining Corp................. 565
11 Nucor Corp. (c)..................... 529
15 Pall Corp........................... 302
8 Phelps Dodge Corp................... 499
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Raw Materials, continued:
30 Placer Dome, Inc.................... $ 376
19 Praxair, Inc........................ 852
8 Reynolds Metals Co.................. 493
8 Rohm & Haas Co...................... 766
13 Sigma-Aldrich Corp.................. 505
17 Union Carbide Corp.................. 718
11 USX-U.S. Steel Group, Inc........... 328
9 W.R. Grace & Co..................... 723
11 Worthington Industries, Inc......... 187
--------
31,621
--------
Retail (5.1%):
31 Albertsons, Inc..................... 1,479
36 American Stores Co.................. 735
13 Charming Shoppes (b)................ 59
12 Circuit City Stores, Inc. (c)....... 426
25 Costco Companies, Inc. (b)(c)....... 1,107
21 CVS Corp............................ 1,323
20 Darden Restaurants, Inc............. 250
27 Dayton Hudson Corp.................. 1,816
14 Dillard Department Stores, Inc.,
Class A........................... 491
26 Federated Department Stores, Inc.
(b)(c)............................ 1,098
51 Gap, Inc............................ 1,790
8 Giant Food Inc., Class A............ 253
5 Great Atlantic & Pacific Tea,
Inc............................... 141
91 Home Depot, Inc..................... 5,345
31 J.C. Penney, Inc.................... 1,893
58 K Mart, Inc. (b)(c)................. 670
31 Kroger Co. (b)...................... 1,129
34 Limited, Inc........................ 861
4 Longs Drug Stores, Inc.............. 117
21 Lowe's Co........................... 1,010
29 May Department Stores Co............ 1,536
87 McDonald's Corp..................... 4,136
4 Mercantile Stores Co., Inc.......... 264
10 Nordstrom, Inc...................... 633
8 Pep Boys-Manny, Moe & Jack.......... 189
15 Rite Aid Corp....................... 856
49 Sears Roebuck & Co.................. 2,196
16 Tandy Corp.......................... 600
19 TJX Co., Inc. (c)................... 660
35 Toys R Us, Inc. (b)................. 1,099
19 Tricon Global Restaurants (b)....... 559
281 Wal-Mart Stores, Inc. (c)........... 11,102
62 Walgreen Co......................... 1,936
16 Wendy's International, Inc. (c)..... 381
19 Winn Dixie Stores, Inc. (c)......... 816
16 Woolworth Corp. (b)................. 334
--------
49,290
--------
</TABLE>
Continued
16
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter (1.4%):
5 Armstrong World Industries, Inc..... $ 348
6 Boise Cascade Corp.................. 196
3 Centex Corp. (c).................... 202
12 Champion International Co........... 524
4 Fleetwood Enterprises, Inc.......... 176
11 Georgia Pacific Corp................ 686
11 Georgia Pacific Timber Corp. (b).... 261
37 International Paper Co.............. 1,608
5 Kaufman & Broad Home Corp........... 107
70 Kimberly Clark Corp................. 3,436
13 Louisiana Pacific Corp. (c)......... 252
20 Masco Corp.......................... 1,012
14 Mead Corp........................... 401
16 Owens-Illinois, Inc. (b)............ 599
3 Potlatch Corp....................... 131
3 Pulte Corp.......................... 112
12 Stone Container Corp. (b)........... 122
7 Temple Inland, Inc.................. 386
9 Union Camp Corp..................... 476
13 Westvaco Corp....................... 394
25 Weyerhaeuser Co..................... 1,223
15 Williamette Industries, Inc......... 473
--------
13,125
--------
Technology (13.4%):
42 3Com Corp. (b)...................... 1,450
9 Adobe Systems, Inc.................. 363
17 Advanced Micro Devices, Inc. (b).... 303
27 AMP, Inc............................ 1,118
11 Andrew Corp. (b).................... 270
15 Apple Computer, Inc. (b)(c)......... 199
44 Applied Materials, Inc. (b)......... 1,322
6 Auto Desk, Inc...................... 231
24 Bay Networks, Inc. (b).............. 606
125 Boeing Co........................... 6,095
19 Cabletron Systems, Inc. (b)......... 284
125 Cisco Systems, Inc. (b)............. 6,960
94 Compaq Computer Corp. (b)........... 5,314
68 Computer Associates International,
Inc............................... 3,602
4 Data General Corp. (b)(c)........... 76
42 Dell Computer Corp. (b)............. 3,494
19 Digital Equipment Corp. (b)......... 695
14 DSC Communications Corp. (b)........ 339
7 EG&G, Inc........................... 140
61 EMC Corp. (b)....................... 1,679
8 General Dynamics Corp............... 699
10 Harris Corp......................... 436
129 Hewlett Packard Co.................. 8,077
204 Intel Corp.......................... 14,301
122 International Business Machines
(c)............................... 12,779
10 KLA-Tencor Corp. (b)................ 394
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
24 Lockheed Martin Corp. (c)........... $ 2,364
16 LSI Logic Corp. (b)................. 318
80 Lucent Technologies, Inc............ 6,378
26 Micron Technology, Inc. (b)(c)...... 668
149 Microsoft Corp. (b)................. 19,258
73 Motorola, Inc....................... 4,180
16 National Semiconductor Corp.
(b)(c)............................ 422
16 Nextlevel Systems, Inc. (b)......... 277
33 Northern Telecom, Ltd............... 2,906
8 Northrop Grumman Corp............... 940
45 Novell, Inc. (b).................... 336
122 Oracle Corp. (b).................... 2,722
16 Parametric Technology Corp. (b)..... 749
6 Perkin-Elmer Corp................... 395
11 Raychem Corp........................ 474
6 Raytheon Co., Class A............... 292
30 Raytheon Co., Class B............... 1,528
27 Rockwell International Corp......... 1,414
10 Scientific-Atlanta, Inc............. 164
31 Seagate Technology, Inc. (b)........ 597
21 Silicon Graphics, Inc. (b).......... 260
46 Sun Microsystems, Inc. (b).......... 1,846
6 Tektronix, Inc...................... 234
22 Tellabs, Inc. (b)................... 1,163
47 Texas Instruments, Inc.............. 2,114
6 Thomas & Betts Corp................. 304
21 Unisys, Corp. (b)................... 293
30 United Technologies Corp............ 2,188
40 Xerox Corp.......................... 2,976
--------
128,986
--------
Transportation (1.2%):
11 AMR Corp. (b)....................... 1,439
19 Burlington Northern Santa Fe
Corp.............................. 1,766
5 Caliber Systems, Inc................ 236
26 CSX Corp............................ 1,410
9 Delta Air Lines, Inc................ 1,074
15 Federal Express Corp. (b)(c)........ 895
48 Norfolk Southern Corp............... 1,471
27 Southwest Airlines Co............... 666
30 Union Pacific Corp.................. 1,900
10 US Air Group (b).................... 615
--------
11,472
--------
Utilities (10.0%):
62 Airtouch Communications, Inc. (b)... 2,574
24 Alltel Corp......................... 977
23 American Electric Power, Inc........ 1,210
69 Ameritech Corp...................... 5,543
201 AT&T Corp. (c)...................... 12,302
18 Baltimore Gas & Electric Co......... 621
97 Bell Atlantic Corp.................. 8,819
</TABLE>
Continued
17
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
123 BellSouth Corp...................... $ 6,935
19 Carolina Power & Light Co........... 822
26 Central & South West Corp........... 710
19 Cinergy Corp........................ 739
13 Coastal Corp........................ 784
7 Columbia Gas System, Inc............ 560
29 Consolidated Edison Co. of New York,
Inc............................... 1,201
11 Consolidated Natural Gas Co......... 695
18 Detroit Edison Co................... 628
22 Dominion Resources, Inc. of
Virginia.......................... 923
44 Duke Power Co., Inc................. 2,452
2 Eastern Enterprises................. 80
51 Edison International................ 1,381
38 Enron Corp.......................... 1,580
29 Entergy Corp........................ 860
19 First Energy Corp. (b).............. 562
23 Florida Power & Light Group, Inc.... 1,366
20 Frontier Corp....................... 486
15 General Public Utilities Corp....... 611
120 GTE Corp............................ 6,254
35 Houston Industries.................. 922
86 MCI Communications Corp............. 3,673
18 Niagara Mohawk Power Corp. (b)...... 187
7 NICOR, Inc.......................... 287
9 Northern States Power Co............ 508
3 Oneok, Inc.......................... 118
11 Pacific Enterprises................. 402
36 Pacificorp.......................... 982
28 Peco Energy Corp.................... 672
4 Peoples Energy Corp................. 156
53 PG & E Corp......................... 1,607
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
20 PP&L Resources, Inc................. $ 476
30 Public Service Enterprise Group..... 957
114 SBC Communications, Inc............. 8,386
11 Sonat, Inc.......................... 498
83 Southern Co......................... 2,156
54 Sprint Corp......................... 3,148
30 Texas Utilities..................... 1,236
77 U.S. West Media Group (c)........... 2,228
27 Unicom Corp......................... 818
13 Union Electric Co................... 541
39 Williams Cos., Inc. (c)............. 1,117
111 WorldCom, Inc. (b)(c)............... 3,361
--------
96,111
--------
Total Common Stocks 939,471
--------
U.S. TREASURY OBLIGATIONS (0.2%):
U.S. Treasury Bills (0.2%):
$ 255 01/2/98 (d)......................... 255
1,035 1/22/98 (d)......................... 1,032
275 2/5/98 (d).......................... 274
--------
Total U.S. Treasury Obligations 1,561
--------
REPURCHASE AGREEMENTS (1.7%):
16,318 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $15,058 various
U.S. Treasury Securities,
0.00%-7.88%, 8/15/00 - 11/15/04,
market value $16,644)............. 16,318
--------
Total Repurchase Agreements 16,318
--------
Total (Cost $687,752) (a) $973,522
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $959,246.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $303,402
Unrealized depreciation..................................... (17,344)
--------
Net unrealized appreciation................................. $286,058
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
(d) Serves as collateral for futures contracts.
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- --------- ------------- --------- -------
<C> <S> <C> <C>
73 Long S&P 500 March 1998 Futures $17,581 $17,869
</TABLE>
See notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Value Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMERCIAL PAPER (3.2%):
Financial Services (3.2%):
$18,590 Merrill Lynch, 5.81%, 3/19/98....... $ 18,366
--------
Total Commercial Paper 18,366
--------
COMMON STOCKS (95.0%):
Business Equipment & Services (0.8%):
38 Jacobs Engineering Group, Inc.
(b)............................... 957
103 Service Corp. International......... 3,793
--------
4,750
--------
Capital Goods (6.7%):
59 Cooper Industries, Inc.............. 2,896
74 Emerson Electric Co................. 4,199
204 General Electric Co................. 14,940
53 Harsco Corp......................... 2,268
33 Hubbell, Inc., Class B.............. 1,622
66 Mark IV Industries, Inc............. 1,439
30 Precision Castparts................. 1,785
101 Teleflex, Inc....................... 3,794
136 Tyco International.................. 6,147
--------
39,090
--------
Consumer Durable (1.8%):
102 Autozone, Inc. (b)(c)............... 2,949
131 Chrysler Corp....................... 4,603
57 Lear Corp. (b)...................... 2,722
--------
10,274
--------
Consumer Non-Durable (9.7%):
161 Archer-Daniels-Midland Co........... 3,487
113 Coca Cola Co........................ 7,495
103 Conagra, Inc........................ 3,376
32 Estee Lauder Cos., Class A.......... 1,656
100 Intimate Brands, Inc. (c)........... 2,416
76 McCormick & Co., Inc................ 2,117
96 Newell Cos., Inc.................... 4,067
187 PepsiCo, Inc........................ 6,803
247 Philip Morris Co., Inc.............. 11,197
40 Proctor & Gamble Co. (c)............ 3,224
70 Quaker Oats Co...................... 3,666
60 Revlon, Inc. (b).................... 2,112
117 RJR Nabisco Holdings Corp........... 4,388
--------
56,004
--------
Consumer Services (5.1%):
52 Belo (A.H.) Corp., Series A......... 2,896
112 Cendant Corp. (b)(c)................ 3,847
96 Hasbro, Inc......................... 3,027
120 Hilton Hotels Corp.................. 3,573
53 MGM Grand, Inc. (b)(c).............. 1,926
92 Tele-Communications, Inc. (b)....... 2,561
79 Time Warner, Inc. (c)............... 4,904
82 Viacom, Inc. (b).................... 3,414
34 Walt Disney Co...................... 3,398
--------
29,546
--------
Energy (8.0%):
48 Ashland, Inc........................ 2,598
58 Atlantic Richfield Co............... 4,623
43 Devon Energy Corp................... 1,663
40 Dresser Industries, Inc............. 1,694
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Energy, continued:
201 Exxon Corp.......................... $ 12,288
85 Mobil Corp.......................... 6,143
131 Royal Dutch Petroleum Co............ 7,120
106 Tosco Corp. (c)..................... 4,012
107 USX-Marathon Group.................. 3,618
56 Weatherford Enterra, Inc. (b)....... 2,428
--------
46,187
--------
Financial Services (16.8%):
28 Allstate Corp....................... 2,499
30 American Express Co................. 2,642
46 American International Group,
Inc............................... 5,046
49 Charter One Financial, Inc.......... 3,081
49 Chase Manhattan Corp................ 5,333
21 Cigna Corp.......................... 3,600
57 Equitable Co., Inc.................. 2,831
117 Federal National Mortgage Assoc..... 6,671
35 First American Bank Corp............ 2,707
123 First Union Corp. (c)............... 6,288
81 Fleet Financial Group, Inc.......... 6,040
45 Hartford Financial Services Group... 4,164
85 Morgan Stanley Dean Witter
Discover.......................... 5,032
110 NationsBank Corp. (c)............... 6,689
83 PNC Bank Corp....................... 4,736
53 Provident Co., Inc.................. 2,051
65 Regions Financial Corp.............. 2,755
71 Southtrust Corp..................... 4,510
51 State Street Corp................... 2,973
35 TransAmerica Corp................... 3,706
128 Travelers Group, Inc. (c)........... 6,873
40 Washington Mutual, Inc.............. 2,572
15 Wells Fargo & Co.................... 4,956
--------
97,755
--------
Health Care (10.5%):
92 Abbott Labs......................... 6,058
68 American Home Products Corp......... 5,194
49 Amgen, Inc. (b)..................... 2,630
66 Baxter International, Inc........... 3,334
96 Bristol Myers Squibb Co............. 9,085
30 Cardinal Health, Inc. (c)........... 2,284
121 Eli Lilly & Co...................... 8,432
55 Guidant Corp........................ 3,411
81 Healthsouth Corp. (b)............... 2,253
35 Johnson & Johnson................... 2,332
69 Medpartners, Inc. (b)(c)............ 1,551
48 Merck & Co., Inc.................... 5,068
32 Pfizer, Inc......................... 2,393
76 Tenet Healthcare Corp. (b).......... 2,501
37 Warner-Lambert Co................... 4,526
--------
61,052
--------
Raw Materials (4.2%):
48 Betzdearborn, Inc................... 2,943
75 Crompton & Knowles Corp............. 1,982
74 Du Pont (EI) de Nemours & Co........ 4,469
89 Ferro Corp.......................... 2,167
103 Morton International, Inc........... 3,527
67 Nalco Chemical Co................... 2,667
</TABLE>
Continued
19
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Value Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Raw Materials, continued:
64 Olin Corp........................... $ 3,009
73 Praxair, Inc........................ 3,303
--------
24,067
--------
Retail (5.8%):
136 CompUSA, Inc. (b)................... 4,204
71 Dayton Hudson Corp.................. 4,799
85 Gymboree Corp. (b).................. 2,330
147 Just For Feet, Inc. (b)............. 1,924
123 Kroger Co. (b)...................... 4,536
188 Officemax, Inc. (b)................. 2,680
50 Outback Steakhouse, Inc. (b)(c)..... 1,443
94 Toys R Us, Inc. (b)................. 2,961
18 Tricon Global Restaurants........... 516
210 Wal-Mart Stores, Inc................ 8,290
--------
33,683
--------
Shelter (2.4%):
132 Kaufman & Broad Home Corp........... 2,960
81 Kimberly Clark Corp................. 4,014
58 Leggett & Platt, Inc................ 2,412
48 Masco Corp. (c)..................... 2,442
64 Pentair, Inc........................ 2,314
--------
14,142
--------
Technology (14.0%):
29 Altera Corp. (b)(c)................. 944
90 Analog Devices, Inc. (b)(c)......... 2,489
49 BMC Software, Inc. (b).............. 3,189
62 Boeing Co........................... 3,049
112 Cadence Design Systems, Inc.
(b)(c)............................ 2,742
121 Cisco Systems, Inc. (b)............. 6,749
107 Compaq Computer Corp. (b)(c)........ 6,028
71 Dell Computer Corp. (b)............. 5,939
24 General Motors Corp., Class H....... 875
64 Hewlett Packard Co.................. 3,988
142 Intel Corp.......................... 9,947
89 International Business Machines..... 9,285
32 Lockheed Martin Corp................ 3,113
42 Lucent Technologies, Inc............ 3,331
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
103 Microsoft Corp. (b)................. $ 13,298
81 Orbital Sciences Corp. (b)(c)....... 2,410
13 Raytheon Co., Class A............... 657
91 Teradyne, Inc. (b).................. 2,896
--------
80,929
--------
Utilities (9.2%):
74 AES Corp. (b)....................... 3,450
52 Century Telephone Enterprises....... 2,585
59 Florida Power & Light, Inc.......... 3,516
99 General Public Utilities Corp....... 4,162
123 GTE Corp............................ 6,416
139 LCI International, Inc. (b)(c)...... 4,271
51 MCN Corp............................ 2,055
30 National Fuel Gas Co................ 1,451
113 New York State Electric & Gas....... 4,008
104 SBC Communications, Inc............. 7,605
100 Sprint Corp......................... 5,874
85 Texas Utilities..................... 3,516
138 Worldcom, Inc. (b)(c)............... 4,171
--------
53,080
--------
Total Common Stocks 550,559
--------
U.S. TREASURY OBLIGATIONS:
U.S. Treasury Bills (0.1%):
$ 110 1/22/98 (d)......................... 110
685 2/19/98 (d)......................... 680
55 3/12/98 (d)......................... 54
--------
Total U.S. Treasury Obligations: 844
--------
REPURCHASE AGREEMENTS (1.7%):
10,034 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $10,250 U.S.
Treasury Notes, 5.63%, 12/31/99,
market value $10,235)............. 10,034
--------
Total Repurchase Agreements 10,034
--------
Total (Cost $480,627) (a) $579,803
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $579,555.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $105,908
Unrealized depreciation..................................... (6,609)
--------
Net unrealized appreciation................................. $ 99,299
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
(d) Serves as collateral for futures contracts.
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- --------- ------------- --------- -------
<C> <S> <C> <C>
80 Long S&P 500 March 1998 Futures $19,459 $19,582
</TABLE>
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Large Company Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (93.0%):
Business Equipment & Services (0.6%):
111 Browning-Ferris Industries, Inc.
(c)............................... $ 4,110
--------
Capital Goods (3.8%):
75 Case Corp........................... 4,533
90 Cooper Industries, Inc.............. 4,410
60 Emerson Electric Co................. 3,386
100 Harsco Corp......................... 4,313
113 Ingersoll Rand Co................... 4,555
100 Sherwin-Williams Co................. 2,775
100 Trinity Industries, Inc............. 4,463
--------
28,435
--------
Consumer Durable (2.7%):
150 Autozone, Inc. (b)(c)............... 4,350
250 Chrysler Corp....................... 8,796
100 General Motors Corp................. 6,063
30 Meritor Automotive, Inc. (b)........ 632
--------
19,841
--------
Consumer Non-Durable (4.8%):
200 American Greetings Corp., Class A... 7,825
205 Archer-Daniels-Midland Co........... 4,446
397 RJR Nabisco Holdings Corp........... 14,902
200 Supervalu, Inc...................... 8,375
--------
35,548
--------
Consumer Services (2.7%):
200 CBS Corp............................ 5,888
100 Hasbro, Inc......................... 3,150
100 Hilton Hotels Corp.................. 2,975
195 Viacom, Inc., Class A (b)........... 7,970
--------
19,983
--------
Energy (17.0%):
100 Amoco Corp.......................... 8,513
100 Ashland, Inc........................ 5,369
150 Atlantic Richfield Co............... 12,019
50 Chevron Corp. (c)................... 3,850
100 Dresser Industries, Inc............. 4,194
500 Exxon Corp.......................... 30,593
86 Mobil Corp.......................... 6,237
456 Royal Dutch Petroleum Co. (c)....... 24,710
100 Tenneco, Inc........................ 3,950
150 Texaco, Inc......................... 8,156
100 Unocal Corp......................... 3,881
440 USX-Marathon Group.................. 14,850
--------
126,322
--------
Financial Services (24.8%):
170 Allstate Corp....................... 15,449
90 Chase Manhattan Corp................ 9,855
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
63 Cigna Corp.......................... $ 10,816
150 Federal National Mortgage Assoc.
(c)............................... 8,559
230 First Union Corp. (c)............... 11,788
130 Fleet Financial Group, Inc.......... 9,742
130 Hartford Financial Services Group... 12,163
104 KeyCorp............................. 7,343
110 Lincoln National Corp............... 8,594
100 Mellon Bank Corp.................... 6,063
166 Morgan Stanley Dean Witter
Discover.......................... 9,785
300 NationsBank Corp. (c)............... 18,244
150 PNC Bank Corp....................... 8,559
100 Southtrust Corp..................... 6,344
100 State Street Corp................... 5,819
50 SunTrust Banks, Inc................. 3,569
40 TransAmerica Corp................... 4,260
375 Travelers Group, Inc. (c)........... 20,202
20 Wells Fargo & Co.................... 6,789
--------
183,943
--------
Health Care (2.2%):
65 Aetna (c)........................... 4,587
100 Baxter International, Inc........... 5,043
100 Biomet, Inc......................... 2,563
100 St. Jude Medical Center, Inc.
(b)(c)............................ 3,050
25 United Healthcare Corp.............. 1,242
--------
16,485
--------
Multi-Industry (1.1%):
120 Allied Signal, Inc.................. 4,672
30 Loews Corp.......................... 3,184
--------
7,856
--------
Raw Materials (3.2%):
81 Alumax, Inc. (b).................... 2,754
40 Aluminum Co. of America (c)......... 2,815
50 B. F. Goodrich Co. (c).............. 2,072
51 Dow Chemical Co..................... 5,177
150 Nalco Chemical Co. (c).............. 5,934
50 Olin Corp. (c)...................... 2,344
50 Praxair, Inc........................ 2,250
--------
23,346
--------
Retail (2.9%):
100 American Stores Co.................. 2,056
100 Dillard Department Stores, Inc.,
Class A........................... 3,525
145 McDonald's Corp..................... 6,924
100 Sears Roebuck & Co.................. 4,525
150 Toys R Us, Inc. (b)................. 4,716
--------
21,746
--------
</TABLE>
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Large Company Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter (2.5%):
100 International Paper Co.............. $ 4,313
150 Masco Corp.......................... 7,631
127 Weyerhaeuser Co..................... 6,231
--------
18,175
--------
Technology (12.1%):
40 Applied Materials, Inc. (b)......... 1,205
184 Boeing Co........................... 9,000
335 International Business Machines..... 35,007
200 Litton Industries, Inc. (b)......... 11,500
70 Lockheed Martin Corp. (c)........... 6,895
140 Motorola, Inc....................... 7,989
100 National Semiconductor Corp.
(b)(c)............................ 2,594
6 Raytheon Co., Class A............... 314
40 Rockwell International Corp......... 2,090
200 Texas Instruments, Inc.............. 9,000
50 United Technologies Corp............ 3,641
--------
89,235
--------
Transportation (0.4%):
30 Burlington Northern Santa Fe
Corp.............................. 2,788
--------
Utilities (12.2%):
185 Baltimore Gas & Electric Co......... 6,312
200 BellSouth Corp...................... 11,260
150 Cinergy Corp........................ 5,747
140 Edison International................ 3,806
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
31 El Paso Natural Gas................. $ 2,041
89 Enron Corp.......................... 3,699
50 Entergy Corp........................ 1,497
100 Florida Power & Light Group, Inc.
(c)............................... 5,919
100 General Public Utilities Corp....... 4,213
82 GTE Corp............................ 4,285
200 MCI Communications Corp............. 8,563
150 Public Service Enterprises, Inc..... 4,753
112 SBC Communications, Inc............. 8,204
87 Southern Co......................... 2,251
150 Sprint Corp......................... 8,794
100 Texas Utilities Corp................ 4,156
150 Worldcom, Inc. (b)(c)............... 4,538
--------
90,038
--------
Total Common Stocks 687,851
--------
REPURCHASE AGREEMENTS (8.3%):
$61,507 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $78,102 various
U.S. Government Securities,
0.00%-6.50%, 11/15/00-2/1/35,
market value $63,231)............. 61,507
--------
Total Repurchase Agreements 61,507
--------
Total (Cost $600,783) (a) $749,358
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $739,597.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $152,336
Unrealized depreciation..................................... (3,773)
--------
Net unrealized appreciation................................. $148,563
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Disciplined Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (97.5%):
Banking (22.1%):
105 Charter One Financial, Inc.......... $ 6,631
139 Crestar Financial Corp.............. 7,923
77 First American Bank Corp............ 5,950
180 First Security Corp................. 7,538
111 First Tennessee National Corp.
(c)............................... 7,376
79 First Virginia Banks, Inc........... 4,078
205 Firstar Corp........................ 8,700
180 Hibernia Corp., Class A............. 3,386
12 ING Groep N.V.--ADR (c)............. 520
169 Marshall & Ilsley Corp.............. 10,499
45 MBNA Corp........................... 1,229
195 Mercantile Bancorporation........... 11,993
138 Mercantile Bankshares Corp.......... 5,380
196 Old Kent Financial Corp............. 7,767
34 PNC Bank Corp....................... 1,940
278 Provident Co., Inc.................. 10,738
168 Regions Financial Corp.............. 7,088
183 Southtrust Corp..................... 11,603
34 State Street Corp................... 1,978
269 Summit Bancorp...................... 14,299
59 Union Planters Corp. (c)............ 4,008
25 Washington Mutual, Inc.............. 1,595
--------
142,219
--------
Business Equipment & Services (1.6%):
60 Jacobs Engineering Group, Inc.
(b)............................... 1,523
126 Office Depot, Inc. (b).............. 3,016
192 Olsten Corp......................... 2,880
63 Stewart Enterprises Corp............ 2,937
--------
10,356
--------
Capital Goods (5.2%):
55 Flowserve Corp...................... 1,527
128 Harsco Corp......................... 5,511
35 Hubbell, Inc., Series B............. 1,726
153 Mark IV Industries, Inc............. 3,336
143 Molex, Inc.......................... 4,588
87 Southdown, Inc...................... 5,133
84 Teleflex, Inc....................... 3,179
116 Trinity Industries.................. 5,177
111 United State Filter Corp. (b)(c).... 3,323
--------
33,500
--------
Consumer Durable (0.8%):
67 Arvin Industries, Inc............... 2,242
55 Lear Corp. (b)...................... 2,612
--------
4,854
--------
Consumer Non-Durable (5.1%):
52 Dean Foods Co....................... 3,094
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
125 First Brands Corp................... $ 3,367
82 Hormel Foods Corp................... 2,686
102 IBP, Inc............................ 2,136
95 Intimate Brands, Inc. (c)........... 2,286
98 McCormick & Co., Inc................ 2,744
73 Newell Co........................... 3,103
67 Payless Shoesource, Inc. (b)........ 4,497
345 Tyson Foods, Inc., Class A (c)...... 7,071
46 Universal Corp...................... 1,892
--------
32,876
--------
Consumer Services (4.5%):
130 Belo (A.H.) Corp., Series A......... 7,300
100 Cendant Corp. (b)(c)................ 3,438
70 Circus Circus Entertainment
(b)(c)............................ 1,435
65 Hasbro, Inc......................... 2,048
107 International Game Technologies..... 2,702
143 MGM Grand, Inc. (b)(c).............. 5,157
15 Washington Post Co.................. 7,298
--------
29,378
--------
Energy (4.8%):
36 Ashland, Inc........................ 1,933
29 BJ Services Co. (b)(c).............. 2,086
113 Mapco, Inc.......................... 5,236
43 Murphy Oil Corp..................... 2,330
42 Pioneer Natural Resources Co........ 1,214
53 Tosco Corp.......................... 2,004
84 Transocean Offshore, Inc. (c)....... 4,048
172 Ultramar Diamond Shamrock Corp...... 5,482
73 Valero Energy Corp.................. 2,305
98 Weatherford Enterra, Inc. (b)....... 4,288
--------
30,926
--------
Financial Services (6.6%):
177 A.G. Edwards, Inc................... 7,036
155 Bear Stearns Co., Inc. (c).......... 7,363
60 Gatx Corp........................... 4,354
227 Paine Webber Group, Inc............. 7,828
117 PMI Group, Inc. (c)................. 8,459
84 Reliance Group Holdings, Inc........ 1,187
33 Reliastar Financial Corp............ 1,359
65 The Money Store, Inc. (c)........... 1,365
50 Transatlantic Holdings, Inc......... 3,604
--------
42,555
--------
Health Care (5.2%):
87 Allegiance Corp..................... 3,065
82 Apria Healthcare Group, Inc. (b).... 1,102
21 ATLI Ultrasound, Inc. (b)........... 966
47 Bergen Brunswig Corp................ 1,980
</TABLE>
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Disciplined Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care, continued:
22 Cardinal Health, Inc. (c)........... $ 1,653
5 Genzyme Corp. (b)................... 33
160 Genzyme Corp. (b)(c)................ 4,440
40 HBO & Co............................ 1,920
79 McKesson Corp....................... 8,550
80 Medpartners, Inc. (b)(c)............ 1,790
233 Mylan Laboratories (c).............. 4,872
66 St. Jude Medical, Inc. (b).......... 2,013
46 Watson Pharmaceuticals, Inc. (b).... 1,492
--------
33,876
--------
Raw Materials (5.5%):
91 Alumax, Inc. (b).................... 3,094
43 B. F. Goodrich Co. (c).............. 1,782
109 Cabot Corp.......................... 3,011
96 Crompton & Knowles Corp. (c)........ 2,544
174 Ferro Corp.......................... 4,219
23 Fuller (H. B.) Co................... 1,114
98 Hanna (M.A.) Co..................... 2,481
76 Ispat International NV (c).......... 1,644
102 Olin Corp. (c)...................... 4,779
75 Schulman, Inc....................... 1,872
54 Sigma-Aldrich Corp.................. 2,147
19 Vulcan Materials Co................. 1,981
99 Wellman, Inc........................ 1,931
72 Witco Corp.......................... 2,939
--------
35,538
--------
Retail (4.5%):
62 Best Buy, Inc. (b).................. 2,286
60 CompUSA, Inc. (b)................... 1,860
132 Cracker Barrel...................... 4,406
73 Fingerhut Companies, Inc............ 1,560
81 Fred Meyer, Inc. (b)(c)............. 2,961
66 Hannaford Brothers Co............... 2,863
70 Just For Feet, Inc. (b)............. 919
320 Officemax, Inc. (b)................. 4,560
96 Outback Steakhouse, Inc. (b)(c)..... 2,760
33 Sbarro, Inc......................... 863
50 Toys R Us, Inc. (b)................. 1,572
138 U S Office Products Co. (b)(c)...... 2,708
--------
29,318
--------
Shelter (2.6%):
59 Bowater, Inc........................ 2,622
207 Clayton Homes, Inc.................. 3,726
85 Kaufman & Broad Home Corp........... 1,907
45 Leggett & Platt, Inc................ 1,884
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Shelter, continued:
105 Pentair, Inc........................ $ 3,774
69 Rayonier, Inc....................... 2,928
--------
16,841
--------
Technology (5.6%):
68 American Power Conversion (b)....... 1,607
163 Arrow Electronics, Inc. (b)......... 5,294
87 ATMEL Corp. (b)..................... 1,615
36 Avnet, Inc.......................... 2,343
310 Cypress Semiconductor Corp. (b)..... 2,635
19 Dell Computer Corp. (b)............. 1,596
60 EMC Corp. (b)....................... 1,646
71 NCR Corp. (b)(c).................... 1,975
100 Orbital Sciences Corp. (b).......... 2,989
117 Storage Technology Corp. (b)(c)..... 7,245
17 Stratus Computer, Inc. (b).......... 624
67 Teradyne, Inc. (b).................. 2,144
54 Thiokol Corp........................ 4,388
--------
36,101
--------
Transportation (1.9%):
17 ASA Holdings, Inc................... 483
24 Burlington Northern Santa Fe
Corp.............................. 2,231
137 CNF Transportation, Inc............. 5,257
93 Kansas City Southern Industries..... 2,953
57 Yellow Corp. (b)(c)................. 1,432
--------
12,356
--------
Utilities (21.5%):
102 AES Corp. (b)....................... 4,756
73 AGL Resources....................... 1,500
307 Allegheny Energy, Inc............... 9,978
70 American Water Works, Inc. (c)...... 1,912
170 Century Telephone Enterprises....... 8,468
102 Cinergy Corp........................ 3,908
253 CMS Energy Corp..................... 11,148
60 Edison International................ 1,642
113 El Paso Natural Gas Co.............. 7,515
23 Florida Power & Light Group, Inc.... 1,361
53 Florida Progress Corp............... 2,080
85 General Public Utilities Corp....... 3,581
207 L G & E Energy Corp. (c)............ 5,118
148 LCI International, Inc. (b)(c)...... 4,551
139 MCN Energy Group, Inc. (c).......... 5,612
200 Montana Power Co.................... 6,356
101 National Fuel Gas Co................ 4,917
236 New Century Energies, Inc........... 11,290
55 New England Electric Systems........ 2,351
201 New York State Electric & Gas
Corp.............................. 7,136
</TABLE>
Continued
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Disciplined Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
176 Nextel Communications, Inc.,
Class A (b)....................... $ 4,563
103 Nipsco Industries, Inc.............. 5,092
199 Pinnacle West Capital Corp.......... 8,416
66 Potomiac Electric Power Co.......... 1,704
74 Questar Corp........................ 3,302
84 Scana Corp.......................... 2,515
296 Teco Energy, Inc.................... 8,325
--------
139,097
--------
Total Common Stocks 629,791
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.4%):
$15,355 Prudential Securities, 6.80%, 1/2/98
(collateralized by $15,028 U.S.
Treasury Notes, 6.25%, 1/31/02,
market value $15,663)............. $ 15,355
--------
Total Repurchase Agreements 15,355
--------
Total (Cost $495,970) (a) $645,146
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $645,995.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $156,070
Unrealized depreciation..................................... (6,894)
--------
Net unrealized appreciation................................. $149,176
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Large Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ---------------------------------- ----------
<C> <S> <C>
COMMON STOCKS (100.6%):
Business Equipment & Services (0.3%):
50 Automatic Data Processing, Inc.... $ 3,068
40 Interpublic Group Co., Inc........ 1,993
----------
5,061
----------
Capital Goods (6.6%):
25 Emerson Electric Co............... 1,424
1,152 General Electric Co............... 84,564
20 Honeywell, Inc.................... 1,370
38 Molex, Inc........................ 1,078
350 Tyco International, Ltd........... 15,772
----------
104,208
----------
Consumer Non-Durable (19.3%):
220 Anheuser Busch Co., Inc........... 9,680
40 Avon Products, Inc................ 2,455
175 Campbell Soup Co.................. 10,172
807 Coca Cola Co...................... 53,777
120 Colgate Palmolive Co.............. 8,820
381 Conagra, Inc...................... 12,502
45 CPC International................. 4,849
222 Gillette Co. (c).................. 22,297
80 H.J. Heinz Co..................... 4,065
50 Hershey Foods Corp................ 3,097
120 Kellogg Co. (c)................... 5,955
130 Newell Co......................... 5,525
75 Nike, Inc., Class B (c)........... 2,944
671 PepsiCo, Inc...................... 24,449
1,340 Philip Morris Co., Inc............ 60,717
20 Pioneer Hi-Bred International,
Inc............................. 2,145
588 Proctor & Gamble Co............... 46,905
75 Quaker Oats Co.................... 3,956
190 Sara Lee, Corp.................... 10,699
200 Unilever N V (c).................. 12,488
----------
307,497
----------
Consumer Services (4.0%):
270 Cendant Corp. (b)(c).............. 9,281
70 Comcast Corp., Class A............ 2,209
200 Gannett, Inc...................... 12,363
280 Hilton Hotels Corp................ 8,330
175 Mattel, Inc. (c).................. 6,519
450 Tele-Communications, Inc. (b)..... 12,572
165 Time Warner, Inc. (c)............. 10,230
14 Walt Disney Co.................... 1,396
----------
62,900
----------
Energy (2.2%):
24 Exxon Corp........................ 1,497
100 Halliburton Co.................... 5,194
23 Mobil Corp........................ 1,644
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ---------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Energy, continued:
46 Noble Drilling Corp. (b)(c)....... $ 1,413
27 Royal Dutch Petroleum............. 1,478
215 Schlumberger Ltd. (c)............. 17,307
100 Union Pacific Resources Group,
Inc............................. 2,425
105 Unocal Corp....................... 4,075
----------
35,033
----------
Financial Services (11.4%):
210 American Express Co. (c).......... 18,743
313 American International Group,
Inc............................. 34,088
27 BankAmerica Corp.................. 1,940
90 Charles Schwab Corp............... 3,774
210 Chase Manhattan Corp.............. 22,995
10 Chubb Corp........................ 783
464 Federal National Mortgage
Assoc........................... 26,490
253 First Union Corp.................. 12,941
17 J.P. Morgan & Co., Inc............ 1,952
50 Marsh & McLennan Co............... 3,728
28 MBIA, Inc......................... 1,885
180 MBNA Corp. (c).................... 4,916
10 MGIC Investment Group............. 665
222 Morgan Stanley Dean Witter
Discover........................ 13,096
14 Nationsbank Corp.................. 837
9 Northern Trust Corp............... 636
22 Price T Rowe and Assoc............ 1,384
69 State Street Corp................. 4,009
90 SunAmerica, Inc................... 3,848
54 Travelers Group, Inc.............. 2,888
118 U.S. Bancorp...................... 13,203
100 Washington Mutual, Inc............ 6,381
----------
181,182
----------
Health Care (20.9%):
220 Abbott Labs....................... 14,424
305 American Home Products Co......... 23,294
120 Amgen, Inc. (b)................... 6,495
150 Baxter International, Inc......... 7,566
75 Bergen Brunswig Corp.............. 3,159
140 Boston Scientific Corp. (b)(c).... 6,423
470 Bristol Myers Squibb Co........... 44,474
30 Cardinal Health, Inc. (c)......... 2,254
64 Elan Corp., PLC (b)(c)............ 3,270
550 Eli Lilly & Co.................... 38,294
70 Guidant Corp...................... 4,358
340 Healthsouth Corp. (b)(c).......... 9,435
499 Johnson & Johnson................. 32,897
270 Medtronic, Inc.................... 14,124
420 Merck & Co., Inc. (c)............. 44,651
560 Pfizer, Inc....................... 41,790
</TABLE>
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Large Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ---------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care, continued:
238 Schering Plough Corp.............. $ 14,764
175 Warner Lambert Co................. 21,700
----------
333,372
----------
Multi-Industry (0.5%):
99 Minnesota Mining & Manufacturing
Co.............................. 8,124
Raw Materials (2.8%):
28 Air Products & Chemical, Inc...... 2,303
438 Du Pont (EI) de Nemours & Co...... 26,306
245 Monsanto Co....................... 10,274
119 Praxair, Inc...................... 5,341
----------
44,224
----------
Retail (7.1%):
135 Dayton Hudson Corp................ 9,113
165 Gap, Inc. (c)..................... 5,847
362 Home Depot, Inc................... 21,297
616 Just For Feet, Inc. (b)........... 8,085
175 Kroger Co. (b).................... 6,464
145 McDonald's Corp................... 6,924
181 TJX Cos., Inc. (c)................ 6,215
5 Tricon Global Restaurants (b)..... 148
1,085 Wal-Mart Stores, Inc.............. 42,789
180 Walgreen Co....................... 5,648
----------
112,530
----------
Shelter (1.1%):
334 Kimberly Clark Corp. (c).......... 16,464
28 Sealed Air Corp. (b)(c)........... 1,717
----------
18,181
----------
Technology (18.4%):
42 3Com Corp. (b).................... 1,470
140 Applied Materials, Inc. (b)....... 4,218
44 Boeing Co......................... 2,174
527 Cisco Systems, Inc. (b)(c)........ 29,398
195 Compaq Computer Corp. (b)......... 11,005
259 Computer Associates International,
Inc............................. 13,668
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ---------------------------------- ----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
528 Dell Computer Corp. (b)........... $ 44,344
300 EMC Corp. (b)..................... 8,231
25 Hewlett Packard Co................ 1,577
693 Intel Corp........................ 48,684
14 KLA-Tencor Corp. (b).............. 541
15 Linear Technology Corp............ 871
250 Lucent Technologies, Inc. (c)..... 19,969
19 Micron Technology, Inc. (b)(c).... 493
540 Microsoft Corp. (b)............... 69,795
119 Northern Telecom, Ltd............. 10,591
100 Oracle Corp. (b).................. 2,231
110 Tellabs, Inc. (b)................. 5,816
190 Texas Instruments, Inc............ 8,550
50 United Technologies Corp.......... 3,641
80 Xerox Corp........................ 5,905
----------
293,172
----------
Utilities (6.0%):
28 AES Corp. (b)..................... 1,326
100 Airtouch Communications, Inc.
(b)............................. 4,156
250 Ameritech Corp.................... 20,125
246 Bell Atlantic Corp................ 22,422
370 GTE Corp.......................... 19,333
390 SBC Communications, Inc........... 28,568
----------
95,930
----------
Total Common Stocks 1,601,414
----------
REPURCHASE AGREEMENTS (1.1%):
$16,845 Prudential Securities, 6.80%,
1/2/98 (Collateralized by
$19,947 U.S. Treasury STRIPS,
0.00%, 8/15/00, market value
$17,182)........................ 16,845
----------
Total Repurchase Agreements 16,845
----------
Total (Cost $1,124,533) (a) $1,618,259
==========
</TABLE>
- ------------
Percentages indicated are based on net assets of $1,590,769.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $509,368
Unrealized depreciation..................................... (15,642)
--------
Net unrealized appreciation................................. $493,726
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Growth Opportunities Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (94.9%):
Business Equipment & Services (13.6%):
166 America Online, Inc. (b)(c)......... $ 14,796
170 Cintas Corp......................... 6,646
62 Corrections Corporation of America
(b)(c)............................ 2,298
101 Fiserv, Inc. (b)(c)................. 4,971
96 Herman Miller, Inc.................. 5,211
143 Manpower, Inc....................... 5,055
283 Omnicom Group, Inc.................. 11,984
255 Paychex, Inc. (c)................... 12,918
67 Pittston Co......................... 2,681
214 Reynolds & Reynolds Co.............. 3,940
392 Staples, Inc. (b)(c)................ 10,875
147 Sterling Commerce, Inc. (b)......... 5,667
19 Stewart Enterprises, Inc............ 891
255 Sungard Data Systems, Inc. (b)(c)... 7,896
402 U.S.A. Waste Services, Inc.
(b)(c)............................ 15,789
76 Viad Corp........................... 1,475
19 Viking Office Products (b).......... 412
81 Wallace Computer Services........... 3,153
--------
116,658
--------
Capital Goods (3.3%):
70 Catellus Development Corp. (b)...... 1,400
108 Diebold, Inc........................ 5,446
6 Dover Corp.......................... 223
95 Fastenal Co. (c).................... 3,618
76 Federal Signal Corp................. 1,648
97 Hubbell, Inc., Class B.............. 4,803
57 Precision Castparts Co.............. 3,450
129 Sundstrand Corp..................... 6,478
41 United States Filter Corp. (b)(c)... 1,230
--------
28,296
--------
Consumer Durable (2.1%):
111 Danaher Corp. (c)................... 6,998
58 Federal Mogul Corp. (c)............. 2,341
283 Harley-Davidson, Inc. (c)........... 7,758
22 OEA, Inc............................ 624
--------
17,721
--------
Consumer Non-Durable (8.4%):
52 Beringer Wine Estates, Series B
(b)(c)............................ 1,957
690 Coca-Cola Enterprises (c)........... 24,523
143 Dial Corp........................... 2,966
94 Dole Food, Inc. (c)................. 4,310
194 Flowers Industries, Inc............. 3,993
129 General Nutrition Cos. (b).......... 4,389
449 Interstate Bakeries Co. (c)......... 16,763
133 Jones Apparel Group, Inc. (b)....... 5,708
41 Lancaster Colony Corp............... 2,328
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
28 Nautica Enterprises, Inc. (b)....... $ 651
14 Tommy Hilfiger Corp. (b)............ 492
95 Unifi, Inc.......................... 3,878
--------
71,958
--------
Consumer Services (1.7%):
165 Callaway Golf Co. (c)............... 4,711
255 International Game Technologies..... 6,446
45 Promus Hotel Corp. (b).............. 1,873
38 TCA Cable TV, Inc................... 1,748
--------
14,778
--------
Energy (7.2%):
252 Ensco International, Inc. (c)....... 8,435
317 Global Marine, Inc. (b)............. 7,774
1 Houston Exploration Co. (b)......... 11
385 Intelect Communications, Inc.
(b)(c)............................ 1,971
292 Nabors Industries, Inc. (b)(c)...... 9,188
232 Noble Drilling Corp. (b)(c)......... 7,102
8 Phillips Petroleum Co............... 389
121 Smith International, Inc. (b)(c).... 7,445
104 Tidewater, Inc...................... 5,739
278 Tosco Corp. (c)..................... 10,527
116 Varco International, Inc. (b)....... 2,491
15 Weatherford Enterra, Inc. (b)....... 670
--------
61,742
--------
Financial Services (13.5%):
274 AFLAC, Inc.......................... 13,990
20 Associated Bancorp.................. 1,103
152 Capital One Financial Corp.......... 8,247
86 Charter One Financial, Inc.......... 5,415
82 City National Corp.................. 3,029
73 ESG Re Ltd.......................... 1,704
39 First America Bank Corp............. 2,985
97 First Security Corp................. 4,058
10 First Tennessee National Corp....... 668
24 Firstar Corp........................ 1,023
258 Franklin Resources, Inc............. 22,443
16 Green Tree Financial Corp. (c)...... 406
20 Marshall & Ilsley Corp.............. 1,243
38 Mercantile Bancorporation........... 2,306
27 MGIC Investment Corp................ 1,765
262 Northern Trust Corp................. 18,254
47 Old Republic International Corp..... 1,759
120 Price (T. Rowe) Associates.......... 7,529
119 Robert Half International, Inc.
(b)............................... 4,768
5 Summit Bancorp...................... 266
42 SunAmerica, Inc..................... 1,779
176 TCF Financial Corp.................. 5,987
</TABLE>
Continued
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Growth Opportunities Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
29 Union Planters Corp................. $ 1,957
52 Wilmington Trust Corp............... 3,244
--------
115,928
--------
Health Care (8.8%):
154 Biogen, Inc. (b).................... 5,594
18 Biomet, Inc......................... 461
151 Centocor, Inc. (b).................. 5,027
311 Chiron Corp. (b)(c)................. 5,287
116 Dentsply International, Inc......... 3,544
143 Foundation Health Systems, Series A
(b)(c)............................ 3,188
88 Health Care & Retirement Corp.
(b)............................... 3,538
293 Health Management Associates, Inc.
(b)............................... 7,406
80 Healthcare Compare Corp. (b)........ 4,112
26 Healthsouth Corp. (b)(c)............ 717
105 Hillenbrand Industries, Inc......... 5,349
14 Integrated Health Services.......... 430
17 Medtronic, Inc...................... 868
175 Omnicare, Inc. (c).................. 5,422
97 Oxford Health Plans, Inc. (b)....... 1,515
95 Quorum Health Group, Inc. (b)....... 2,482
40 R. P. Scherer Corp. (b)............. 2,440
183 Stryker Corp. (c)................... 6,832
98 Sybron International Corp.-
Wisconsin (b)(c).................. 4,576
12 United Healthcare Corp.............. 593
50 Vencor, Inc. (b).................... 1,222
141 Watson Pharmaceutical, Inc. (b)..... 4,580
--------
75,183
--------
Multi-Industry (0.6%):
40 Trammell Crow Co.................... 1,030
226 United Rentals, Inc. (b)(c)......... 4,365
--------
5,395
--------
Raw Materials (2.5%):
52 Betzdearborn, Inc................... 3,187
76 Crompton & Knowles Corp............. 2,025
57 Cytec Industries, Inc. (b).......... 2,694
85 IMC Global, Inc. (c)................ 2,784
103 Ispat International N.V.-New York
(c)............................... 2,232
126 Lyondell Petrochemical.............. 3,347
95 Solutia, Inc........................ 2,535
58 Witco Corp.......................... 2,359
--------
21,163
--------
Retail (10.8%):
58 Barnes & Noble, Inc. (b)............ 1,929
94 Bed Bath & Beyond, Inc. (b)(c)...... 3,634
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail, continued:
180 Claire's Stores, Inc................ $ 3,507
234 CompUSA, Inc. (b)................... 7,246
164 Consolidated Stores Co. (b)......... 7,194
295 Dollar General Corp................. 10,697
278 Family Dollar Stores, Inc........... 8,159
16 Hollywood Entertainment Corp.
(b)(c)............................ 170
17 Home Depot, Inc..................... 971
1,447 Just For Feet, Inc. (b)(c).......... 18,992
154 Kohl's Corp. (b)(c)................. 10,478
60 Lands End, Inc. (b)................. 2,104
87 Mac Frugal's Bargains (b)........... 3,574
57 Outback Steakhouse, Inc. (b)........ 1,647
301 Starbucks Corp. (b)................. 11,543
25 Tiffany & Co. (c)................... 902
--------
92,747
--------
Shelter (2.1%):
55 Hon Industries, Inc................. 3,216
170 Leggett & Platt, Inc................ 7,136
81 Sealed Air Corp. (b)(c)............. 4,977
168 Sunstone Hotel Investors, Inc....... 2,901
--------
18,230
--------
Technology (16.1%):
7 3Com Corp. (b)...................... 252
18 Adaptec, Inc. (b)................... 668
235 ADC Telecommunications, Inc. (b).... 9,824
151 Altera Corp. (b)(c)................. 5,005
220 American Power Conversion (b)....... 5,205
301 Analog Devices, Inc. (b)(c)......... 8,329
11 Ascend Communications, Inc. (b)..... 270
34 ATMEL Corp. (b)..................... 633
219 BMC Software, Inc. (b).............. 14,386
379 Cadence Design Systems, Inc. (b).... 9,278
8 Cisco Systems, Inc. (b)............. 418
381 Compuware Corp. (b)................. 12,192
154 Dell Computer Corp. (b)............. 12,902
1 Electronic Arts, Inc. (b)(c)........ 53
5 Intel Corp.......................... 323
91 Lexmark International Group, Inc.
(b)............................... 3,458
122 Linear Technology Corp. (c)......... 7,024
265 Maxim Integrated Products, Inc.
(b)(c)............................ 9,143
6 Microsoft Corp. (b)................. 724
95 Network Associates, Inc............. 5,023
18 Newbridge Networks Corp............. 633
22 Oracle Corp. (b).................... 485
13 Parametric Technology Corp. (b)..... 616
88 Quantum Corp. (b)(c)................ 1,772
85 SCI Systems, Inc. (b)(c)............ 3,707
</TABLE>
Continued
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Growth Opportunities Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
158 Solectron Corp. (b)................. $ 6,575
63 Structural Dynamics (b)............. 1,413
10 Sun Microsystems, Inc. (b).......... 383
95 Synopsys, Inc. (b).................. 3,396
13 Tellabs, Inc. (b)................... 703
190 Teradyne, Inc. (b)(c)............... 6,086
18 Thermo Instrument Systems, Inc.
(b)............................... 635
43 Varian Associates, Inc.............. 2,179
136 Xilinx, Inc. (b).................... 4,783
--------
138,476
--------
Transportation (0.5%):
117 Illinois Central Corp............... 3,975
--------
Utilities (3.7%):
191 360 Communications Co. (b).......... 3,846
329 AES Corp. (b)....................... 15,330
192 LCI International, Inc. (b)......... 5,904
115 Seagull Energy Corp. (b)............ 2,374
93 Southern New England
Telecommunications, Inc. (c)...... 4,679
--------
32,133
--------
Total Common Stocks 814,383
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
REPURCHASE AGREEMENTS (4.1%):
$35,429 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $43,741 U.S.
Government Agency Securities,
7.03%, 11/1/32, market value
$36,492).......................... 35,429
--------
Total Repurchase Agreements 35,429
--------
Total (Cost $701,114) (a) $849,812
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $858,525.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $181,676
Unrealized depreciation..................................... (32,978)
--------
Net unrealized appreciation................................. $148,698
========
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Small Capitalization Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMERCIAL PAPER (5.0%):
Financial Services (5.0%):
5,575 CXC, Inc., 5.82%, 3/19/98........... $ 5,507
--------
Total Commercial Paper 5,507
--------
COMMON STOCKS (88.2%):
Business Equipment & Services (9.2%):
20 A Consulting Team, Inc. (b)......... 223
45 Acxiom Corp. (b).................... 866
25 Billing Information Concepts (b).... 1,197
20 Carriage Services, Inc. (b)......... 380
8 Catalina Marketing Corp. (b)........ 370
15 Central Parking Corp................ 680
10 Choicepoint, Inc. (b)............... 478
25 Concord EFS, Inc. (b)............... 622
15 Equity Corporation International
(b)............................... 347
14 Hyperion Software, Inc. (b)......... 483
15 Imnet Systems, Inc. (b)(c).......... 244
11 Inacom Corp. (c).................... 309
30 Inspire Insurance Solutions (b)..... 626
12 Interim Services, Inc. (b).......... 311
20 Norrell Corp........................ 398
30 Nova Corp. (b)...................... 750
20 Paxar Corp. (b)..................... 296
10 Pierce Leahy Corp. (b).............. 205
8 Stone & Webster, Inc................ 375
10 Tetra Technologies (b).............. 211
15 World Access, Inc. (b).............. 358
15 Zebra Technologies, Class A (b)..... 446
--------
10,175
--------
Capital Goods (2.6%):
26 Blount International, Inc........... 694
13 Imco Recycling, Inc................. 209
8 Ionics, Inc. (b).................... 313
8 Kent Electronics Corp. (b).......... 201
25 Kuhlman Corp........................ 977
15 Wabash National Corp................ 427
--------
2,821
--------
Consumer Durable (0.7%):
10 Breed Technologies, Inc. (c)........ 183
50 Miller Industries, Inc. (b)......... 537
--------
720
--------
Consumer Non-Durable (6.2%):
10 Canandaigua Wine Co., Class A (b)... 554
15 Coca-Cola Bottling Co............... 1,034
20 Dekalb Genetics Corp................ 785
20 Earthgrains Co...................... 940
15 Nautica Enterprises, Inc. (b)....... 349
17 NBTY, Inc. (b)...................... 567
15 Richfood Holdings (c)............... 424
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Non-Durable, continued:
24 Smithfield Foods, Inc. (b).......... $ 792
15 Westpoint Stevens, Inc. (b)(c)...... 709
30 Wolverine World Wide, Inc........... 679
--------
6,833
--------
Consumer Services (2.9%):
30 Action Performance Co., Inc.
(b)(c)............................ 1,136
22 Grand Casinos (b)................... 300
25 International Speedway Corp. (c).... 589
15 Regal Cinemas, Inc. (b)(c).......... 418
20 Sturm, Ruger & Co................... 369
25 Suburban Lodges of America (b)...... 333
--------
3,145
--------
Energy (7.4%):
8 CAMCO International, Inc............ 510
10 Devon Energy Corp................... 385
10 EVI, Inc. (b)....................... 518
12 Forcenergy, Inc. (b)(c)............. 314
20 Global Industries Ltd. (b).......... 340
14 Input/Output, Inc. (b).............. 416
15 Marine Drilling Co., Inc. (b)....... 311
30 Maverick Tube Corp. (b)............. 759
30 Newpark Resources, Inc. (b)......... 525
25 Patterson Energy, Inc. (b).......... 966
10 Pool Energy Services Co. (b)........ 223
25 Pride Petroleum Services, Inc.
(b)............................... 631
7 Saint Mary Land & Exploration....... 245
10 Snyder Oil Corp..................... 183
17 Stone Energy Corp. (b).............. 559
15 Trico Marine Services, Inc. (b)..... 441
18 Tuboscope, Inc. (b)................. 433
15 UTI Energy Corp. (b)................ 388
--------
8,147
--------
Financial Services (18.4%):
35 Alabama National Bankcorp........... 923
25 Amresco, Inc. (b)................... 756
4 BankAtlantic Bancorp, Inc.,
Series A (c)...................... 61
15 BankAtlantic Bancorp, Inc., Series
B................................. 251
25 Bankunited Financial Corp. (b)...... 385
7 Capital Bancorp..................... 405
20 Carolina First Corp................. 430
7 Cenit Bancorp, Inc.................. 557
20 Colonial BancGroup, Inc............. 689
52 Cooperative Bankshares, Inc. (b).... 1,274
23 Cullen/Frost Bankers, Inc........... 1,396
20 Eagle Bancshares, Inc............... 440
11 First Commercial Corp............... 616
25 First Financial Holdings, Inc....... 1,328
</TABLE>
Continued
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Small Capitalization Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
20 First Liberty Financial Corp........ $ 640
14 First Palm Beach Bancorp............ 582
12 Keystone Financial, Inc............. 483
25 Protective Life Corp................ 1,493
10 Provident Financial Group, Inc...... 485
15 Raymond James Financial............. 595
14 Republic Bancshares, Inc. (b)....... 371
21 Resource Bancshares Mortgage
Group............................. 343
15 Seacoast Banking Corp............... 578
25 Sirrom Capital Corp................. 1,303
25 Sovereign Bancorp, Inc.............. 519
10 Trans Financial, Inc................ 389
42 Triad Guaranty, Inc. (b)............ 1,218
25 United Cos. Financial Corp. (c)..... 388
12 Whitney Holding Corp................ 684
17 Zions Bancorporation................ 771
--------
20,353
--------
Health Care (9.2%):
20 Alpharma, Inc. (c).................. 435
9 Ballard Medical Products............ 218
26 Centennial Healthcare Corp. (b)..... 592
15 Cryolife, Inc. (b).................. 204
30 Cyberonics, Inc. (b)................ 458
30 Genesis Health (b)(c)............... 791
10 Gulf South Medical Supply (b)....... 373
12 ICN Pharmaceuticals, Inc............ 596
15 Invacare Corp....................... 326
11 LCA Vision, Inc..................... 13
16 Lincare Holding, Inc. (b)........... 910
8 MedImmune, Inc. (b)................. 343
7 Mentor Corp......................... 266
10 North American Vaccine, Inc.
(b)(c)............................ 249
20 Orthalliance, Inc., Class A (b)..... 183
45 Orthodontic Centers of America
(b)(c)............................ 748
20 Phycor, Inc. (b)(c)................. 540
9 Protein Design Labs, Inc. (b)....... 360
24 Roberts Pharmaceutical Corp. (b).... 230
9 Safeskin Corp. (b).................. 511
11 Steris Corp. (b).................... 507
40 Summit Technology, Inc. (b)......... 181
16 Sunrise Assisted Living (b)......... 690
8 Vertex Pharmaceuticals, Inc. (b).... 264
30 Vision Twenty-One, Inc. (b)......... 278
--------
10,266
--------
Multi-Industry (0.5%):
40 Denali, Inc. (b).................... 530
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Raw Materials (1.8%):
14 Birmingham Steel Corp............... $ 221
25 Chemfirst, Inc...................... 705
10 NS Group, Inc. (b).................. 171
20 Quanex Corp......................... 563
10 Scotts Company (b).................. 303
--------
1,963
--------
Retail (7.1%):
30 Arbor Drugs, Inc.................... 555
35 Cato Corp........................... 311
17 Compucom Systems, Inc. (b).......... 140
12 Footstar, Inc. (b).................. 323
25 Gymboree Corp. (b).................. 684
30 Hibbet Sporting Goods, Inc. (b)..... 660
20 Just For Feet, Inc. (b)............. 263
20 Landry's Seafood Restaurants, Inc.
(b)............................... 480
12 Men's Wearhouse, Inc. (b)........... 417
30 Michaels Stores, Inc. (b)(c)........ 876
14 O'Reilly Automotive, Inc. (b)....... 368
30 Pier 1 Imports, Inc................. 679
24 Proffitts, Inc. (b)................. 683
16 Ross Stores, Inc.................... 582
15 Ruby Tuesday, Inc. (b).............. 386
15 Stein Mart, Inc. (b)................ 401
--------
7,808
--------
Shelter (2.8%):
24 Caraustar Industries, Inc........... 822
30 Ethan Allen Interiors, Inc.......... 1,156
3 Kimberly Clark Corp................. 166
20 Oakwood Homes Corp.................. 664
35 Southern Energy Homes, Inc. (b)..... 280
--------
3,088
--------
Technology (12.2%):
7 Alliant Techsystems, Inc. (b)....... 390
30 Aspect Telecommunications, Inc.
(b)............................... 626
5 ATMI, Inc. (b)...................... 121
28 Benchmark Electronics, Inc. (b)..... 620
25 Comverse Technology, Inc. (b)....... 955
35 Corsair Communications, Inc.
(b)(c)............................ 569
25 Datastream Systems, Inc. (b)........ 775
54 Digital Microwave Corp. (b)......... 783
25 Faro Technologies, Inc. (b)......... 291
26 Harbinger Corp. (b)................. 731
10 Keane, Inc. (b)..................... 406
10 Kemet Corp. (b)..................... 194
5 Lattice Semiconductor Corp. (b)..... 237
19 Microchip Technology, Inc. (b)...... 570
11 Novellus Systems, Inc. (b).......... 355
13 Oak Industries (b).................. 386
</TABLE>
Continued
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Small Capitalization Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology, continued:
19 Platinum Technology, Inc. (b)(c).... $ 537
40 Powertel, Inc. (b).................. 670
10 Read-Rite Corp. (b)................. 158
12 Sanmina Corp. (b)(c)................ 813
20 Sawtek, Inc. (b).................... 528
6 SCI Systems, Inc. (b)(c)............ 266
13 Sterling Software (b)............... 533
23 Tech Data Corp. (b)................. 894
40 Telco Systems, Inc. (b)............. 388
16 Vantive Corp. (b)................... 404
16 VLSI Technology, Inc. (b)........... 378
--------
13,578
--------
Transportation (3.9%):
14 Atlantic Coast Airlines, Inc.
(b)(c)............................ 445
23 Comair Holdings, Inc. (b)........... 543
38 Halter Marine Group, Inc. (b)(c).... 1,082
25 Heartland Express, Inc. (b)(c)...... 672
25 MS Carriers, Inc. (b)............... 622
10 Railtex, Inc. (b)................... 143
14 Skywest, Inc........................ 415
10 USFreightways Corp.................. 325
--------
4,247
--------
Utilities (3.3%):
6 Energen Corp........................ 239
13 K N Energy, Inc..................... 702
50 LCI International, Inc. (b)(c)...... 1,537
25 Rural Cellular Corp. Class A (b).... 327
15 Southwestern Energy Co.............. 193
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities, continued:
22 Tel-Save Holdings, Inc. (b)(c)...... $ 437
7 TNP Enterprises, Inc................ 233
--------
3,668
--------
Total Common Stocks 97,342
--------
PREFERRED STOCKS (2.0%):
Financial Services (1.8%):
15 CCB Financial Corp.................. 1,612
17 Southwest Securities Group, Inc..... 438
--------
2,050
--------
Technology (0.2%):
7 Gray Communications Systems, Inc.,
Class B........................... 175
--------
Total Preferred Stocks 2,225
--------
U.S. TREASURY OBLIGATIONS (0.2%):
U.S. Treasury Bills (0.2%):
$ 105 2/19/98 (d)......................... 104
55 2/26/98 (d)......................... 55
15 3/12/98............................. 15
--------
Total U.S. Treasury Obligations 174
--------
REPURCHASE AGREEMENTS (4.2%):
4,619 Prudential Securities, 6.80%, 1/2/98
(Collateralized by $4,836 U.S.
Treasury Bills, 0.00%, 6/25/98,
market value $4,712).............. 4,619
--------
Total Repurchase Agreements 4,619
--------
Total (Cost $85,403) (a) $109,867
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $110,282.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $27,909
Unrealized depreciation..................................... (3,340)
-------
Net unrealized appreciation................................. $24,569
=======
</TABLE>
(b) Non-income producing securities.
(c) A portion of this security was loaned as of December 31, 1997.
(d) Serves as collateral for futures.
At December 31, 1997, the Portfolios open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- --------- ------------- --------- -------
<C> <S> <C> <C>
25 Long Russell March 1998 Futures $5,413 $5,518
</TABLE>
See notes to financial statements.
33
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS (96.1%):
ARGENTINA (0.8%):
Automotive (0.0%):
34 Renault Argentina (b)............... $ 44
--------
Beverages & Tobacco (0.0%):
Buenos Aires Embottelladora SA,
Class B (b)(d).................... 27
--------
Oil & Gas Exploration, Production & Services (0.5%):
130 Perez Companc SA.................... 929
39 YPF Sociedad Anonima................ 1,307
--------
2,236
--------
Telecommunications (0.3%):
89 Telecom Argentina SA, Class B....... 637
215 Telefonica de Argentina SA, Class
B................................. 806
--------
1,443
--------
Total Argentina..................... 3,750
--------
AUSTRALIA (2.2%):
Banking (0.7%):
120 National Australia Bank Ltd. (b).... 1,674
171 Westpac Banking Corp., Ltd.......... 1,093
--------
2,767
--------
Beverages & Tobacco (0.1%):
57 Coca-Cola Amatil Ltd. (b)........... 427
--------
Brewery (0.0%):
113 Foster's Brewing Group Ltd.......... 215
--------
Broadcasting & Publishing (0.2%):
157 News Corp., Ltd. (b)................ 864
--------
Building Products (0.3%):
221 Boral Ltd........................... 558
135 CSR Ltd. (b)........................ 458
131 Pioneer International Ltd. (b)...... 358
--------
1,374
--------
Diversified (0.1%):
82 Southcorp Holdings Ltd.............. 271
--------
Engineering (0.0%):
31 Leighton Holdings Ltd............... 108
--------
Metals (0.0%):
229 M.I.M. Holdings Ltd. (b)............ 140
36 RGC Ltd............................. 55
--------
195
--------
Metals & Mining (0.4%):
68 Aberfoyle Ltd....................... 111
125 Australian National Industries
Ltd............................... 114
123 Broken Hill Proprietary Co. Ltd.
(b)............................... 1,144
30 Delta Gold.......................... 32
28 Great Central Mines Ltd (b)......... 30
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
AUSTRALIA, CONTINUED:
Metals & Mining, continued:
35 Newcrest Mining Ltd. (b)............ $ 38
122 Normandy Mining Ltd. (b)............ 119
36 Plutonic Resources Ltd. (b)......... 101
31 Resolute Limited.................... 23
87 WMC Ltd. (b)........................ 303
--------
2,015
--------
Real Estate (0.2%):
186 General Property Trust.............. 330
177 Stockland Trust Group............... 410
186 Westfield Trust..................... 355
--------
1,095
--------
Retail-Stores/Catalog (0.1%):
102 Coles Myer Ltd. (b)................. 490
--------
Services (0.1%):
14 Brambles Industries Ltd............. 280
--------
Total Australia..................... 10,101
--------
AUSTRIA (1.6%):
Airlines (0.1%):
22 Austrian Airlines (b)............... 457
--------
Automotive (0.0%):
7 Steyr-Daimler-Puch AG............... 174
--------
Banking & Finance (0.4%):
7 Bank Austria AG..................... 181
18 Bank Austria AG, Participating
Certificates (b).................. 909
11 Bank Austria VAR (b)................ 540
--------
1,630
--------
Beverages & Tobacco (0.0%):
4 Osterreichische Brau-Beteiligungs AG
(b)............................... 197
--------
Building Products (0.1%):
2 Wienerberger Baustoffindustrie AG... 455
--------
Chemicals (0.1%):
4 Lenzing AG (b)...................... 240
--------
Engineering (0.1%):
4 VA Technologie AG (b)............... 652
--------
Environmental Services (0.1%):
2 BWT AG.............................. 279
--------
Insurance (0.2%):
3 EA-Generali AG...................... 748
--------
Miscellaneous Materials & Commodities (0.1%):
9 Radex-Heraklith
Industriebeteiligungs AG.......... 308
--------
</TABLE>
Continued
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
AUSTRIA, CONTINUED:
Oil & Gas Exploration, Production & Services (0.2%):
8 OMV AG.............................. $ 1,155
--------
Telecommunications--Services and Equipment (0.2%):
11 Osterreichische
Elekrizitaitswirtschafts-AG, Class
A................................. 1,128
--------
Total Austria....................... 7,423
--------
BELGIUM (1.9%):
Banking (0.4%):
2 Generale de Banque SA............... 727
1 Kredietbank NV...................... 577
1 Kredietbank VVPR (b)................ 546
--------
1,850
--------
Chemicals (0.2%):
14 Solvay SA........................... 851
--------
Industrial Holding Company (0.1%):
4 Groupe Bruxelles Lambert SA......... 596
--------
Insurance (0.3%):
4 Fortis AG........................... 891
2 Royale Belge........................ 537
--------
1,428
--------
Merchandising (0.2%):
14 Delhaize-Le Lion SA................. 715
--------
Metals & Mining (0.0%):
3 Union Miniere Group (b)............. 207
--------
Oil & Gas Exploration, Production & Services (0.2%):
2 PetroFina SA........................ 890
--------
Telecommunications--Services and Equipment (0.5%):
9 Electrabel SA....................... 2,134
--------
Total Belgium....................... 8,671
--------
BRAZIL (0.3%):
Banking & Finance (0.0%):
18,213 Banco Bradesco (d).................. 0
--------
Beverages & Tobacco (0.0%):
41 Companhia Cervejaria Brahma (b)..... 26
--------
Chemicals (0.0%):
242 Copesul--Companhia Pertoquimica do
Sul (b)........................... 9
19 White Martins SA (b)................ 27
--------
36
--------
Gaming (0.0%):
5 Companhia Vidraria Santa Maria...... 9
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
BRAZIL, CONTINUED:
Gas & Electric Utility (0.2%):
7,050 Centrais Electricas Brasilieras SA
(b)............................... $ 350
3,370 Centrais Electricas Brasilieras SA,
Class B........................... 172
4,116 Companhia Paranaense de Energia-
Copel (b)......................... 46
405 Light--Servicos de Eletricidade SA
(b)............................... 169
--------
737
--------
Steel (0.0%):
3,589 Companhia Siderurgica Nacional...... 100
4 Companhia Vale do Rio Doce (b)...... 77
--------
177
--------
Telecommunications (0.1%):
2,677 Telecomunicacoes Brasileiras SA..... 272
193 Telecomunicacoes de Sao Paulo SA
(b)............................... 44
--------
316
--------
Tobacco (0.0%):
10 Souza Cruz SA....................... 81
--------
Total Brazil........................ 1,382
--------
CHILE (0.2%):
Banking & Finance (0.0%):
6 Banco de Santiago ADR (b)........... 131
--------
Beverages & Tobacco (0.0%):
7 Embotelladora Andina SA, Series A
ADR............................... 143
--------
Telecommunications (0.2%):
18 Telecomunicaciones de Chile SA
ADR............................... 545
--------
Total Chile......................... 819
--------
DENMARK (1.5%):
Agriculture (0.0%):
3 Korn-OG Foderstof Kompagniet A/S.... 82
--------
Banking & Finance (0.3%):
7 Danske Bank......................... 894
6 Unidanmark A/S, Class A............. 411
--------
1,305
--------
Beverages & Tobacco (0.1%):
4 Carlsberg A/S, Class A.............. 192
7 Carlsberg A/S, Class B (b).......... 392
--------
584
--------
Commercial Services (0.0%):
3 ISS International Service System
A/S, Class B (b).................. 105
--------
Diversified (0.1%):
14 Superfos A/S........................ 348
--------
</TABLE>
Continued
35
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
DENMARK, CONTINUED:
Engineering (0.0%):
7 FLS Industries A/S, Class B......... $ 175
--------
Pharmaceuticals (0.5%):
13 Novo Nordisk A/S, Class B........... 1,854
--------
Telecommunications (0.2%):
14 Tele Danmark A/S, Class B........... 853
--------
Transportation & Shipping (0.3%):
0 D/S 1912, Class B (d)............... 785
0 D/S Svendborg A/S, Class B (d)...... 788
0 Lauritzen (J.) Holding A/S (b)(d)... 25
1,598
--------
Total Denmark....................... 6,904
--------
FINLAND (0.8%):
Banking & Finance (0.1%):
96 Merita Ltd., Class A................ 524
--------
Forest Products (0.1%):
27 UPM-Kymmene Corp.................... 544
--------
Insurance (0.1%):
5 Pohjola Insurance Group, Class B.... 178
8 Sampo Insurance Co.................. 260
--------
438
--------
Metals (0.1%):
26 Outokumpo OY, Class A............... 313
--------
Telecommunications (0.4%):
19 Nokia AB, Class A................... 1,343
11 Nokia AB, Class K................... 752
--------
2,095
--------
Total Finland....................... 3,914
--------
FRANCE (10.6%):
Automotive (0.2%):
6 PSA Peugeot......................... 795
--------
Banking (0.9%):
24 Banque Nationale de Paris........... 1,274
16 Compagnie Financiere de Paribas..... 1,374
10 Societe Generale (b)................ 1,427
--------
4,075
--------
Beverages & Tobacco (0.4%):
10 LVMH (Moet Hennessy Louis
Vuitton).......................... 1,584
8 Pernod Ricard (b)................... 478
--------
2,062
--------
Broadcasting/Cable (0.1%):
4 Canal Plus (b)...................... 670
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FRANCE, CONTINUED:
Building Products (0.3%):
3 Imetal SA........................... $ 354
15 Lafarge SA (b)...................... 1,002
--------
1,356
--------
Business Service (0.6%):
17 Compagnie Generale des Eaux......... 2,338
9 Havas SA............................ 658
--------
2,996
--------
Chemicals (0.7%):
10 L'Air Liquide (b)................... 1,515
38 Rhone-Poulenc SA (b)................ 1,710
--------
3,225
--------
Commercial Services (0.2%):
1 Addeco SA........................... 170
1 Sodexho SA.......................... 697
--------
867
--------
Construction (0.1%):
5 Bouygues............................ 521
--------
Defense (0.2%):
1 Sagem SA............................ 290
19 Thomson CSF (b)..................... 585
--------
875
--------
Diversified (0.1%):
15 Lagardere SCA (b)................... 493
--------
Electrical & Electronic (0.9%):
18 Alcatel Alsthom (b)................. 2,264
5 Legrand SA (b)...................... 947
16 Schneider SA........................ 891
--------
4,102
--------
Energy (1.4%):
31 Elf Aquitane SA..................... 3,565
28 Total SA, Class B................... 3,070
--------
6,635
--------
Engineering (0.1%):
4 Compagnie Francaise d'Etudes et de
Construction Technip (b).......... 396
--------
Food & Household Products (0.1%):
4 Eridania Beghin-Say SA.............. 696
--------
Food Products & Services (0.3%):
8 Groupe Danone....................... 1,421
--------
</TABLE>
Continued
36
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
FRANCE, CONTINUED:
Health & Personal Care (0.9%):
7 L'OREAL............................. $ 2,856
12 Sanofi SA........................... 1,282
--------
4,138
--------
Industrial Goods & Services (0.2%):
17 Michelin Class B, Registered........ 874
--------
Industrial Holding Company (0.5%):
21 Lyonnaise des Eaux SA............... 2,334
--------
Insurance (0.6%):
35 AXA SA (b).......................... 2,706
--------
Leisure (0.2%):
4 Accor SA (b)........................ 809
3 Salomon SA.......................... 215
--------
1,024
--------
Media (0.1%):
1 Pathe SA............................ 280
--------
Merchandising (1.0%):
4 Carrefour SA (b).................... 2,205
7 Etablissements Economiques du Casino
Guichard-Perrachon................ 409
3 Pinault-Printemps-Redoute SA........ 1,334
2 Promodes............................ 911
--------
4,859
--------
Office Equipment & Services (0.2%):
11 BIC................................. 774
--------
Oil & Gas (0.3%):
10 Compagnie de Saint Gobain........... 1,414
--------
Textile Products (0.0%):
2 Dollfus-Mieg & Cie (b).............. 43
--------
Total France........................ 49,631
--------
GERMANY (15.9%):
Airlines (0.2%):
54 Lufthansa AG........................ 1,014
--------
Automotive (1.6%):
68 Daimler-Benz AG..................... 4,809
1 Man AG.............................. 416
4 Volkswagen AG....................... 2,074
--------
7,299
--------
Banking (3.0%):
98 Bayer AG (b)........................ 3,644
39 Bayerische Vereinsbank AG........... 2,493
67 Deutsche Bank AG (b)................ 4,707
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GERMANY, CONTINUED:
Banking, continued:
3 Dresdner Bank (b)................... $ 107
62 Dresdner Bank AG.................... 2,834
--------
13,785
--------
Banking & Finance (0.3%):
33 Bayerische Hypotheken-und Weschel-
Bank AG........................... 1,620
--------
Building Products (0.1%):
8 Heidelberger Zement AG.............. 542
--------
Business Service (0.5%):
8 SAP AG.............................. 2,467
--------
Chemicals (0.8%):
83 BASF AG............................. 2,981
15 Degussa AG.......................... 762
--------
3,743
--------
Conglomerates (1.9%):
30 Metro AG (b)........................ 1,080
3 Preussag AG (b)..................... 855
70 VEBA AG............................. 4,793
4 Viag AG............................. 2,082
--------
8,810
--------
Construction (0.1%):
9 Hochtief AG......................... 382
--------
Consumer Goods & Services (0.2%):
6 Adidas AG........................... 827
--------
Electrical & Electronic (0.9%):
74 Siemens AG.......................... 4,449
--------
Engineering (0.7%):
10 AGIV AG (b)......................... 202
6 Bilfinger & Berger Bau AG........... 186
5 Mannesmann AG (b)................... 2,677
--------
3,065
--------
Health Care (0.2%):
11 Schering AG......................... 1,026
--------
Insurance (2.8%):
30 Allianz AG.......................... 7,681
5 AMB Aachener und Muenchener
Beteiligungs...................... 595
2 AMB Aachener und Muenchener
Beteiligungs AG................... 210
4 CKAG Colonia Konzern AG............. 361
</TABLE>
Continued
37
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GERMANY, CONTINUED:
Insurance, continued:
1 Muenchener Rueckversicherungs
Gesellschaft AG, Bearer Shares
(b)............................... $ 162
11 Muenchener Rueckversicherungs
Gesellschaft AG, Registered Shares
(b)............................... 4,048
--------
13,057
--------
Investment Company (0.2%):
17 Beiersdorf AG....................... 711
--------
Machinery & Equipment (0.2%):
9 Kloeckner-Humbolt-Deutz AG (b)...... 67
1 Linde AG (b)........................ 692
--------
759
--------
Metals & Mining (0.2%):
9 Fag Kugelfischer Georg Schaefer
AG................................ 121
4 Thyssen AG.......................... 956
--------
1,077
--------
Pharmaceuticals (0.2%):
24 Merck KGaA.......................... 804
--------
Retail (0.1%):
1 Karstadt AG (b)..................... 398
--------
Retail-General Merchandise (0.0%):
5 Douglas Holding AG.................. 159
--------
Telecommunications (1.2%):
306 Deutsche Telekom AG................. 5,670
--------
Telecommunications--Services and Equipment (0.5%):
48 RWE AG.............................. 2,573
--------
Total Germany....................... 74,237
--------
GREECE (0.9%):
Agriculture (0.0%):
8 Hellenic Sugar Industry SA.......... 49
--------
Banking & Finance (0.6%):
18 Alpha Credit Bank................... 1,066
8 Commercial Bank of Greece SA........ 294
13 Ergo Bank SA........................ 662
5 National Bank of Greece SA (b)...... 479
--------
2,501
--------
Beverages & Tobacco (0.1%):
24 Hellenic Bottling Co. SA............ 553
--------
Building Products (0.2%):
27 Heracles General Cement Co. SA...... 556
--------
Insurance (0.0%):
5 Aspis Pronia (b).................... 53
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
GREECE, CONTINUED:
Telecommunications (0.0%):
3 Intracom SA......................... $ 137
--------
Tobacco (0.0%):
4 Papastratos Cigarette............... 77
--------
Transportation & Shipping (0.0%):
7 Attica Enterprises.................. 76
--------
Total Greece........................ 4,002
--------
HONG KONG (0.8%):
Airlines (0.0%):
194 Cathay Pacific Airways (b).......... 158
--------
Banking (0.1%):
83 Bank of East Asia Ltd. (b).......... 195
12 HSBC Holdings PLC................... 286
--------
481
--------
Banking & Finance (0.0%):
38 Wing Lung Bank...................... 182
--------
Broadcasting & Publishing (0.1%):
95 Television Broadcasts Ltd........... 271
--------
Conglomerates (0.1%):
68 Swire Pacific Ltd., Class A......... 373
--------
Electrical Equipment (0.0%):
645 Elec & Eltek International
Holdings Ltd...................... 160
--------
Industrial Holding Company (0.2%):
145 Hutchison Whampoa Ltd. (b).......... 909
--------
Printing & Publishing (0.0%):
263 Oriental Press Group Ltd. (b)....... 80
--------
Real Estate (0.1%):
56 Sun Hung Kai Properties Ltd. (b).... 390
--------
Telecommunications (0.2%):
391 Hong Kong Telecommunications
Ltd. (b).......................... 804
--------
Total Hong Kong..................... 3,808
--------
INDONESIA (0.2%):
Agriculture (0.0%):
369 PT SMART Corp....................... 32
--------
Auto Parts (0.0%):
61 PT Astra International IDR.......... 16
--------
Banking & Finance (0.0%):
298 PT Bank International Indonesia--
Foreign Registry.................. 18
--------
Building Products (0.0%):
222 Indocement Tunggal Prakarsa......... 73
--------
</TABLE>
Continued
38
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
INDONESIA, CONTINUED:
Chemicals (0.0%):
1,246 Polysindo EKA IDR................... $ 206
--------
Forest Products (0.0%):
203 PT Barito Pacific Timber............ 58
100 PT Inti Indorayon Utama--
Foreign Registry.................. 10
--------
68
--------
Telecommunications (0.1%):
108 PT Indosat.......................... 198
285 PT Telekomunikasi Indonesia......... 152
--------
350
--------
Tobacco (0.1%):
155 PT Gudang Garam..................... 236
51 PT Hanjaya Mandala Sampoerna........ 38
--------
274
--------
Total Indonesia..................... 1,037
--------
IRELAND (0.5%):
Banking (0.1%):
38 Allied Irish Banks PLC.............. 363
--------
Banking & Finance (0.3%):
132 Allied Irish Banks PLC.............. 1,282
--------
Beverages & Tobacco (0.0%):
77 James Crean PLC..................... 158
--------
Industrial Goods & Services (0.1%):
133 Smufit (Jefferson) Group............ 375
--------
Total Ireland....................... 2,178
--------
ITALY (10.0%):
Agriculture (0.1%):
306 Parmalat Finanziaria SpA (b)........ 438
--------
Auto Parts (0.0%):
90 Magneti Marelli SpA................. 154
--------
Automotive (0.5%):
719 Fiat SpA............................ 2,091
165 Fiat SpA di Risp
(Non-convertible)................. 273
--------
2,364
--------
Banking (1.0%):
378 Banca Commerciale Italiana (b)...... 1,315
39 Banca Popolare di Milano............ 247
99 Banco Ambrosiano Veneto SpA......... 379
425 Credito Italiano SpA (b)............ 1,313
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
ITALY, CONTINUED:
Banking, continued:
148 Istituto Bancario San Paolo
di Torino (b)..................... $ 1,412
32 Riunione Adriatica di Sicurta SpA
di Risp........................... 215
--------
4,881
--------
Banking & Finance (0.1%):
81 Mediobanca SpA (b).................. 633
--------
Broadcasting & Publishing (0.2%):
232 Mediaset SpA........................ 1,141
--------
Building Products (0.1%):
32 Italcementi SpA (b)................. 224
15 Italcementi SpA RNC................. 45
--------
269
--------
Chemicals (0.2%):
958 Montedison SpA...................... 860
102 Montedison SpA di Risp.............. 67
130 Snia MPD SpA........................ 134
--------
1,061
--------
Engineering (0.0%):
145 Impregilo SpA....................... 111
--------
Financial Services (0.3%):
109 Istituto Mobiliare Italiano (b)..... 1,297
--------
Gas & Electric Utility (0.3%):
127 Edison SpA (b)...................... 767
144 Italgas SpA......................... 595
--------
1,362
--------
Insurance (1.8%):
237 Assicurazioni Generali.............. 5,828
486 Istituto Nazionale delle
Assicurazioni..................... 985
23 La Previdente....................... 177
56 Riuniune Adriatici de Sicurta SpA
(b)............................... 554
63 Societa Assicuratrice Industriale
(SAI) SpA (b)..................... 700
--------
8,244
--------
Office Equipment & Services (0.0%):
380 Olivetti SpA (b).................... 230
--------
Oil & Gas (1.9%):
1,554 Ente Nazionale Idrocarburi SpA
(ENI)............................. 8,813
--------
Paper Products (0.1%):
34 Burgo (Cartiere) SpA................ 202
17 Reno de Medici SpA (b).............. 46
--------
248
--------
</TABLE>
Continued
39
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
ITALY, CONTINUED:
Printing & Publishing (0.0%):
26 Mandadori (b)....................... $ 208
--------
Retail (0.1%):
36 La Rinascente SpA (b)............... 266
--------
Steel (0.0%):
29 Falck Acciaierie & Ferriere Lombarde
SpA............................... 132
--------
Telecommunications (3.0%):
56 Sirti SpA (b)....................... 337
1,362 Telecom Italia Mobile SpA di Risp
(Non-convertible)................. 6,290
357 Telecom Italia SpA.................. 1,014
773 Telecom Italia SpA.................. 4,939
213 Telecom Italia SpA-RNC (b).......... 939
--------
13,519
--------
Textile Products (0.1%):
35 Benetton Group SpA (b).............. 569
7 Marzotto (Gaetano) & Figli SpA...... 85
--------
654
--------
Tire & Rubber (0.2%):
300 Pirelli SpA (b)..................... 803
--------
Total Italy......................... 46,828
--------
JAPAN (20.8%):
Agriculture (0.0%):
25 Nippon Beet Sugar Manufacturing..... 34
--------
Airlines (0.1%):
115 Japan Airlines (b).................. 314
--------
Aluminum (0.0%):
63 Nippon Light Metal Co............... 92
--------
Appliances & Household Products (1.2%):
130 Matsushita Electric Industrial Co.,
Ltd............................... 1,910
12 Pioneer Electronic Corp............. 186
95 Sanyo Electric Co................... 248
81 Sharp Corp.......................... 559
26 Sony Corp........................... 2,320
--------
5,223
--------
Automotive (2.3%):
2 Autobacs Seven Co................... 58
62 Honda Motor Co., Ltd................ 2,284
159 Nissan Motor Co., Ltd............... 660
9 Sanden.............................. 39
23 Toyoda Automatic Loom Works......... 425
246 Toyota Motor Corp................... 7,076
--------
10,542
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Banking (2.3%):
131 Asahi Bank Ltd...................... $ 534
304 Bank of Tokyo--Mitsubishi........... 4,202
215 Fuji Bank Ltd....................... 873
175 Industrial Bank of Japan............ 1,252
220 Mitsui Trust & Banking Co........... 428
240 Sakura Bank Ltd..................... 689
209 Sumitomo Bank....................... 2,395
13 Yamaguchi Bank...................... 160
--------
10,533
--------
Basic Industry (0.0%):
42 Sekisui Chemical Co., Ltd........... 214
--------
Beverages & Tobacco (0.2%):
20 Asahi Breweries Ltd................. 292
49 Kirin Brewery Co., Ltd.............. 359
36 Takara Shuzo........................ 134
--------
785
--------
Brewery (0.0%):
18 Sapporo Breweries................... 57
--------
Broadcasting & Publishing (0.0%):
18 Tokyo Broadcasting System........... 228
--------
Building Products (0.1%):
35 Chichibu Onoda Cement Co............ 65
5 Dianippon Screen Manufacturing Co.,
Ltd............................... 23
21 Nihon Cement Co., Ltd............... 43
32 Sanwa Shutter Corp.................. 161
16 Tostem Corp......................... 173
--------
465
--------
Chemicals (0.8%):
72 Asahi Chemical Industry Co., Ltd.... 245
6 Daicel Chemical Industries Ltd...... 8
23 Dainippon Ink & Chemicals, Inc...... 58
97 Denki Kagaku Kogyo K.K.............. 147
26 Ishihara Sangyo Kaisha (b).......... 29
32 Kaneka Corp......................... 145
24 Konica Corp......................... 111
13 Kureha Chemical Industry............ 27
107 Mitsubishi Chemical Corp............ 154
16 Mitsubishi Gas Chemical Co.......... 42
14 Nippon Shokubai K.K. Co............. 57
14 NOF Corp............................ 24
19 Shin-Etsu Chemical Co............... 372
59 Showa Denko K.K..................... 52
100 Sumitomo Chemical Co................ 231
49 Takeda Chemical Industries.......... 1,401
80 Toray Industries, Inc............... 360
</TABLE>
Continued
40
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Chemicals, continued:
72 Tosoh Corp. (b)..................... $ 121
74 Ube Industries Ltd.................. 94
--------
3,678
--------
Commercial Services (0.0%):
3 Oyo Corp............................ 46
--------
Computer Software (0.0%):
4 CSK Corp............................ 103
3 Konami Co., Ltd..................... 74
177
--------
Construction (0.2%):
26 Aoki Corp. (b)...................... 8
21 Daiko Inc. (b)...................... 16
29 Daiwa House Industry Co., Ltd....... 154
22 Haseko (b).......................... 11
56 Kumagai Gumi Co., Ltd............... 31
12 Misawa Homes........................ 33
18 Okumura Corp........................ 43
28 Penta-Ocean Construction Co.,
Ltd............................... 39
61 Sekisui House Ltd................... 394
59 Shimizu Corp........................ 137
46 Taisei Corp......................... 76
--------
942
--------
Consumer Goods & Services (0.1%):
35 Nippon Sheet Glass Co., Ltd......... 49
18 Renown, Inc. (b).................... 8
9 Shimano, Inc........................ 166
2 Tokyo Style Co., Ltd................ 18
50 Toto Ltd............................ 317
--------
558
--------
Cosmetics/Personal Care (0.0%):
17 Shisiedo Co., Ltd................... 233
--------
Data Processing & Reproduction (0.3%):
117 Fujitsu Ltd......................... 1,260
2 Trans Cosmos, Inc................... 35
--------
1,295
--------
Distribution (0.1%):
187 Itochu Corp......................... 295
--------
Diversified (0.1%):
9 Amano Corp.......................... 69
7 Sanrio Co., Ltd. (b)................ 37
18 Yamaha Corp......................... 205
--------
311
--------
Electrical & Electronic (0.4%):
13 Casio Computer Co., Ltd............. 94
10 Kyocera Corp........................ 455
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Electrical & Electronic, continued:
125 Mitsubishi Electric Corp............ $ 321
22 Nikon Corp.......................... 218
17 Omron Corp.......................... 267
7 Rohm Co............................. 716
--------
2,071
--------
Electrical Equipment (0.2%):
9 Alps Electric Co., Ltd.............. 85
7 SMC Corp............................ 628
4 Taiyo Yuden Co., Ltd................ 28
--------
741
--------
Electronic Components/Instruments (0.8%):
5 Adventest Corp...................... 285
13 Fanuc Co., Ltd...................... 494
3 Hirose Electric..................... 159
203 Hitachi Ltd......................... 1,451
106 NEC Corp............................ 1,133
23 Yokogawa Electric Corp.............. 143
--------
3,665
--------
Electronics (0.0%):
5 Nitto Denko Corp.................... 87
--------
Energy (0.1%):
169 Japan Energy Corp................... 160
155 Nippon Oil Co....................... 402
--------
562
--------
Engineering (0.2%):
13 Daito Trust Construction Co.,
Ltd............................... 80
36 Fujita Corp......................... 13
33 Hazama Corp......................... 16
49 Kajima Corp......................... 124
10 Kandenko Co., Ltd................... 51
70 Kawasaki Heavy Industries........... 109
14 Kinden Corp......................... 149
19 Nishimatsu Construction............. 60
53 Obayashi Corp....................... 180
17 Sato Kogyo.......................... 11
17 Toa Corp............................ 22
--------
815
--------
Entertainment (0.1%):
13 Toei................................ 47
1 Toho Co............................. 118
22 Tokyo Dome Corp..................... 147
--------
312
--------
Financial Services (0.5%):
18 Acom Co., Ltd....................... 997
104 Mitsubishi Trust & Banking Co....... 1,047
</TABLE>
Continued
41
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Financial Services, continued:
6 Orix Corp........................... $ 420
3 Uni-Charm........................... 107
--------
2,571
--------
Food & Household Products (0.2%):
37 Ajinomoto Co., Inc.................. 361
39 Kao Corp............................ 565
10 Nissin Food Products................ 182
--------
1,108
--------
Food Products & Services (0.1%):
59 Daiei, Inc.......................... 245
10 Kikkoman Corp....................... 51
21 Meiji Milk Products Co., Ltd........ 55
28 Nichirei Corp....................... 60
26 Nippon Suisan Kaisha Ltd. (b)....... 33
17 Yamazaki Banking Co., Ltd........... 166
--------
610
--------
Forest Products (0.2%):
38 Mitsubishi Paper Mills.............. 53
115 New Oji Paper Co.................... 461
70 Nippon Paper Industries Co.......... 276
17 Sumitomo Forestry Co., Ltd.......... 83
--------
873
--------
Gas & Electric Utility (1.0%):
81 Kansai Electric Power Co., Inc...... 1,377
170 Osaka Gas Co........................ 390
48 Tohoku Electric Power............... 734
92 Tokyo Electric Power................ 1,675
204 Tokyo Gas Co., Ltd.................. 464
--------
4,640
--------
Health & Personal Care (0.4%):
9 Chugai Pharmaceutical Co., Ltd...... 46
20 Kyowa Hakko Kogyo Co., Ltd.......... 87
21 Lion Corp........................... 62
27 Sankyo Co., Ltd..................... 613
55 Yamanouchi Pharmaceutical Co.,
Ltd............................... 1,185
--------
1,993
--------
Hotels & Lodging (0.0%):
11 Fujita Kanko, Inc................... 118
--------
Industrial Goods & Services (0.7%):
57 Bridgestone Corp.................... 1,241
57 Denso Corp.......................... 1,030
75 Mitsui Engineering & Shipbuilding
Co., Ltd. (b)..................... 48
36 NGK Insulators Ltd.................. 321
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Industrial Goods & Services, continued:
18 NGK Spark Plug Co................... $ 102
52 Sumitomo Electric Industries........ 712
--------
3,454
--------
Insurance (0.4%):
39 Mitsui Marine & Fire Insurance Co.,
Ltd............................... 200
14 Nichido Fire & Marine Insurance Co.,
Ltd............................... 71
29 Nippon Fire & Marine Insurance...... 109
32 Sumitomo Marine & Fire Insurance.... 170
97 Tokio Marine & Fire Insurance Co.... 1,104
--------
1,654
--------
Jewelry (0.1%):
40 Citizen Watch Co., Ltd.............. 269
6 Hoya Corp........................... 189
--------
458
--------
Leasing (0.1%):
45 Yamato Transport Co., Ltd........... 606
--------
Leisure (0.0%):
3 Namco............................... 90
--------
Machinery & Equipment (0.8%):
15 Amada Co., Ltd...................... 56
25 Brother Industries Ltd.............. 57
45 Chiyoda Corp. (b)................... 48
9 Daifuku Co., Ltd.................... 44
18 Daikin Industries Ltd............... 68
14 Ebara Corp.......................... 149
49 Komatsu Ltd......................... 247
3 Komori Corp......................... 45
40 Koyo Seiko Co., Ltd................. 161
94 Kubota Corp......................... 249
9 Kurita Water........................ 92
6 Makino Milling Machine.............. 38
32 Minebea Co., Ltd.................... 345
229 Mitsubishi Heavy Industries, Ltd.... 957
5 Mori Seiki.......................... 52
58 Nigata Engineering Co., Ltd. (b).... 25
77 NSK Ltd............................. 192
49 NTN Corp............................ 114
38 Okuma Corp.......................... 136
34 Sumitomo Heavey Industries Ltd...... 104
5 Takuma Co., Ltd..................... 35
10 Tokyo Electron Ltd.................. 312
8 Tsubakimoto Chain................... 29
--------
3,555
--------
</TABLE>
Continued
42
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Manufacturing--Capital Goods (0.3%):
41 Fujikura Ltd........................ $ 272
16 Kokuyo Co., Ltd..................... 277
21 Makita Corp......................... 202
15 Murata Manufacturing Co., Ltd....... 379
10 Nippon Sharyo Ltd................... 28
22 Noritake Co., Ltd................... 105
--------
1,263
--------
Manufacturing--Consumer Goods (0.6%):
69 Canon, Inc.......................... 1,613
33 Fuji Photo Film Co., Ltd............ 1,269
6 Sega Enterprises.................... 109
--------
2,991
--------
Materials (0.0%):
9 Okamoto Industries, Inc............. 16
26 Sumitomo Osaka Cement Co., Ltd...... 33
--------
49
--------
Medical Supplies (0.0%):
3 Olympus Optical..................... 21
--------
Merchandising (0.4%):
28 ITO-Yokado Co., Ltd................. 1,432
18 JUSCO Co............................ 255
21 Marui Co., Ltd...................... 328
--------
2,015
--------
Metals & Mining (0.2%):
73 Furukawa Electric Co................ 315
64 Hitachi Zosen Corp.................. 103
66 Japan Steel Works (b)............... 50
67 Mitsubishi Materials Corp........... 108
30 Mitsui Mining & Smelting............ 121
59 Mitsui Mining Co., Ltd. (b)......... 46
57 Seika Corp.......................... 86
30 Sumitomo Metal Mining Co............ 99
--------
928
--------
Office Equipment & Services (0.2%):
57 Dai Nippon Printing Co., Ltd........ 1,074
--------
Oil & Gas Exploration, Production & Services (0.1%):
9 Arabian Oil Co...................... 137
66 Asahi Glass Co., Ltd................ 314
66 Teikoku Oil Co...................... 173
--------
624
--------
Oil & Gas Transmission (0.1%):
75 Iwatani International Corp.......... 133
83 Mitsubishi Oil Co., Ltd............. 123
--------
256
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Packaging (0.0%):
14 Toyo Seikan Kaisha.................. $ 199
--------
Pharmaceuticals (0.2%):
12 Eisai Co., Ltd...................... 184
22 Meiji Seika......................... 73
13 Shionogi & Co....................... 60
29 Taisho Pharmacuetical Co............ 743
--------
1,060
--------
Real Estate (0.4%):
94 Mitsubishi Estate Co................ 1,027
65 Mitsui Fudosan...................... 630
10 Tokyo Tatemono Co., Ltd. (b)........ 13
--------
1,670
--------
Restaurants (0.0%):
8 Skylark Co., Ltd.................... 77
--------
Retail (0.3%):
4 Aoyama Trading Co., Ltd............. 75
15 Credit Saison Co., Ltd.............. 359
14 Daimura, Inc........................ 33
10 Hankyu Department Stores............ 56
13 Isetan Co........................... 54
24 Mitsukoshi Ltd...................... 64
52 Mycal Corp.......................... 437
3 Shimachu Co......................... 47
26 Takashimaya Co...................... 158
11 Uny Co., Ltd........................ 151
--------
1,434
--------
Services (0.3%):
12 Secom............................... 770
43 Toppan Printing Co., Ltd............ 562
--------
1,332
--------
Steel (0.3%):
67 Daido Steel Co., Ltd................ 85
53 Japan Metals & Chemicals (b)........ 44
218 Kawasaki Steel Corp................. 298
425 Nippon Steel Co..................... 631
215 NKK Corp............................ 172
260 Sumitomo Metal Industries (b)....... 334
11 Tokyo Steel......................... 37
--------
1,601
--------
Storage (0.0%):
14 Mitsubishi Logistics Corp........... 146
34 Mitsui-Soko Co., Ltd................ 86
--------
232
--------
</TABLE>
Continued
43
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
JAPAN, CONTINUED:
Telecommunications (1.7%):
16 Nippon Comsys Corp.................. $ 198
1 Nippon Telegraph & Telephone
Corp.............................. 7,279
--------
7,477
--------
Textile Products (0.2%):
191 Kanebo Ltd. (b)..................... 140
26 Kurabo Industries................... 28
31 Kuraray Co., Ltd.................... 257
27 Mitsubishi Rayon Co., Ltd........... 66
13 Nisshinbo Industries................ 55
5 Onward Kashiyama Co., Ltd........... 58
31 Teijin Ltd.......................... 65
27 Toyobo Ltd.......................... 33
48 Unitika Ltd. (b).................... 26
--------
728
--------
Transportation & Shipping (0.4%):
0 East Japan Railway Co. (d).......... 1,082
30 Kamigumi Co., Ltd................... 89
93 Kawasaki Kisen Kaisha Ltd. (b)...... 113
81 Mitsui OSK Lines, Ltd. (b).......... 113
78 Nippon Yusen Kabushiki Kaisha....... 215
12 Seino Transportation................ 60
--------
1,672
--------
Transportation--Road & Railroad (0.6%):
91 Hankyu Corp......................... 428
30 Keihin Electric Express Railway..... 105
232 Kinki Nippon Railway................ 1,244
53 Nippon Express Co., Ltd............. 265
40 Odakyu Electric Railway............. 174
36 Tobu Railway Co., Ltd............... 113
78 Tokyu Corp.......................... 302
--------
2,631
--------
Wholesale & International Trade (0.4%):
130 Marubeni Corp....................... 229
112 Mitsubishi Corp..................... 888
106 Mitsui & Co......................... 629
--------
1,746
--------
Wholesale Distribution (0.0%):
14 Nagase & Co......................... 41
--------
Wire & Cable Products (0.0%):
19 Tokyo Rope MFG...................... 22
--------
Total Japan......................... 97,148
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
KOREA (0.0%):
Chemicals (0.0%):
1 Han Wha Corp........................ $ 1
2 Hanwha Chemical Corp. (b)........... 2
--------
3
--------
Retail-Stores/Catalog (0.0%):
8 Keum Kang Development Industries
Co................................ 23
--------
Total Korea......................... 26
--------
LUXEMBOURG (0.0%):
Aluminum (0.0%):
9 Hindalco Industries Ltd. GDR (b).... 185
--------
MALAYSIA (0.2%):
Agriculture (0.0%):
118 Highlands & Lowlands Berhad......... 121
19 IOI Corp. Berahd.................... 6
37 Kemayan Corp. Berhad (b)............ 5
--------
132
--------
Automotive (0.0%):
281 Tan Chong Motors.................... 123
--------
Building Products (0.0%):
10 Golden Plus Holdings................ 2
9 Jaya Tiasa Holdings Berhad.......... 17
80 Pan-Malaysia Cement Works Berhad.... 31
--------
50
--------
Construction (0.0%):
28 YTL Corp. Berhad.................... 37
--------
Diversified (0.0%):
24 Berjaya Group Berhad................ 5
231 Malaysian Mosaics Berhad............ 83
28 Mulph International................. 3
20 Multi-Purpose Holdings Berhad....... 5
--------
96
--------
Engineering (0.0%):
15 Pilecon Engineering Berhad.......... 4
25 United Engineers (Malaysia) Ltd..... 20
--------
24
--------
Financial Services (0.0%):
26 Malayan Banking Berhad.............. 75
40 MBF Capital Berhad.................. 9
69 Rashid Hussain Berhad............... 54
--------
138
--------
Food Products & Services (0.2%):
54 Nestle (Malaysia) Berhad............ 249
--------
</TABLE>
Continued
44
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
MALAYSIA, CONTINUED:
Forest Products (0.0%):
376 Land & General Berhad............... $ 69
--------
Hotels & Lodging (0.0%):
19 Landmarks Berhad.................... 3
--------
Leisure (0.0%):
26 Berjaya Land Berhad................. 16
--------
Miscellaneous (0.0%):
21 Johan Holdings Berhad............... 6
--------
Real Estate (0.0%):
13 Malaysian Resources................. 3
--------
Steel (0.0%):
54 Malayawata Steel Berhad............. 13
--------
Telecommunications (0.0%):
41 Technology Resources Industries
Berhad............................ 24
88 Tenaga Nasional Berhad.............. 188
--------
212
--------
Total Malaysia...................... 1,171
--------
MEXICO (1.0%):
Banking (0.0%):
105 Grupo Financiero Banamex Accival SA
de CV (b)......................... 68
--------
Beverages & Tobacco (0.0%):
17 Grupo Continental SA................ 59
27 Grupo Embotelladoras de Mexico SA de
CV................................ 63
--------
122
--------
Brewery (0.0%):
13 Fomento Economico Mexicano SA de CV,
Class B........................... 104
--------
Building Products (0.2%):
10 Apasco SA de CV..................... 69
32 Cemex SA de CV, Series A (b)........ 147
20 Cemex SA de CV, Series B (b)........ 108
15 Cemex SA de CV, Series CPO (b)...... 69
11 Tolmex SA de CV, Series B2 (b)...... 63
--------
456
--------
Diversified (0.3%):
32 ALFA SA de CV, Class A.............. 219
47 Carso Global Telecom, Series A-1.... 188
6 Desc SA de CV, Series A............. 52
5 Desc SA de CV, Series B............. 47
3 Desc SA de CV, Series C............. 31
41 Grupo Carso SA de CV, Series A-1.... 270
--------
807
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
MEXICO, CONTINUED:
Engineering (0.0%):
50 Empresas ICA Sociedad Controladora
SA de CV.......................... $ 137
16 Grupo Tribasa SA de CV (b).......... 48
--------
185
--------
Financial Services (0.0%):
29 Grupo Financiero Banamex Accival SA
de CV (b)......................... 88
0 Grupo Financiero Inbursa SA de CV,
Class B (b)(d).................... 0
--------
88
--------
Food & Household Products (0.1%):
85 Kimberly-Clark de Mexico SA de CV,
Class A........................... 403
--------
Industrial Goods & Services (0.0%):
19 Grupo Industrial Bimbo SA de CV,
Series A.......................... 180
--------
Merchandising (0.1%):
51 Cifra SA de CV, Series C............ 114
118 Cifra SA de CV, Series V............ 291
--------
405
--------
Metals & Mining (0.0%):
33 Grupo Mexico SA, Series B........... 121
25 Industrias Penoles SA, Series CP.... 111
--------
232
--------
Retail-General Merchandise (0.0%):
39 Controladora Comercial Mexicana SA
de CV............................. 50
--------
Retail-Stores/Catalog (0.0%):
70 El Puerto de Liverpool SA de CV,
Series 1.......................... 115
--------
Steel (0.0%):
26 Altos Hornos de Mexico SA (b)....... 59
10 Hylsamex SA......................... 60
--------
119
--------
Telecommunications (0.3%):
10 Grupo Televisa SA, Series CPO (b)... 195
300 Telefonos de Mexico SA, Series L.... 846
--------
1,041
--------
Tobacco (0.0%):
22 Empresas La Moderna SA de CV (b).... 120
--------
</TABLE>
Continued
45
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
MEXICO, CONTINUED:
Transportation--Shipping (0.0%):
30 Vitro SA............................ $ 131
--------
Wholesale Distribution (0.0%):
15 Grupo Casa Autrey SA de CV.......... 30
--------
Total Mexico........................ 4,656
--------
NETHERLANDS (2.7%):
Appliances & Household Products (0.2%):
14 Philips Electronics NV.............. 810
--------
Banking (0.3%):
67 ABN Amro Holding NV................. 1,302
--------
Beverages & Tobacco (0.1%):
2 Heineken NV......................... 405
--------
Broadcasting & Publishing (0.1%):
43 Elsevier NV......................... 691
--------
Chemicals (0.2%):
4 Akzo Nobel.......................... 767
--------
Energy (1.0%):
82 Nlg Royal Dutch Petroleum........... 4,490
--------
Financial Services (0.3%):
38 ING Groep NV........................ 1,605
--------
Food Products & Services (0.3%):
24 Unilever NV CVA..................... 1,505
--------
Services (0.2%):
23 Koninklijke Royal PTT Nederland
NV................................ 939
--------
Total Netherlands................... 12,514
--------
NEW ZEALAND (0.3%):
Beverages & Tobacco (0.1%):
125 Lion Nathan Ltd..................... 281
--------
Forest Products (0.0%):
88 Carter Holt Harvey (b).............. 135
21 Fletcher Challenge Forestry (b)..... 18
22 Fletcher Challenge Paper............ 29
--------
182
--------
Telecommunications (0.2%):
235 Telecom Corp. of New Zealand
Ltd. (b).......................... 1,138
--------
Total New Zealand................... 1,601
--------
NORWAY (1.1%):
Engineering (0.1%):
8 Kvaerner ASA........................ 386
--------
Entertainment (0.0%):
36 NCL Holdings ASA (b)................ 129
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
NORWAY, CONTINUED:
Forest Products (0.0%):
6 Norske Skogsindustrier ASA.......... $ 167
--------
Insurance (0.1%):
54 Storebrand ASA (b).................. 380
--------
Medical Equipment & Supplies (0.0%):
43 Hafslund ASA, Class A............... 208
--------
Metals & Mining (0.0%):
15 Elkem ASA........................... 194
--------
Oil & Gas Exploration, Production & Services (0.7%):
9 Aker ASA, Class A................... 152
16 Aker ASA, Class B................... 284
41 Norsk Hydro ASA..................... 1,994
6 Petroleum Geo-Services ASA (b)...... 356
--------
2,786
--------
Pharmaceuticals (0.1%):
8 Nycomed Amersham (b)................ 303
--------
Transportation & Shipping (0.1%):
15 Bona Shipholding (b)................ 155
17 Leif Hoegh & Co. ASA................ 355
--------
510
--------
Total Norway........................ 5,063
--------
PHILIPPINES (0.2%):
Banking & Finance (0.0%):
0 Metropolitan Bank & Trust Co. (d)... 0
--------
Beverages & Tobacco (0.0%):
60 San Miguel Corp., Class B........... 75
--------
Building Products (0.0%):
374 Southeast Asia Cement Holdings, Inc.
(b)............................... 5
--------
Diversified (0.0%):
306 Ayala Corp., Series B............... 121
--------
Oil & Gas Exploration, Production & Services (0.0%):
999 Petron Corp......................... 84
--------
Telecommunications (0.2%):
41 Manila Electric Co., Class B........ 138
50 Philippine Long Distance Telephone
Co. (b)........................... 6
15 Pilipino Telephone Corp............. 325
--------
469
--------
Total Phillippines.................. 754
--------
</TABLE>
Continued
46
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
PORTUGAL (1.0%):
Banking (0.4%):
25 Banco Comercial Portugues SA........ $ 512
17 Banco Espirito Santo e Commerical de
Lisboa SA, Registered............. 496
23 Banco Internacional do Funchal SA... 176
1 Banco Totta & Acores SA............. 20
17 BPI-SGPS SA, Registered............. 412
--------
1,616
--------
Beverages & Tobacco (0.0%):
11 UNICER-Uniao Cervejeira SA.......... 162
--------
Building Products (0.0%):
3 Cimpor-Cimentos de Portugal,
SGPS SA........................... 81
--------
Food & Household Products (0.2%):
23 Estabelecimentos Jeronimo Martins &
Filho SA.......................... 731
--------
Forest Products (0.0%):
8 Soporcel-Sociedade Portuguesa de
Celulose SA (b)................... 228
--------
Industrial Holding Company (0.1%):
10 Sonae Investimentos SA.............. 417
--------
Insurance (0.1%):
11 Companhia de Seguros Tranquilidade,
Registered........................ 267
--------
Retail-General Merchandise (0.0%):
5 Modelo Continente-Sociedade Gestora
de Participacoes Sociais SA....... 234
--------
Telecommunications (0.2%):
16 Portugal Telecom SA................. 757
--------
Total Portugal...................... 4,493
--------
SINGAPORE (0.3%):
Automotive (0.0%):
15 Cycle & Carriage.................... 62
--------
Electrical Equipment (0.0%):
3 Creative Technology Ltd............. 61
--------
Health Care (0.0%):
13 Parkway Holdings.................... 29
--------
Lodging (0.0%):
310 Hotel Properties Ltd................ 202
--------
Machinery & Equipment (0.0%):
19 Van Der Horst Ltd................... 7
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SINGAPORE, CONTINUED:
Real Estate (0.1%):
30 City Developments Ltd............... $ 138
39 DBS Land Ltd........................ 60
78 United Industrial Corp., Ltd........ 31
53 United Overseas Land Ltd. (b)....... 45
--------
274
--------
Steel (0.0%):
36 NatSteel Ltd........................ 49
--------
Telecommunications (0.1%):
334 Singapore Telecommunications
Ltd. (b).......................... 622
--------
Transportation & Shipping (0.1%):
468 Chuan Hup Holdings Ltd.............. 142
347 Neptune Orient Lines Ltd............ 137
--------
279
--------
Total Singapore..................... 1,585
--------
SOUTH AFRICA (0.5%):
Banking & Finance (0.1%):
8 Nedcor Ltd.......................... 186
3 Standard Bank Investment Corp.,
Ltd............................... 150
--------
336
--------
Brewery (0.0%):
7 South African Breweries Ltd......... 163
--------
Diversified (0.1%):
9 Anglovaal Industries Ltd............ 17
11 Barlow Ltd.......................... 90
18 Malbak Ltd.......................... 17
14 Rembrandt Group Ltd................. 103
22 Smith (C.G.) Ltd.................... 92
--------
319
--------
Engineering (0.0%):
31 Murray & Roberts Holdings Ltd....... 46
--------
Entertainment (0.0%):
55 Sun International (South Africa)
Ltd............................... 23
--------
Financial Services (0.0%):
19 Amalgamated Banks of
South Africa (b).................. 108
10 First National Bank Holdings Ltd.... 85
--------
193
--------
Food & Household Products (0.0%):
5 Tiger Oats Ltd...................... 65
--------
Food Products & Services (0.0%):
2 Foodcorp Ltd........................ 10
--------
</TABLE>
Continued
47
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SOUTH AFRICA, CONTINUED:
Forest Products (0.0%):
11 Nampak Ltd. (b)..................... $ 34
13 Sappi Ltd........................... 63
--------
97
--------
Industrial Goods & Services (0.0%):
1 Anglo American Industrial Corp.,
Ltd............................... 27
--------
Insurance (0.1%):
8 Liberty Life Association of Africa
Ltd............................... 193
6 Southern Life Association Ltd....... 52
--------
245
--------
Metals & Mining (0.2%):
6 Anglo American Corp. of South Africa
Ltd............................... 238
1 Anglo American Gold Investment Co.,
Ltd............................... 19
41 Billiton PLC (b).................... 105
9 DeBeers Centenary AG................ 189
5 Driefontein Consolidated Ltd........ 35
8 Gencor Ltd. (b)..................... 13
2 Gold Fields of South Africa Ltd..... 23
8 Johnnies Industrial Corp., Ltd...... 86
6 Kloof Gold Mining Company Ltd....... 18
8 Randfontein Estates Gold Mining
Co................................ 12
5 Rustenburg Platinum Holdings
Ltd. (b).......................... 63
4 Samancor Ltd........................ 19
--------
820
--------
Oil & Gas Exploration, Production & Services (0.0%):
18 Sasol Ltd........................... 189
--------
Pharmaceuticals (0.0%):
3 South African Druggists Ltd......... 16
--------
Retail-General Merchandise (0.0%):
2 Ellerine Holdings Ltd............... 16
7 New Clicks Holdings Ltd............. 8
--------
24
--------
Total South Africa.................. 2,573
--------
SPAIN (4.2%):
Banking (0.8%):
45 Banco Central Hispanoamericano SA... 1,100
14 Corporacion Bancaria de Espana SA... 839
60 Esp Banco Santander Sa.............. 1,998
--------
3,937
--------
Banking & Finance (0.6%):
83 Banco Bilbao Vizcaya SA............. 2,698
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SPAIN, CONTINUED:
Beverages & Tobacco (0.1%):
12 El Aguila SA (b).................... $ 47
5 Tabacalera SA, Class A.............. 422
--------
469
--------
Building Products (0.0%):
7 Uralita SA (b)...................... 82
--------
Chemicals (0.0%):
38 Ercros SA (b)....................... 37
--------
Construction (0.1%):
7 Dragados Y Construcciones SA........ 149
7 Fomento de Constucciones y Contratas
SA................................ 274
--------
423
--------
Energy (0.3%):
33 Repsol SA........................... 1,420
--------
Food & Household Products (0.0%):
10 Ebro Agricolas, Compania de
Alimentacion SA (b)............... 167
--------
Forest Products (0.0%):
5 Empresa Nacional de Celulosas SA.... 67
24 Sarrio SA........................... 88
--------
155
--------
Gas & Electric Utility (1.1%):
21 Empresa Nacional de Electricidad
SA................................ 365
132 Endesa SA........................... 2,335
113 Iberdrola SA........................ 1,484
40 Union Electric Fenosa SA (b)........ 382
--------
4,566
--------
Industrial Holding Company (0.1%):
3 Corporacion Financiara Alba......... 358
--------
Insurance (0.0%):
7 Corporacion Mapfre.................. 191
--------
Oil & Gas Exploration, Production & Services (0.2%):
18 Gas Natural SDG..................... 954
5 Viscofan Industria Navarra de
Envolturas Celulosicas SA......... 118
--------
1,072
--------
Real Estate (0.1%):
6 Inmobiliaria Metropolitana Vasco
Central SA........................ 284
4 Vallehermoso SA..................... 123
--------
407
--------
Steel (0.1%):
2 Acerinox SA (b)..................... 323
--------
</TABLE>
Continued
48
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SPAIN, CONTINUED:
Telecommunications (0.7%):
120 Telefonica de Espana................ $ 3,425
--------
Total Spain......................... 19,730
--------
SWEDEN (1.7%):
Automotive (0.1%):
14 Volvo AB, Series B.................. 370
--------
Banking & Finance (0.2%):
27 Skandiaviska Enskilda Banken,
Class A........................... 347
11 Svenska Handlesbanken, Class A...... 386
--------
733
--------
Engineering (0.1%):
32 ABB AB, A Shares.................... 374
8 ABB AB, B Shares.................... 94
4 Skanska AB, Series B................ 174
--------
642
--------
Forest Products (0.1%):
15 Stora Kopparbergs Bergslags
Aktiebolag, Series A.............. 190
6 Stora Kopparbergs Bergslags
Aktiebolag, Series B.............. 71
16 Svenska Cellulosa AB, Series B...... 349
--------
610
--------
Insurance (0.0%):
4 Skandia Forsakrings AB.............. 198
--------
Machinery & Equipment (0.1%):
13 Atlas Copco AB, Series A............ 397
--------
Manufacturing-Consumer Goods (0.1%):
6 Electrolux AB, Series B............. 384
--------
Metals & Mining (0.0%):
4 SKF AB, Series B.................... 91
7 Trelleborg AB, Series B............. 90
--------
181
--------
Office Equipment & Services (0.0%):
5 Esselte AB, Series B................ 93
--------
Pharmaceuticals (0.4%):
80 Astra AB, A Shares.................. 1,379
26 Astra AB, B Shares.................. 442
--------
1,821
--------
Retail-General Merchandise (0.2%):
19 Hennes & Mauritz AB, B Shares....... 832
--------
Telecommunications (0.4%):
48 Telefonaktiebolaget LM Ericsson,
Series B.......................... 1,789
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
SWEDEN, CONTINUED:
Tobacco (0.0%):
20 Swedish Match AB.................... $ 67
--------
Total Sweden........................ 8,117
--------
SWITZERLAND (2.0%):
Banking (0.1%):
2 Swiss Bank Corp. (b)................ 479
--------
Chemicals (0.1%):
4 Ciba Specialty Chemicals AG (b)..... 422
--------
Diversified (0.1%):
0 Alusuisse-Lonza Holding AG,
Registered (d).................... 144
0 SFR ABB AG (d)...................... 327
--------
471
--------
Fertilizers (0.0%):
1 Societe Suisse pour la
Microelectronique et l'Horlogerie
AG................................ 155
--------
Financial Services (0.4%):
5 CS Holding AG, Registered........... 769
1 Union Bank of Switzerland........... 903
--------
1,672
--------
Food Products & Services (0.2%):
1 Nestle SA, Registered............... 1,021
--------
Insurance (0.2%):
0 Swiss Reinsurance Co., Registered
(d)............................... 731
--------
Pharmaceuticals (0.9%):
2 Novartis AG, Bearer................. 2,590
0 Roche Holding AG (d)................ 617
0 Roche Holding AG, Bearer (d)........ 1,293
--------
4,500
--------
Transportation (0.0%):
1 Sfr Danzas Holding Ag Reg........... 98
--------
Total Switzerland................... 9,549
--------
THAILAND (0.1%):
Airlines (0.0%):
136 Thai Airways International Public
Co., Ltd., Foreign Registered
Shares (b)........................ 151
--------
Computer Hardware (0.1%):
70 Shinamatra Computer Public Co.
Ltd............................... 234
--------
Metals & Mining (0.0%):
655 Padaeng Industries Public Co., Ltd.
(b)............................... 107
--------
</TABLE>
Continued
49
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
THAILAND, CONTINUED:
Telecommunications (0.0%):
30 Advanced Information Services PLC,
Foreign Registered Shares......... $ 144
102 TelecomAsia Corp. Public Co., Ltd.
(b)............................... 19
--------
163
--------
Total Thailand...................... 655
--------
TURKEY (1.4%):
Appliances & Household Products (0.0%):
1,601 Arcelik AS.......................... 151
--------
Automotive (0.0%):
150 Otosan Otomobil Sanayii AS.......... 124
1,702 Tofas Turk Otomobil Fabrikas AS..... 97
--------
221
--------
Banking & Finance (0.4%):
9,644 Akbank TAS.......................... 850
8,166 Turkiye Garanti Bankasi AS.......... 404
--------
1,254
--------
Beverages & Tobacco (0.0%):
776 Ege Biracilik ve Malt Sanayi AS..... 70
554 Ericiyas Biracilik ve Malt
Sanayii........................... 78
--------
148
--------
Building Products (0.1%):
847 Akcansa Cimento AS.................. 119
393 Cimentas AS......................... 43
999 Cimsa Cimento Sanayi ve Ticaret
AS................................ 54
709 Turk Sise ve Cam Fabrikalari AS
(b)............................... 52
--------
268
--------
Chemicals (0.0%):
161 Petkim Petrokimya Holding AS........ 87
--------
Diversified (0.2%):
2,571 Dogan Sirketler Grubu Holding AS
(b)............................... 102
3,371 Koc Holding AS...................... 789
--------
891
--------
Electrical & Electronic (0.0%):
94 Raks Electronik Ev Aletleri......... 24
--------
Financial Services (0.5%):
8,925 Turkiye Is Bankasi AS, Class C...... 1,617
11,705 Yapi ve Kredi Bankasi AS............ 446
--------
2,063
--------
Food Products & Services (0.0%):
981 Tat Konserve Sanayii AS............. 46
--------
Forest Products (0.0%):
569 Kartonsan Karton Sanayi ve
Ticaret AS........................ 35
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
TURKEY, CONTINUED:
Industrial Goods & Services (0.0%):
455 Kordsa Kord Bezi Sanayi ve Ticaret
AS................................ $ 40
--------
Manufacturing-Capital Goods (0.0%):
708 Turk Demir Dokum Fabrikalari AS..... 39
--------
Metals & Mining (0.0%):
959 Eregli Demir ve Celik Fabrikalari
TAS............................... 148
2,209 Izmir Demir Celik Sanayi AS (b)..... 26
--------
174
--------
Oil & Gas Exploration, Production & Services (0.1%):
395 Aygaz AS............................ 73
548 Petrol Ofisi AS..................... 131
1,739 Tupras Turkiye Petrol Rafinerileri
AS (b)............................ 198
--------
402
--------
Telecommunications (0.1%):
109 Cukurova Elektrik AS................ 300
293 Netas-Northern Elektrik
Telekomunikasyon AS (b)........... 106
--------
406
--------
Textile Products (0.0%):
206 Aksa Akrilik Kimya Sanayii AS....... 15
--------
Tire & Rubber (0.0%):
931 Brisa Bridgestone Sabanci Lastik
SAN, ve Tic AS.................... 65
145 Goodyear Lastikleri TAS............. 65
--------
130
--------
Transportation (0.0%):
560 Turk Hava Yollari AO (b)............ 99
--------
Wholesale Distribution (0.0%):
247 Migros Turk TAS..................... 223
--------
Total Turkey........................ 6,716
--------
UNITED KINGDOM (9.4%):
Aerospace & Military Technology (0.3%):
20 British Aerospace PLC............... 582
43 Rolls-Royce PLC (b)................. 163
35 Smiths Industries PLC............... 494
--------
1,239
--------
Airlines (0.1%):
57 British Airways PLC................. 555
--------
Appliances & Household Products (0.0%):
24 EMI Group PLC....................... 211
--------
Auto Parts (0.0%):
56 LucasVarity PLC..................... 200
--------
</TABLE>
Continued
50
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Banking (1.3%):
73 Abbey Natioanl PLC.................. $ 1,253
75 Barclays PLC........................ 1,980
29 HSBC Holdings PLC................... 744
49 HSBC Holdings PLC (Hong Kong
Dollars).......................... 1,209
26 Royal Bank of Scotland Group PLC.... 333
--------
5,519
--------
Beverages & Tobacco (0.4%):
156 Guinness PLC........................ 1,432
50 Scottish & Newcastle PLC............ 608
--------
2,040
--------
Brewery (0.1%):
35 Bass PLC............................ 534
--------
Broadcasting/Cable (0.1%):
62 British Sky Broadcasting Group
PLC............................... 460
--------
Building Products (0.1%):
30 Marley PLC.......................... 47
10 Meyer International PLC............. 64
50 Rugby Group PLC..................... 112
96 Tarmac PLC.......................... 180
--------
403
--------
Chemicals (0.1%):
33 Imperial Chemical Industries PLC.... 510
--------
Conglomerates (0.2%):
107 B.A.T. Industries PLC............... 973
--------
Construction (0.0%):
44 Taylor Woodrow PLC.................. 129
26 Wilson Connolly Holdings PLC........ 66
--------
195
--------
Diversified (0.0%):
54 Lonrho PLC.......................... 82
--------
Electrical & Electronic (0.3%):
50 Bowthorpe PLC....................... 312
57 Electrocomponents PLC............... 427
100 General Electric Co., PLC........... 657
--------
1,396
--------
Energy (0.7%):
237 British Petroleum Co., PLC (b)...... 3,120
--------
Engineering (0.0%):
25 Barratt Developments PLC............ 94
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Financial Services (0.5%):
176 Lloyds TSB Group PLC................ $ 2,272
55 St. James's Place Capital PLC....... 153
--------
2,425
--------
Food & Household Products (0.3%):
42 Cadbury Schweppes PLC............... 421
112 Unilever PLC........................ 957
--------
1,378
--------
Food Products & Services (0.1%):
66 J Sainsbury PLC (b)................. 554
--------
Health & Personal Care (0.8%):
115 Glaxo Wellcome PLC.................. 2,714
27 Zeneca PLC (b)...................... 933
--------
3,647
--------
Industrial Holding Company (0.2%):
28 BICC Group PLC...................... 80
143 BTR PLC............................. 440
56 Hanson PLC.......................... 251
--------
771
--------
Insurance (0.5%):
56 Commercial Union PLC................ 832
65 Prudential Corp. PLC................ 751
53 Royal & Sun Alliance Insurance Group
PLC............................... 528
--------
2,111
--------
Leisure (0.2%):
58 Granada Group PLC................... 891
31 Rank Group PLC...................... 170
--------
1,061
--------
Machinery & Equipment (0.1%):
20 GKN PLC............................. 410
--------
Merchandising (0.1%):
43 Safeway PLC......................... 244
--------
Metals & Mining (0.2%):
89 British Steel PLC (b)............... 192
72 English China Clays PLC............. 317
43 RTZ Corp., PLC, Registered.......... 494
--------
1,003
--------
Oil & Gas Exploration, Production & Services (0.3%):
160 BG PLC.............................. 720
61 Harrison & Crossfield PLC........... 141
50 LASMO PLC........................... 222
51 Pilkington PLC...................... 107
--------
1,190
--------
</TABLE>
Continued
51
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED KINGDOM, CONTINUED:
Paper Products (0.0%):
41 Rexam PLC........................... $ 201
--------
Pharmaceuticals (0.4%):
174 SmithKline Beecham PLC.............. 1,791
--------
Printing & Publishing (0.1%):
56 Reuters Holdings PLC................ 617
--------
Real Estate (0.2%):
19 British Land Co., PLC............... 205
49 Land Securities PLC................. 784
--------
989
--------
Real Estate Investment Trust (0.1%):
23 Peninsular & Oriental Steam
Navigation Co..................... 262
--------
Retail-Stores/Catalog (0.7%):
46 Boots Co., PLC...................... 661
41 Great Universal Stores PLC.......... 506
90 Marks & Spencer PLC................. 886
23 Next PLC............................ 258
117 Tesco PLC........................... 944
21 Thorn PLC........................... 55
--------
3,310
--------
Telecommunications (0.9%):
249 British Telecommunications PLC...... 1,964
94 Cable & Wireless PLC (b)............ 830
154 Centrica PLC (b).................... 223
50 National Power PLC.................. 496
127 Vodaphone Group PLC................. 923
--------
4,436
--------
Textile Products (0.0%):
24 Courtaulds Textiles PLC............. 143
--------
Total United Kingdom................ 44,074
--------
UNITED STATES (1.0%):
Aluminum (0.0%):
16 Indian Aluminum Company Ltd. GDR
(b)............................... 31
--------
Automotive (0.1%):
14 Mahindra & Mahindra Ltd. GDR........ 145
16 Tata Engineering & Locomotive Co.,
Ltd. GDR.......................... 137
--------
282
--------
Beverages & Tobacco (0.1%):
7 Compania Cervezas Unidas SA ADR..... 197
7 Embotelladora Andina SA ADR......... 133
3 Vina Concho y Toro SA ADR........... 76
--------
406
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED STATES, CONTINUED:
Building Products (0.0%):
19 Gujarat Ambuja Cements
Ltd. GDR.......................... $ 132
--------
Chemicals (0.1%):
10 Indian Petrochemicals Corp., Ltd.
GDR............................... 48
41 Indo Gulf Fertilizers and Chemicals
Corp., Ltd. GDR................... 37
6 Quimica Y Minera Chile SA ADR....... 281
7 United Phosphorus Ltd. GDR.......... 21
--------
387
--------
Diversified (0.1%):
13 Grasim Industries Ltd. GDR.......... 140
19 ITC Ltd. GDR (b).................... 296
2 U.S. Industries, Inc................ 73
--------
509
--------
Forest Products (0.0%):
12 Maderas Y Sinteticos Anonima SA
ADR............................... 113
--------
Gas & Electric Utility (0.3%):
12 Chilectra SA ADR.................... 298
12 Chilgener SA ADR.................... 291
13 Enersis SA ADR...................... 380
--------
969
--------
Hotels & Lodging (0.0%):
6 East India Hotels Ltd. GDR.......... 72
8 Indian Hotels Co., Ltd. GDR (b)..... 147
--------
219
--------
Manufacturing-Capital Goods (0.0%):
5 Ashok Leyland Ltd. GDR.............. 13
27 India Cements Ltd. GDR.............. 51
14 Larsen & Toubro Ltd. GDR............ 145
--------
209
--------
Metals & Mining (0.0%):
8 Madeco SA ADR....................... 116
20 Steel Authority of India Ltd. GDR... 64
--------
180
--------
Packaging (0.0%):
9 Cristalerias de Chile ADR........... 123
--------
Pharmaceuticals (0.1%):
5 Laboratorio Chile ADR............... 105
9 Ranbaxy Laboratories Ltd. GDR....... 230
--------
335
--------
</TABLE>
Continued
52
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
UNITED STATES, CONTINUED:
Textile Products (0.2%):
22 Arvind Mills Ltd. GDR............... $ 43
7 Bombay Dye & Manufacturing Co. GDR.. 18
1 Century Textile & Industries Ltd.
GDR............................... 34
21 Indian Rayon & Industries Ltd. GDR
(b)............................... 88
8 Raymond Ltd. GDR.................... 21
59 Reliance Industries Ltd. GDR (b).... 495
--------
699
--------
Transportation (0.0%):
11 Bajaj Auto Ltd. GDR................. 207
--------
Transportation--Shipping (0.0%):
21 Great Eastern Shipping Co. GDR
(b)............................... 110
--------
Total United States................. 4,911
--------
Total Common Stocks........................... 450,206
--------
PREFERRED STOCKS (1.7%):
AUSTRALIA (0.2%):
Media (0.2%):
223 News Corp. Ltd...................... 1,105
--------
BRAZIL (0.5%):
Banking (0.1%):
18,213 Banco Bradesco SA................... 180
201 Banco Itau SA (b)................... 108
--------
288
--------
Beverages & Tobacco (0.0%):
151 Companhia Cervejaria Brahma (b)..... 101
--------
Electric Utility (0.1%):
1,704 Cia Energetica de Sao Paolo (b)..... 102
3,073 Companhia Energetica de Minas
Gerais............................ 134
--------
236
--------
Forest Products (0.0%):
90 Sadia-Concordia SA.................. 59
--------
Oil & Gas Exploration, Production & Services (0.1%):
2,019 Petroleo Brasileiro SA.............. 472
--------
Steel (0.0%):
7 Companhia Vale do Rio Doce (b)...... 134
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
PREFERRED STOCKS, CONTINUED:
BRAZIL, CONTINUED:
Telecommunications (0.2%):
8,769 Telecomunicacoes Brasileiras SA..... $ 1,001
441 Telecomunicacoes de Sao Paolo SA.... 117
--------
1,118
--------
Total Brazil........................ 2,408
--------
GERMANY (0.8%):
Automotive (0.1%):
1 Volkswagen AG....................... 562
--------
Business Service (0.4%):
6 SAP AG.............................. 1,839
--------
Gas & Electric Utility (0.3%):
35 RWE AG.............................. 1,492
--------
Total Germany....................... 3,893
--------
GREECE (0.1%):
Telecommunications (0.1%):
6 Intracom SA......................... 267
--------
ITALY (0.1%):
Automotive (0.1%):
218 Fiat SpA (b)........................ 333
--------
Total Preferred Stocks 8,006
--------
U.S. TREASURY OBLIGATIONS (0.1%):
U.S. Treasury Bills (0.1%):
$ 390 1/2/98 (e).......................... 390
--------
Total U.S. Treasury Obligations 390
--------
REPURCHASE AGREEMENTS (3.1%):
United States (3.1%):
14,423 State Street Bank, 5.00%, 1/2/98
(Collateralized by $14,545 U.S.
Treasury Securities, 6.13%,
12/31/01, market value $14,713)... 14,423
--------
Total Repurchase Agreements 14,423
--------
Total (Cost $417,674) (a) $473,025
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $468,630.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $115,820
Unrealized depreciation..................................... (60,623)
--------
Net unrealized appreciation................................. $ 55,197
========
</TABLE>
(b) Non-income producing securities.
Continued
53
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
International Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
(c) A portion of this security was loaned as of December 31, 1997.
(d) Amounts are less than 1,000.
(e) Serves as collateral for futures contracts.
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
NUMBER OPENING MARKET
OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
- ---------- --------------------------------------------- --------- -------
<C> <S> <C> <C>
18 Long Nikkei 225 March 1998 Future $1,452 $1,365
16 Long Eurotop 100 March 1998 Future 3,681 3,726
------ ------
5,133 5,091
====== ======
ADR American Depository Receipt
GDR Global Depository Receipt
</TABLE>
At December 31, 1997, the Fund's open forward currency contracts were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY CONTRACT CONTRACT CONTRACT MARKET APPRECIATION/
CURRENCY DATE PRICE AMOUNT VALUE VALUE (DEPRECIATION)
- ------------------------ -------- ----------- --------- -------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Long Contracts:
Belgian Franc 1/15/98 36.8800 4,357 $ 118 $ 117 $ (1)
German Mark 1/5/98 1.7885 809 452 450 (2)
European Currency Unit 3/20/98 0.8931 3,300 3,695 3,639 (56)
French Franc 1/30/98 5.9746 1,895 317 315 (2)
Italian Lire 1/8/98 1,757.8900 891,449 507 504 (3)
Japanese Yen 1/7/98 25.6100 183,000 1,457 1,414 (43)
Japanese Yen 3/12/98 125.6100 387,005 2,977 2,976 (1)
Netherlands Guilder 1/6/98 2.0164 141 70 70 --
Spanish Peseta 1/7/98 151.3600 76,882 508 504 (4)
------- ------ -----
Total Long Contracts $10,101 $9,989 $(112)
======= ====== =====
Short Contracts:
Indonesian Rupiah 1/2/98 5,699.9992 (143,515) $ (25) $ (26) $ (1)
------- ------ -----
Total Short Contracts $ (25) $ (26) $ (1)
======= ====== =====
</TABLE>
See notes to financial statements.
54
<PAGE>
(This page intentionally left blank)
55
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
ASSET ALLOCATION INCOME EQUITY
FUND FUND
---------------- -------------
<S> <C> <C>
ASSETS:
Investments, at value....................................... $197,844 $884,176
Repurchase agreements, at cost.............................. 4,876 22,722
-------- --------
Total (cost $179,677; $499,296; $687,752; $480,627;
$600,783; respectively)................................... 202,720 906,898
Cash........................................................ 1 --
Interest and dividends receivable........................... 1,329 2,151
Receivable for capital shares issued........................ 220 259
Receivable from brokers for investments sold................ -- 2,697
Prepaid expenses and other assets........................... 2 174
-------- --------
TOTAL ASSETS................................................ 204,272 912,179
-------- --------
LIABILITIES:
Cash overdraft.............................................. -- 11
Dividends payable........................................... 523 935
Payable for capital shares redeemed......................... 30 216
Payable to brokers for investments purchased................ -- 4,363
Payable for variation margin on futures contracts........... 2 --
Accrued expenses and other payables:
Investment advisory fees................................ 93 532
Administration fees..................................... 13 123
12b-1 fees.............................................. 65 118
Other................................................... 88 179
-------- --------
TOTAL LIABILITIES........................................... 814 6,477
-------- --------
NET ASSETS:
Capital..................................................... 178,352 483,768
Undistributed (distributions in excess) of net investment
income.................................................... (15) 23
Accumulated undistributed net realized gains (losses) from
investment, options and futures transactions.............. 2,026 14,309
Net unrealized appreciation (depreciation) from investments
and futures............................................... 23,095 407,602
-------- --------
NET ASSETS.................................................. $203,458 $905,702
======== ========
NET ASSETS:
Fiduciary............................................... $ 94,794 $689,912
Class A................................................. 38,874 96,787
Class B................................................. 69,790 118,646
Class C................................................. -- 357
-------- --------
Total....................................................... $203,458 $905,702
======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary............................................... 7,531 32,103
Class A................................................. 3,085 4,509
Class B................................................. 5,517 5,517
Class C................................................. -- 17
======== ========
Total....................................................... 16,133 42,146
======== ========
Net Asset Value:
Fiduciary Offering and redemption price per share....... $ 12.59 $ 21.49
======== ========
Class A Redemption price per share...................... $ 12.60 $ 21.47
======== ========
Maximum sales charge................................ 4.50% 4.50%
======== ========
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent)............................................... $ 13.19 $ 22.48
======== ========
Class B Offering price per share (b).................... $ 12.65 $ 21.50
======== ========
Class C Offering price per share (b).................... $ -- $ 21.51
======== ========
</TABLE>
- ------------
(a) Amount is less than 1,000.
(b) Redemption price per Class B and Class C shares varies based on length of
time shares are held.
See notes to financial statements.
56
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
VALUE
EQUITY INDEX GROWTH LARGE COMPANY
FUND FUND VALUE FUND
------------ ------------ -------------
<S> <C> <C> <C>
$957,204 $569,769 $687,851
16,318 10,034 61,507
-------- -------- --------
973,522 579,803 749,358
26 1 1
1,332 760 995
1,182 62 31
-- -- 15,151
16 6 10
-------- -------- --------
976,078 580,632 765,546
-------- -------- --------
-- -- --
954 391 813
15,071 111 171
-- -- 23,939
4 4 --
81 356 456
97 82 106
229 24 15
396 109 449
-------- -------- --------
16,832 1,077 25,949
-------- -------- --------
660,888 470,302 574,172
-- 1 (79)
12,300 9,953 16,941
286,058 99,299 148,563
-------- -------- --------
$959,246 $579,555 $739,597
======== ======== ========
$567,634 $505,228 $709,375
150,595 59,719 17,408
240,865 14,607 12,814
152 1 --
-------- -------- --------
$959,246 $579,555 $739,597
======== ======== ========
24,402 43,732 46,693
6,475 5,174 1,141
10,361 1,271 835
7 --(a) --
======== ======== ========
41,245 50,177 48,669
======== ======== ========
$ 23.26 $ 11.55 $ 15.19
======== ======== ========
$ 23.26 $ 11.54 $ 15.25
======== ======== ========
4.50% 4.50% 4.50%
======== ======== ========
$ 24.36 $ 12.08 $ 15.97
======== ======== ========
$ 23.25 $ 11.49 $ 15.34
======== ======== ========
$ 23.26 $ 11.54 $ --
======== ======== ========
</TABLE>
57
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
DISCIPLINED VALUE LARGE COMPANY
FUND GROWTH FUND
----------------- -------------
<S> <C> <C>
ASSETS:
Investments, at value....................................... $629,791 $1,601,414
Repurchase agreements, at cost.............................. 15,355 16,845
-------- ----------
Total (cost $495,970; $1,124,533; $701,114; $85,403;
$417,674, respectively)................................... 645,146 1,618,259
Foreign currency, at value (cost $1,490).................... -- --
Interest and dividends receivable........................... 680 2,313
Receivable for capital shares issued........................ 22 15,428
Receivable from brokers for investments sold................ 1,296 15,237
Deferred organization costs................................. -- --
Net receivable for variation margin on futures contracts.... -- --
Tax reclaim receivable...................................... -- --
Prepaid expenses and other assets........................... 8 17
-------- ----------
TOTAL ASSETS................................................ 647,152 1,651,254
-------- ----------
LIABILITIES:
Cash overdraft.............................................. 3 14
Dividends payable........................................... 484 584
Payable for capital shares redeemed......................... 10 298
Payable to brokers for investments purchased................ -- 57,835
Net payable for variation margin on futures contracts....... -- --
Payable for forward foreign currency contracts.............. -- --
Accrued expenses and other payables:
Investment advisory fees................................ 392 941
Administration fees..................................... 91 217
12b-1 fees.............................................. 27 184
Other................................................... 150 412
-------- ----------
TOTAL LIABILITIES........................................... 1,157 60,485
-------- ----------
NET ASSETS:
Capital..................................................... 485,221 1,085,700
Undistributed (distributions in excess) of net investment
income.................................................... (37) 46
Accumulated undistributed net realized gains (losses) from
investment, options and futures transactions.............. 11,635 11,297
Net unrealized appreciation (depreciation) from investments,
futures and translation of assets and liabilities in
foreign currencies........................................ 149,176 493,726
-------- ----------
NET ASSETS.................................................. $645,995 $1,590,769
======== ==========
NET ASSETS:
Fiduciary............................................... $591,390 $1,253,716
Class A................................................. 29,367 152,579
Class B................................................. 25,238 184,424
Class C................................................. -- 50
-------- ----------
Total....................................................... $645,995 $1,590,769
======== ==========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary............................................... 36,772 68,733
Class A................................................. 1,822 8,139
Class B................................................. 1,571 10,051
Class C................................................. -- 3
======== ==========
Total....................................................... 40,165 86,926
======== ==========
Net Asset Value :
Fiduciary Offering and redemption price per share....... $ 16.08 $ 18.24
======== ==========
Class A Redemption price per share...................... $ 16.12 $ 18.75
======== ==========
Maximum sales charge................................ 4.50% 4.50%
======== ==========
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to nearest
cent)............................................... 16.88 $ 19.63
======== ==========
Class B Offering price per share (b).................... $ 16.06 $ 18.35
======== ==========
Class C Offering price per share (b).................... -- $ 18.21
======== ==========
</TABLE>
- ------------
(a) Amount is less than 1,000.
(b) Redemption price per Class B and Class C shares varies based on length of
time shares are held.
See notes to financials.
58
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
GROWTH SMALL INTERNATIONAL
OPPORTUNITIES CAPITALIZATION EQUITY INDEX
FUND FUND FUND
------------- -------------- -------------
<S> <C> <C> <C>
$814,383 $105,248 $458,602
35,429 4,619 14,423
-------- -------- --------
849,812 109,867 473,025
-- -- 1,490
454 73 286
449 10 94
23,944 749 2,009
-- -- 2
-- 33 --
-- -- 471
10 -- 6
-------- -------- --------
874,669 110,732 477,383
-------- -------- --------
7 -- 4
15,098 -- 621
176 2 9
-- 305 7,400
-- -- 1
-- -- 113
498 68 215
115 14 68
63 8 12
187 53 310
-------- -------- --------
16,144 450 8,753
-------- -------- --------
722,544 77,724 425,231
(2,006) (366) (2,574)
(10,711) 8,355 (9,224)
148,698 24,569 55,197
-------- -------- --------
$858,525 $110,282 $468,630
======== ======== ========
$733,898 $ 86,817 $441,609
62,939 18,477 16,236
61,686 4,987 10,784
2 1 1
-------- -------- --------
$858,525 $110,282 $486,630
======== ======== ========
37,762 7,653 28,996
3,262 1,630 1,065
3,317 447 730
--(a) --(a) --(a)
======== ======== ========
44,341 9,730 30,791
======== ======== ========
$ 19.44 $ 11.34 $ 15.23
======== ======== ========
$ 19.30 $ 11.33 $ 15.25
======== ======== ========
4.50% 4.50% 4.50%
======== ======== ========
$ 20.21 $ 11.86 $ 15.97
======== ======== ========
$ 18.60 $ 11.16 $ 14.76
======== ======== ========
$ 19.41 $ 11.33 $ 15.23
======== ======== ========
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSET ALLOCATION INCOME EQUITY EQUITY INDEX VALUE GROWTH LARGE COMPANY
FUND FUND FUND FUND VALUE FUND
---------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......................... $ 2,952 $ 1,177 $ 836 $ 799 $ 1,055
Dividend income.......................... 730 9,338 7,295 3,879 7,508
Income from securities lending........... 26 55 108 70 83
------- ------- ------- ------- -------
Total Income............................. 3,708 10,570 8,239 4,748 8,646
------- ------- ------- ------- -------
EXPENSES:
Investment advisory fees................. 605 3,075 1,335 2,018 2,712
Administration fees...................... 153 683 731 448 602
12b-1 fees (Class A)..................... 61 159 223 94 29
12b-1 fees (Class B)..................... 285 505 1,050 64 56
12b-1 fees (Class C)..................... -- 1 -- -- --
Custodian and accounting fees............ 35 42 102 39 35
Legal and audit fees..................... 3 28 17 12 12
Trustees' fees and expenses.............. 1 7 8 5 6
Transfer agent fees...................... 108 211 457 73 56
Registration and filing fees............. 25 81 85 53 28
Printing costs........................... 13 74 85 48 44
Other.................................... 16 20 13 6 17
------- ------- ------- ------- -------
Total expenses before waivers............ 1,305 4,886 4,106 2,860 3,597
Less waivers............................. (195) (45) (1,339) (27) (8)
------- ------- ------- ------- -------
Net Expenses............................. 1,110 4,841 2,767 2,833 3,589
------- ------- ------- ------- -------
Net Investment Income.................... 2,598 5,729 5,472 1,915 5,057
------- ------- ------- ------- -------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS, OPTIONS AND FUTURES:
Net realized gains (losses) from
investments, options and futures
transactions........................... 8,100 40,769 17,428 39,963 44,331
Net change in unrealized appreciation
(depreciation) from investments,
options and futures.................... 5,887 27,462 59,085 22,345 19,320
------- ------- ------- ------- -------
Net realized/unrealized gains (losses)
from investments, options and
futures................................ 13,987 68,231 76,513 62,308 63,651
------- ------- ------- ------- -------
Change in net assets resulting from
operations............................. $16,585 $73,960 $81,985 $64,223 $68,708
======= ======= ======= ======= =======
</TABLE>
See notes to financial statements.
60
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
GROWTH SMALL INTERNATIONAL
DISCIPLINED LARGE COMPANY OPPORTUNITIES CAPITALIZATION EQUITY INDEX
VALUE FUND GROWTH FUND FUND FUND FUND
----------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......................... $ 294 $ 370 $ 407 $ 141 $ --
Dividend income.......................... 5,420 9,409 1,627 264 3,207
Income from securities lending........... 113 126 284 47 --
Foreign tax withholding.................. -- -- -- -- (327)
-------- -------- ------- ------- --------
Total Income............................. 5,827 9,905 2,318 452 2,880
-------- -------- ------- ------- --------
EXPENSES:
Investment advisory fees................. 2,298 5,427 2,924 410 1,300
Administration fees...................... 510 1,205 649 91 389
12b-1 fees (Class A)..................... 47 249 100 33 27
12b-1 fees (Class B)..................... 115 809 259 22 54
Custodian and accounting fees............ 41 74 76 23 316
Legal and audit fees..................... 7 33 12 5 2
Organization costs....................... -- -- -- -- 2
Trustees' fees and expenses.............. 4 13 6 1 4
Transfer agent fees...................... 76 413 214 49 69
Registration and filing fees............. 17 88 41 12 31
Printing costs........................... 38 117 52 25 26
Other.................................... 16 32 20 8 7
-------- -------- ------- ------- --------
Total expenses before waivers............ 3,169 8,460 4,353 679 2,227
Less waivers............................. (13) (71) (29) (37) (8)
-------- -------- ------- ------- --------
Net Expenses............................. 3,156 8,389 4,324 642 2,219
-------- -------- ------- ------- --------
Net Investment Income (Loss)............. 2,671 1,516 (2,006) (190) 661
-------- -------- ------- ------- --------
REALIZED / UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS, OPTIONS, FUTURES AND
FOREIGN CURRENCIES:
Net realized gains (losses) from
investments, options, futures, and
foreign currency transactions.......... 68,149 113,398 59,810 15,383 (19)
Net change in unrealized appreciation
(depreciation) from investments,
options, futures and translation of
assets and liabilities in foreign
currencies............................. 50,897 12,442 38,036 444 (35,526)
-------- -------- ------- ------- --------
Net realized/unrealized gains (losses)
from investments, futures, options, and
foreign currency....................... 119,046 125,840 97,846 15,827 (35,545)
-------- -------- ------- ------- --------
Change in net assets resulting from
operations............................. $121,717 $127,356 $95,840 $15,637 $(34,884)
======== ======== ======= ======= ========
</TABLE>
See notes to financial statements.
61
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND INCOME EQUITY FUND
-------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss)............................ $ 2,598 $ 4,173 $ 5,729 $ 9,950
Net realized gains (losses) from investments, options
and futures transactions.............................. 8,100 15,867 40,769 63,053
Net change in unrealized appreciation (depreciation)
from investments, options and futures................. 5,887 4,463 27,462 89,271
-------- -------- -------- --------
Change in net assets resulting from operations.............. 16,585 24,503 73,960 162,274
-------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.............................. (1,466) (2,678) (4,833) (8,549)
In excess of net investment income...................... -- (11) -- (14)
From net realized gains from investment transactions.... (10,063) (2,959) (62,899) (10,510)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.............................. (515) (764) (580) (948)
In excess of net investment income...................... -- (3) -- (2)
From net realized gains from investment transactions.... (3,738) (974) (9,117) (1,743)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.............................. (637) (731) (287) (453)
In excess of net investment income...................... -- (3) -- (1)
From net realized gains from investment transactions.... (6,134) (1,129) (10,250) (1,424)
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income.............................. -- -- (1) --
From net realized gains from investment transactions.... -- -- (11) --
-------- -------- -------- --------
Change in net assets from shareholder distributions......... (22,553) (9,252) (87,978) (23,644)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................. 50,451 74,038 96,955 113,454
Proceeds from shares issued in conversion............... -- 37,254 70,389 283,942
Dividends reinvested.................................... 14,633 6,840 35,241 11,938
Cost of shares redeemed................................. (25,908) (49,880) (90,366) (135,743)
-------- -------- -------- --------
Change in net assets from share transactions................ 39,176 68,252 112,219 273,591
-------- -------- -------- --------
Change in net assets........................................ 33,208 83,503 98,201 412,221
NET ASSETS:
Beginning of period..................................... 170,250 86,747 807,501 395,280
-------- -------- -------- --------
End of period........................................... $203,458 $170,250 $905,702 $807,501
======== ======== ======== ========
SHARE TRANSACTIONS:
Issued.................................................. 3,877 6,114 4,436 6,001
Issued in conversion.................................... -- 3,076 3,342 14,913
Reinvested.............................................. 1,151 573 1,645 656
Redeemed................................................ (1,988) (4,071) (4,096) (7,141)
-------- -------- -------- --------
Change in shares............................................ 3,040 5,692 5,327 14,429
======== ======== ======== ========
Undistributed (distributions in excess of) net investment
income included in net assets:
End of period........................................... $ (15) $ 5 $ 23 $ (5)
======== ======== ======== ========
</TABLE>
See notes to financial statements.
62
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY INDEX FUND VALUE GROWTH FUND LARGE COMPANY VALUE FUND
-------------------------- -------------------------- --------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997 1997 1997
------------ ----------- ------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
$ 5,472 $ 9,130 $ 1,915 $ 3,251 $ 5,057 $ 12,627
17,428 20,871 39,963 42,586 44,331 17,493
59,085 140,765 22,345 51,518 19,320 126,134
-------- -------- -------- -------- -------- --------
81,985 170,766 64,223 97,355 68,708 156,254
-------- -------- -------- -------- -------- --------
(4,056) (7,178) (1,789) (2,906) (5,005) (12,228)
-- -- -- -- -- --
(14,824) (3,288) (54,060) (36,353) (41,719) (47,388)
(782) (899) (136) (316) (95) (209)
-- -- -- -- -- --
(3,454) (420) (6,125) (5,893) (1,000) (904)
(634) (780) (1) (16) (37) (69)
-- -- -- -- -- --
(5,722) (629) (1,479) (992) (700) (410)
-- -- -- -- -- --
(1) -- -- -- -- --
-------- -------- -------- -------- -------- --------
(29,473) (13,194) (63,590) (46,476) (48,556) (61,208)
-------- -------- -------- -------- -------- --------
235,619 372,043 118,809 236,686 66,908 165,729
-- -- -- -- -- 63,222
14,720 6,593 30,433 39,472 23,837 26,644
(91,461) (180,134) (58,980) (70,246) (81,576) (238,407)
-------- -------- -------- -------- -------- --------
158,878 198,502 90,262 205,912 9,169 17,188
-------- -------- -------- -------- -------- --------
211,390 356,074 90,895 256,791 29,321 112,234
747,856 391,782 488,660 231,869 710,276 598,042
-------- -------- -------- -------- -------- --------
$959,246 $747,856 $579,555 $488,660 $739,597 $710,276
======== ======== ======== ======== ======== ========
10,341 20,262 9,997 22,826 4,347 12,629
-- -- -- -- -- 4,655
645 360 2,627 4,071 1,572 2,051
(4,043) (9,830) (4,916) (6,738) (5,252) (17,923)
-------- -------- -------- -------- -------- --------
6,943 10,792 7,708 20,159 667 1,412
======== ======== ======== ======== ======== ========
$ -- $ -- $ 1 $ 12 $ (79) $ 1
======== ======== ======== ======== ======== ========
</TABLE>
63
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND LARGE COMPANY GROWTH
-------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss)............................ $ 2,671 $ 8,249 $ 1,516 $ 6,257
Net realized gains (losses) from investments, options
and futures transactions.............................. 68,149 59,778 113,398 130,961
Net change in unrealized appreciation (depreciation)
from investments, options and futures and translation
of assets and liabilities in foreign currencies....... 50,897 36,525 12,442 186,164
---------- ---------- ---------- ----------
Change in net assets resulting from operations.............. 121,717 104,552 127,356 323,382
---------- ---------- ---------- ----------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.............................. (2,626) (7,822) (1,456) (5,746)
In excess of net investment income...................... -- -- -- --
From net realized gains from investment transactions.... (91,826) (53,221) (167,063) (37,414)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.............................. (92) (274) (59) (403)
In excess of net investment income...................... -- -- -- --
From net realized gains from investment transactions.... (4,398) (2,285) (20,430) (4,265)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.............................. (7) (89) -- (23)
In excess of net investment income...................... -- -- -- --
From net realized gains from investment transactions.... (3,742) (1,855) (24,184) (3,785)
In excess of net realized gains from investment
transactions.......................................... -- -- -- --
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income.............................. -- -- -- --
From net realized gains from investment transactions.... -- -- (4) --
---------- ---------- ---------- ----------
Change in net assets from shareholder distributions......... (102,691) (65,546) (213,196) (51,636)
---------- ---------- ---------- ----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................. 68,541 107,311 189,988 230,983
Proceeds from shares issued in conversion............... -- 48,296 81,659 289,603
Dividends reinvested.................................... 53,965 32,360 119,759 31,237
Cost of shares redeemed................................. (102,247) (179,880) (115,839) (299,888)
---------- ---------- ---------- ----------
Change in net assets from share transactions................ 20,259 8,087 275,567 251,935
---------- ---------- ---------- ----------
Change in net assets........................................ 39,285 47,093 189,727 523,681
NET ASSETS:
Beginning of Period..................................... 606,710 559,617 1,401,042 877,361
---------- ---------- ---------- ----------
End of period........................................... $ 645,995 $ 606,710 $1,590,769 $1,401,042
========== ========== ========== ==========
SHARE TRANSACTIONS:
Issued.................................................. 4,153 7,390 9,902 14,003
Issued in conversion.................................... -- 3,333 4,595 17,279
Reinvested.............................................. 3,429 2,299 6,447 1,936
Redeemed................................................ (6,174) (12,355) (5,886) (18,015)
---------- ---------- ---------- ----------
Change in shares............................................ 1,408 667 15,058 15,203
---------- ---------- ---------- ----------
Undistributed net investment income (loss) including in net
assets:
End of period........................................... $ (37) $ 17 $ 46 $ 45
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
64
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND SMALL CAPITALIZATION FUND INTERNATIONAL EQUITY INDEX FUND
-------------------------- -------------------------- -------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997 1997 1997
------------ ----------- ------------ ----------- --------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
$ (2,006) $ 7,629 $ (190) $ (231) $ 661 $ 4,485
59,810 35,797 15,383 10,486 (19) 5,054
38,036 87,369 444 1,985 (35,526) 51,395
-------- -------- -------- -------- -------- --------
95,840 130,795 15,637 12,240 (34,884) 60,934
-------- -------- -------- -------- -------- --------
-- (7,053) -- -- (623) (4,346)
-- (669) -- -- -- (3,417)
(80,645) (83,581) (9,265) (8,358) (12,040) (3,811)
-- (361) -- -- (4) (92)
-- (34) -- -- -- (73)
(7,223) (4,572) (1,939) (1,835) (435) (111)
-- (215) -- -- -- (47)
-- (20) -- -- -- --
(7,103) (3,102) (521) (302) (301) (72)
-- -- -- -- -- (37)
== == == == == ==
-------- -------- -------- -------- -------- --------
(94,971) (99,607) (11,725) (10,495) (13,403) (12,006)
-------- -------- -------- -------- -------- --------
132,564 291,882 16,618 14,236 79,152 191,629
57,769 -- -- -- -- --
63,277 56,517 10,294 9,973 8,139 2,834
(100,644) (248,384) (19,994) (30,774) (42,918) (135,282)
-------- -------- -------- -------- -------- --------
152,966 100,015 6,918 (6,565) 44,373 59,181
-------- -------- -------- -------- -------- --------
153,835 131,203 10,830 (4,820) (3,914) 108,109
704,690 573,487 99,452 104,272 472,544 364,435
-------- -------- -------- -------- -------- --------
$858,525 $704,690 $110,282 $ 99,452 $468,630 $472,544
======== ======== ======== ======== ======== ========
6,319 16,132 1,335 1,433 4,890 12,777
3,113 -- -- -- -- --
3,314 3,283 945 1,042 538 189
(4,693) (13,633) (1,644) (3,085) (2,624) (9,008)
-------- -------- -------- -------- -------- --------
8,053 5,782 636 (610) 2,804 3,958
-------- -------- -------- -------- -------- --------
$ (2,006) $ -- $ (366) $ (176) $ (2,574) $ (2,608)
======== ======== ======== ======== ======== ========
</TABLE>
65
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
(Unaudited)
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Asset Allocation Fund,
the Income Equity Fund, the Equity Index Fund, the Value Growth Fund, the
Large Company Value Fund, the Disciplined Value Fund, the Large Company
Growth Fund, the Growth Opportunities Fund, the Small Capitalization Fund
(previously named the Gulf South Growth Fund) and the International Equity
Index Fund (individually a "Fund", collectively the "Funds") only. In 1997
the investment objective of the Gulf South Growth Fund was changed to permit
investments in companies headquartered or doing business outside of the
Southeastern region of the United States, and to focus the Fund's investments
to a greater extent on investments in the equity securities of small
capitalization and emerging growth companies. As a result, the name of the
Fund was changed to The One Group Small Capitalization Fund. Each Fund is a
diversified mutual fund.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Asset Allocation To provide total return while preserving capital.
Income Equity Current income through regular payment of dividends with
the secondary goal of achieving capital appreciation by
investing primarily in equity securities.
Equity Index Investment results that correspond to the aggregate price
and dividend performance of the securities in the
Standard & Poor's 500 Composite Stock Price Index.
Value Growth Fund Long-term capital growth and growth of income with a
secondary objective of providing a moderate level of
current income.
Large Company Value Fund Capital appreciation with the incidental goal of
achieving current income by investing primarily in
equity securities.
Disciplined Value Fund Capital appreciation with the secondary goal of achieving
current income by investing primarily in equity
securities.
Large Company Growth Fund Long-term capital appreciation and growth of income by
investing primarily in equity securities.
Growth Opportunities Fund Growth of capital and secondarily, current income by
investing primarily in equity securities.
Small Capitalization Fund Long-term capital growth, primarily by investing in a
portfolio of equity securities of small-capitalization
and emerging growth companies.
International Equity Index Fund To provide investment results that correspond to the
aggregate price and dividend performance of the
securities in the Gross Domestic Product Weighted Morgan
Stanley Capital International Europe, Australia, and Far
East Index.
</TABLE>
Continued
66
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Listed securities are valued at the latest available sales price on the
principal exchange where such securities are traded. Unlisted securities or
listed securities for which latest sales prices are not available are valued
at the mean of the latest bid and asked price in the principal market where
such securities are normally traded. Corporate debt securities and debt
securities of U.S. issuers (other than short-term investments maturing in 60
days or less), including municipal securities, are valued on the basis of
valuations provided by dealers or by an independent pricing service approved
by the Board of Trustees. Short-term investments maturing in 60 days or less
are valued at amortized cost, which approximates market value. Futures
contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded. Options traded on an
exchange are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations. Investments for which there are no such
quotations or valuations are carried at fair value as determined by the Fair
Value Committee which is comprised of members from Banc One Investment
Advisors Corporation (the "Advisor") and The One Group Services Company (the
"Administrator") under the direction of the Board of Trustees.
FOREIGN CURRENCY TRANSLATION
Investment valuations, other assets and liabilities initially expressed in
foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates. Purchases and sales of foreign investments and
income and expenses are converted into U.S. dollars based upon exchange rates
prevailing on the respective dates of such transactions. That portion of
realized gains or losses and unrealized appreciation or depreciation from
investments due to fluctuations in foreign currency exchange rates is not
separately disclosed. Such fluctuations are included with the net realized
and unrealized gain or loss from investments.
FORWARD FOREIGN CURRENCY CONTRACTS
Forward foreign currency contracts are valued at the daily exchange rate of
the underlying currency. Purchases and sales of forward foreign currency
contracts having the same settlement date and broker are presented net on the
Statement of Assets and Liabilities. The forward foreign currency exchange
contracts are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized appreciation or depreciation until the contract settlement date.
Gains or losses from the purchase or sale of forward foreign currency
contracts having the same settlement date and broker are recorded as realized
on the date of offset; otherwise gains or losses are recorded as realized on
settlement date.
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that are
deemed by the Advisor to be of good standing and creditworthy under
guidelines established by the Board of Trustees. Each repurchase
Continued
67
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
agreement is recorded at cost. The Fund requires that the securities
purchased in a repurchase agreement transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those
securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities
held at not less than the repurchase price, including accrued interest.
Repurchase agreements are considered to be loans under the 1940 Act.
WRITTEN OPTIONS
The Funds may write covered call or secured put options for which premiums
received are recorded as liabilities and are subsequently adjusted to the
current value of the options written. Premiums received from writing options
which expire are treated as realized gains. Premiums received from writing
options, which are either exercised or closed, are offset against the
proceeds received or amount paid on the transaction to determine realized
gains or losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period. Cash
or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change in
the market value of the position are recorded as unrealized appreciation or
depreciation until the contract is closed out, at which time the appreciation
or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities may
be more volatile than the referenced instrument itself, but any loss is
limited to the amount of the original investment.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn dividends and interest on securities lent while
simultaneously seeking to earn interest on the investment of collateral.
Collateral is marked to market daily to provide a level of collateral at
least equal to the market value of securities lent. There may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. However, loans will
be made only to borrowers deemed by the Advisor to be of good standing and
creditworthy under guidelines established by the Board of Trustees and when,
in the judgment of the Advisor, the consideration which can be earned
currently from such securities loans justifies the attendant risks. Loans are
subject to termination by the Funds or the borrower at any time, and are,
therefore, not
Continued
68
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
considered to be illiquid investments. As of December 31, 1997, the following
Funds had securities with the following market values on loan (amounts in
thousands):
<TABLE>
<CAPTION>
MARKET VALUE
OF LOANED
SECURITIES
-------------
<S> <C>
Asset Allocation Fund....................................... $ 21,880
Income Equity Fund.......................................... 32,163
Equity Index Fund........................................... 73,806
Value Growth Fund........................................... 41,087
Large Company Value Fund.................................... 60,516
Disciplined Value Fund...................................... 84,361
Large Company Growth Fund................................... 77,687
Growth Opportunities Fund................................... 154,143
Small Capitalization........................................ 11,520
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities as of December 31, 1997.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Dividends are recorded on the
ex-dividend date. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one Fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid monthly for
the Funds except for the International Equity Index Fund which declares
and pays dividends, if any, at least annually. Net realized capital
gains, if any, are distributed at least annually. Dividends are declared
separately for each class. No class has preferential dividend rights;
differences in per share dividend rates are 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, foreign currency transactions, and deferrals of certain
losses. Permanent book and tax basis differences have been reclassified
among the components of net assets.
Continued
69
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and
from net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes. Withholding taxes on foreign
dividends have been paid or provided for in accordance with the
applicable country's tax rules and rates.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more. The Trust is registered to offer forty series
and five classes of shares: Fiduciary Class, 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 Fund's prospectus. As of December 31,
1997, there were no shareholders in Class C of the Asset Allocation Fund,
Large Company Value Fund or the Disciplined Value Fund. Shareholders are
entitled to one vote for each full share held and will vote in the aggregate
and not by class or series, except as otherwise expressly required by law or
when the Board of Trustees has determined that the matter to be voted on
affects only the interest of shareholders of a particular class or series.
The following is a summary of transactions in Fund shares for the periods
ended December 31, 1997 and June 30, 1997:
Continued
70
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND INCOME EQUITY FUND
-------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $ 16,685 $ 36,157 $ 40,811 $ 39,671
Proceeds from shares issued in conversion................. -- 37,254 70,389 283,942
Dividends reinvested...................................... 3,819 3,380 15,579 7,467
Cost of shares redeemed................................... (17,915) (41,096) (76,108) (115,841)
-------- -------- -------- ---------
Change in net assets from Fiduciary Share transactions.... $ 2,589 $ 35,695 $ 50,671 $ 215,239
======== ======== ======== =========
CLASS A SHARES:
Proceeds from shares issued............................... $ 9,306 $ 14,748 $ 19,607 $ 33,483
Dividends reinvested...................................... 4,160 1,663 9,320 2,597
Cost of shares redeemed................................... (4,806) (5,587) (9,177) (15,299)
-------- -------- -------- ---------
Change in net assets from Class A Share transactions...... $ 8,660 $ 10,824 $ 19,750 $ 20,781
======== ======== ======== =========
CLASS B SHARES:
Proceeds from shares issued............................... $ 24,460 $ 23,133 $ 36,193 $ 40,300
Dividends reinvested...................................... 6,654 1,797 10,330 1,874
Cost of shares redeemed................................... (3,187) (3,197) (5,081) (4,603)
-------- -------- -------- ---------
Change in net assets from Class B Share transactions...... $ 27,927 $ 21,733 $ 41,442 $ 37,571
======== ======== ======== =========
CLASS C SHARES:
Proceeds from shares issued............................... $ -- $ -- $ 344 $ --
Dividends reinvested...................................... -- -- 12 --
Cost of shares redeemed................................... -- -- -- --
-------- -------- -------- ---------
Change in net assets from Class C Share transactions...... $ -- $ -- $ 356 $ --
======== ======== ======== =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 1,290 3,003 1,887 2,121
Issued in conversion...................................... -- 3,076 3,342 14,913
Reinvested................................................ 302 284 725 412
Redeemed.................................................. (1,375) (3,348) (3,442) (6,085)
-------- -------- -------- ---------
Change in Fiduciary Shares................................ 217 3,015 2,512 11,361
======== ======== ======== =========
CLASS A SHARES:
Issued.................................................... 713 1,212 889 1,768
Reinvested................................................ 327 139 436 142
Redeemed.................................................. (369) (460) (422) (814)
-------- -------- -------- ---------
Change in Class A Shares.................................. 671 891 903 1,096
======== ======== ======== =========
CLASS B SHARES:
Issued.................................................... 1,874 1,899 1,644 2,112
Reinvested................................................ 522 150 483 102
Redeemed.................................................. (244) (263) (232) (242)
-------- -------- -------- ---------
Change in Class B Shares.................................. 2,152 1,786 1,895 1,972
======== ======== ======== =========
CLASS C SHARES:
Issued.................................................... -- -- 16 --
Reinvested................................................ -- -- 1 --
Redeemed.................................................. -- -- -- --
-------- -------- -------- ---------
Change in Class C Shares.................................. -- -- 17 --
======== ======== ======== =========
</TABLE>
Continued
71
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
EQUITY INDEX FUND VALUE GROWTH FUND
-------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $123,298 $ 193,036 $104,451 $222,240
Dividends reinvested...................................... 4,437 3,889 22,879 32,485
Cost of shares redeemed................................... (73,564) (148,567) (53,690) (59,895)
-------- --------- -------- --------
Change in net assets from Fiduciary Share transactions.... $ 54,171 $ 48,358 $ 73,640 $194,830
======== ========= ======== ========
CLASS A SHARES:
Proceeds from shares issued............................... $ 50,323 $ 72,287 $ 11,016 $ 9,761
Dividends reinvested...................................... 4,051 1,279 6,076 5,980
Cost of shares redeemed................................... (9,581) (25,085) (4,642) (9,421)
-------- --------- -------- --------
Change in net assets from Class A Share transactions...... $ 44,793 $ 48,481 $ 12,450 $ 6,320
======== ========= ======== ========
CLASS B SHARES:
Proceeds from shares issued............................... $ 61,850 $ 106,720 $ 3,341 $ 4,685
Dividends reinvested...................................... 6,231 1,425 1,478 1,007
Cost of shares redeemed................................... (8,316) (6,482) (648) (930)
-------- --------- -------- --------
Change in net assets from Class B Share transactions...... $ 59,765 $ 101,663 $ 4,171 $ 4,762
======== ========= ======== ========
CLASS C SHARES:
Proceeds from shares issued............................... $ 148 $ -- $ 1 $ --
Dividends reinvested...................................... 1 -- --(a) --
Cost of shares redeemed................................... -- -- -- --
-------- --------- -------- --------
Change in net assets from Class C Share transactions...... $ 149 $ -- $ 1 $ --
======== ========= ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 5,413 10,607 8,788 21,444
Reinvested................................................ 193 215 1,980 3,352
Redeemed.................................................. (3,259) (8,036) (4,474) (5,755)
-------- --------- -------- --------
Change in Fiduciary Shares................................ 2,347 2,786 6,294 19,041
======== ========= ======== ========
CLASS A SHARES:
Issued.................................................... 2,206 3,962 928 929
Reinvested................................................ 178 69 520 615
Redeemed.................................................. (419) (1,452) (388) (893)
-------- --------- -------- --------
Change in Class A Shares.................................. 1,965 2,579 1,060 651
======== ========= ======== ========
CLASS B SHARES:
Issued.................................................... 2,715 5,693 281 453
Reinvested................................................ 274 76 127 104
Redeemed.................................................. (365) (342) (54) (90)
-------- --------- -------- --------
Change in Class B Shares.................................. 2,624 5,427 354 467
======== ========= ======== ========
CLASS C SHARES:
Issued.................................................... 7 -- --(a) --
Reinvested................................................ --(a) -- --(a) --
Redeemed.................................................. -- -- -- --
-------- --------- -------- --------
Change in Class C Shares.................................. 7 -- --(a) --
======== ========= ======== ========
</TABLE>
- ------------
(a) Amount is less than 1,000.
Continued
72
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND DISCIPLINED VALUE FUND
-------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $ 59,665 $ 150,998 $ 63,300 $ 95,887
Proceeds from shares issued in conversion................. -- 63,222 -- 48,296
Dividends reinvested...................................... 22,040 25,070 45,876 27,911
Cost of shares redeemed................................... (78,042) (229,727) (97,915) (168,332)
-------- --------- -------- ---------
Change in net assets from Fiduciary Share transactions.... $ 3,663 $ 9,563 11,261 $ 3,762
======== ========= ======== =========
CLASS A SHARES:
Proceeds from shares issued............................... $ 4,136 $ 10,438 $ 3,169 $ 8,230
Dividends reinvested...................................... 1,067 1,100 4,368 2,515
Cost of shares redeemed................................... (3,024) (8,010) (2,715) (9,255)
-------- --------- -------- ---------
Change in net assets from Class A Share transactions...... $ 2,179 $ 3,528 $ 4,822 $ 1,490
======== ========= ======== =========
CLASS B SHARES:
Proceeds from shares issued............................... $ 3,107 $ 4,293 $ 2,072 $ 3,194
Dividends reinvested...................................... 730 474 3,721 1,934
Cost of shares redeemed................................... (510) (670) (1,617) (2,293)
-------- --------- -------- ---------
Change in net assets from Class B Share transactions...... $ 3,327 $ 4,097 $ 4,176 2,835
======== ========= ======== =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 3,880 11,519 3,838 6,612
Issued in conversion...................................... -- 4,655 -- 3,333
Reinvested................................................ 1,456 1,931 2,924 1,984
Redeemed.................................................. (5,025) (17,266) (5,912) (11,571)
-------- --------- -------- ---------
Change in Fiduciary Shares................................ 311 839 850 358
======== ========= ======== =========
CLASS A SHARES:
Issued.................................................... 268 793 190 559
Reinvested................................................ 69 84 272 178
Redeemed.................................................. (195) (607) (165) (628)
-------- --------- -------- ---------
Change in Class A Shares.................................. 142 270 297 109
======== ========= ======== =========
CLASS B SHARES:
Issued.................................................... 199 317 125 219
Reinvested................................................ 47 36 233 137
Redeemed.................................................. (32) (50) (97) (156)
-------- --------- -------- ---------
Change in Class B Shares.................................. 214 303 261 200
======== ========= ======== =========
</TABLE>
- ------------
Continued
73
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH GROWTH OPPORTUNITIES FUND
-------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $117,841 $ 134,662 $ 88,515 $ 216,371
Proceeds from shares issued in conversion................. 81,659 289,603 57,769 --
Dividends reinvested...................................... 75,450 22,758 49,054 48,075
Cost of shares redeemed................................... (98,895) (274,724) (90,415) (199,916)
-------- --------- -------- ---------
Change in net assets from Fiduciary Share transactions.... $176,055 $ 172,299 $104,923 $ 64,530
======== ========= ======== =========
CLASS A SHARES:
Proceeds from shares issued............................... $ 26,070 $ 39,340 $ 22,473 $ 54,262
Dividends reinvested...................................... 20,257 4,698 7,155 5,065
Cost of shares redeemed................................... (10,835) (17,325) (8,358) (46,273)
-------- --------- -------- ---------
Change in net assets from Class A Share transactions...... $ 35,492 $ 26,713 $ 21,270 $ 13,054
======== ========= ======== =========
CLASS B SHARES:
Proceeds from shares issued............................... $ 46,028 $ 56,981 $ 21,574 $ 21,249
Dividends reinvested...................................... 24,048 3,781 7,068 3,377
Cost of shares redeemed................................... (6,109) (7,839) (1,871) (2,195)
-------- --------- -------- ---------
Change in net assets from Class B Share transactions...... $ 63,967 $ 52,923 $ 26,771 $ 22,431
======== ========= ======== =========
CLASS C SHARES:
Proceeds from shares issued............................... $ 49 $ -- $ 2 $ --
Dividends reinvested...................................... 4 -- --(a) --
Cost of shares redeemed................................... -- -- -- --
-------- --------- -------- ---------
Change in net assets from Class C Share transactions...... $ 53 $ -- $ 2 $ --
======== ========= ======== =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 6,263 8,322 4,218 11,966
Issued in conversion...................................... 4,595 17,279 3,113 --
Reinvested................................................ 4,105 1,418 2,574 2,790
Redeemed.................................................. (5,032) (16,537) (4,204) (11,005)
-------- --------- -------- ---------
Change in Fiduciary Shares................................ 9,931 10,482 5,701 3,751
======== ========= ======== =========
CLASS A SHARES:
Issued.................................................... 1,300 2,308 1,056 2,954
Reinvested................................................ 1,059 285 365 293
Redeemed.................................................. (542) (1,016) (398) (2,503)
-------- --------- -------- ---------
Change in Class A Shares.................................. 1,817 1,577 1,023 744
======== ========= ======== =========
CLASS B SHARES:
Issued.................................................... 2,336 3,373 1,045 1,212
Reinvested................................................ 1,283 233 375 200
Redeemed.................................................. (312) (462) (91) (125)
-------- --------- -------- ---------
Change in Class B Shares 3,307 3,144 1,329 1,287
======== ========= ======== =========
CLASS C SHARES:
Issued.................................................... 3 -- --(a) --
Reinvested................................................ -- -- --(a) --
Redeemed.................................................. -- -- -- --
-------- --------- -------- ---------
Change in Class C Shares.................................. 3 -- --(a) --
======== ========= ======== =========
</TABLE>
- ------------
(a) Amount is less than 1,000.
Continued
74
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
SMALL CAPITALIZATION FUND INDEX FUND
-------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $ 14,681 $ 9,250 $ 70,214 $ 182,120
Dividends reinvested...................................... 7,886 7,857 7,249 2,570
Cost of shares redeemed................................... (17,122) (23,477) (40,211) (129,185)
-------- -------- -------- ---------
Change in net assets from Fiduciary Share transactions.... $ 5,445 $ (6,370) $ 37,252 $ 55,505
======== ======== ======== =========
CLASS A SHARES:
Proceeds from shares issued............................... $ 1,047 $ 3,550 $ 6,498 $ 5,122
Dividends reinvested...................................... 1,887 1,821 532 167
Cost of shares redeemed................................... (2,537) (6,707) (1,813) (4,769)
-------- -------- -------- ---------
Change in net assets from Class A Share transactions...... $ 397 $ (1,336) $ 5,217 $ 520
======== ======== ======== =========
CLASS B SHARES:
Proceeds from shares issued............................... $ 889 $ 1,436 $ 2,439 $ 4,387
Dividends reinvested...................................... 521 295 358 97
Cost of shares redeemed................................... (335) (590) (894) (1,328)
-------- -------- -------- ---------
Change in net assets from Class B Share transactions...... $ 1,075 $ 1,141 $ 1,903 $ 3,156
======== ======== ======== =========
CLASS C SHARES:
Proceeds from shares issued............................... $ 1 $ -- $ 1 $ --
Dividends reinvested...................................... --(a) -- --(a) --
Cost of shares redeemed................................... -- -- -- --
-------- -------- -------- ---------
Change in net assets from Class C Share transactions...... $ 1 $ -- $ 1 $ --
======== ======== ======== =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 1,178 933 4,338 12,143
Reinvested................................................ 724 821 480 171
Redeemed.................................................. (1,408) (2,352) (2,456) (8,601)
-------- -------- -------- ---------
Change in Fiduciary Shares................................ 494 (598) 2,362 3,713
======== ======== ======== =========
CLASS A SHARES:
Issued.................................................... 84 354 399 337
Reinvested................................................ 173 190 34 11
Redeemed.................................................. (208) (673) (111) (317)
-------- -------- -------- ---------
Change in Class A Shares.................................. 49 (129) 322 31
======== ======== ======== =========
CLASS B SHARES:
Issued.................................................... 73 146 153 297
Reinvested................................................ 48 31 24 7
Redeemed.................................................. (28) (60) (57) (90)
-------- -------- -------- ---------
Change in Class B Shares.................................. 93 117 120 214
======== ======== ======== =========
CLASS C SHARES:
Issued.................................................... --(a) -- --(a) --
Reinvested................................................ --(a) -- --(a) --
Redeemed.................................................. -- -- -- --
-------- -------- -------- ---------
Change in Class C Shares.................................. --(a) -- --(a) --
======== ======== ======== =========
</TABLE>
- ------------
(a) Amount is less than 1,000.
Continued
75
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to a fee, computed daily and paid
monthly, at the annual rate of 0.74% of the average net assets of the Income
Equity Fund, the Value Growth Fund, the Large Company Value Fund, the
Disciplined Value Fund, the Large Company Growth Fund, the Growth
Opportunities Fund, and the Small Capitalization Fund; 0.65% of the average
daily net assets of the Asset Allocation Fund; 0.55% of the average daily net
assets of the International Equity Index Fund; and 0.30% of the average daily
net assets of the Equity Index Fund.
Independence International Associates ("IIA"), an indirect subsidiary of John
Hancock Mutual Life Insurance Company, manages the investment portfolios of
the International Equity Index Fund subject to the supervision of the Advisor
pursuant to a Sub-Advisory Agreement with the Advisor. For its services, IIA
is paid a fee by the Advisor, computed daily and paid monthly, at the annual
rate of 0.275% of average daily net assets up to $10 million, 0.225% of
average daily net assets over $10 million up to $25 million, 0.195% of net
assets over $25 million up to $50 million, 0.125% of the average daily net
assets over $50 million up to $100 million and 0.060% of the average daily
net assets over $100 million.
The Trust and the Administrator, a wholly-owned subsidiary of The BISYS
Group, Inc., are parties to an administrative agreement under which the
Administrator provides services for a fee that is computed daily and paid
monthly, at an annual rate of 0.20% on the first $1.5 billion of Trust net
assets (excluding the Investor Growth Fund, the Investor Growth & Income
Fund, the Investor Conservative Fund, and the Investor Balanced Fund (the
"Investor Funds") and the Treasury Only Money Market Fund and the Government
Money Market Fund (the "Institutional Money Market Funds")); 0.18% on the
next $0.5 billion of Trust net assets (excluding the Investor Funds and the
Institutional Money Market Funds); and 0.16% of Trust net assets (excluding
the Investor Funds and the Institutional Money Market Funds) over $2 billion.
The Advisor also serves as Sub-Administrator to each Fund of the Trust,
pursuant to an agreement between the Administrator and the Advisor. Pursuant
to this agreement, the Advisor performs many of the Administrator's duties,
for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A, Class B, and Class C Shares are subject to
distribution and shareholder services plans (the "Plans") pursuant to Rule
12b-1 under the 1940 Act. As provided in the Plans, the Trust will pay the
Distributor a fee of 0.35% of the average daily net assets of Class A Shares
of each of the Funds and 1.00% of the average daily net assets of the Class B
Shares 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 six months ended December 31, 1997, the
Distributor received $10,266,499 from commissions earned on sales of Class A
Shares and redemptions of Class B Shares and Class C Shares, of which, the
Distributor re-allowed $10,245,443 to affiliated broker-dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
76
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the six months ended December 31, 1997,
fees in the following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12B-1 FEES
ADVISORY FEES ADMINISTRATION WAIVED
WAIVED FEES WAIVED CLASS A
------------- --------------- ----------
<S> <C> <C> <C>
Asset Allocation Fund.................................. $ 93 $ 84 $18
Income Equity Fund..................................... -- -- 45
Equity Index Fund...................................... 890 385 64
Value Growth Fund...................................... -- -- 27
Large Company Value Fund............................... -- -- 8
Disciplined Value...................................... -- -- 13
Large Company Growth Fund.............................. -- -- 71
Growth Opportunities................................... -- -- 29
Small Capitalization Fund.............................. -- 28 9
International Equity Index Fund........................ -- -- 8
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the six months
ended December 31, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -------
<S> <C> <C>
Asset Allocation Fund....................................... $51,766 $43,731
Income Equity Fund.......................................... 40,852 88,441
Equity Index Fund........................................... 180,380 27,969
Value Growth Fund........................................... 185,169 176,507
Large Company Value Fund.................................... 148,915 188,801
Disciplined Value Fund...................................... 235,213 302,398
Large Company Growth Fund................................... 524,166 501,605
Growth Opportunities Fund................................... 631,975 637,031
Small Capitalization Fund................................... 38,381 51,925
International Equity Index Fund............................. 64,120 34,817
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as options, futures, indexed
securities and sales of forward foreign currency contracts involves risks in
excess of the amounts reflected in the Statements of Assets and Liabilities.
The face or contract amounts reflect the extent of the involvement the Funds
have in the particular class of instrument. Risks associated with these
instruments include an imperfect correlation between the movements in the
price of the instruments and the price of the underlying securities and
interest rates, an illiquid secondary market for the instruments or inability
of counterparties to perform under the terms of the contract, and changes in
the value of currency relative to the U.S. dollar. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuations in the
value of securities.
Continued
77
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
The following is a summary of option activity for the six months ended
December 31, 1997 by the Large Company Value Fund (amounts in thousands):
<TABLE>
<CAPTION>
LARGE COMPANY VALUE
FUND
----------------------
SHARES
SUBJECT
TO CONTRACT PREMIUMS
----------- --------
<S> <C> <C>
COVERED CALL OPTIONS
Balance at beginning of period............................ 0 $ 0
Options written........................................... 200 256
Options closed............................................ 0 0
Options expired........................................... 0 0
Options exercised......................................... 0 0
----- -------
Options outstanding at end of period...................... 200 $ 256
===== =======
</TABLE>
7. CONCENTRATION OF CREDIT RISK:
The International Equity Index Fund has a relatively large concentration of
securities invested in companies domiciled in Japan. The Fund may be more
susceptible to the political, social and economic events adversely affecting
the Japanese companies than funds not so concentrated.
8. CONVERSION OF COMMON TRUST FUNDS:
On December 19, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net assets value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
SHARES NET ASSETS NET ASSET VALUE UNREALIZED
ISSUED CONVERTED PER SHARE ISSUED APPRECIATION
------ ---------- ---------------- ------------
<S> <C> <C> <C> <C>
Income Equity Fund................ 3,342 $ 70,389 $21.06 $ 23,821
Large Company Growth Fund......... 4,595 81,659 17.77 33,084
Growth Opportunities Fund......... 3,113 57,769 18.56 15,137
</TABLE>
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following is
a summary of shares issued, net assets converted, net assets value per share
issued and unrealized appreciation of assets acquired as of the conversion
date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
SHARES NET ASSETS NET ASSET VALUE UNREALIZED
ISSUED CONVERTED PER SHARE ISSUED APPRECIATION
------ ---------- ---------------- ------------
<S> <C> <C> <C> <C>
Asset Allocation Fund............. 3,076 $ 37,254 $12.11 $ 8,361
Income Equity Fund................ 14,913 283,942 19.04 150,438
Large Company Value Fund.......... 4,655 63,222 13.58 7,315
Disciplined Value Fund............ 3,333 48,296 14.49 7,763
Large Company Growth Fund......... 17,279 289,603 16.76 102,448
</TABLE>
Continued
78
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
------------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993(A)
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 12.98 $ 11.71 $ 10.73 $ 9.64 $ 10.06 $ 10.00
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income................. 0.20 0.43 0.41 0.38 0.29 0.07
Net realized and unrealized gains
(losses) from investments........... 1.04 1.81 1.16 1.12 (0.38) 0.06
------- ------- ------- ------- ------- -------
Total from Investment Activities.... 1.24 2.24 1.57 1.50 (0.09) 0.13
------- ------- ------- ------- ------- -------
Distributions:
Net investment income................. (0.20) (0.43) (0.41) (0.37) (0.29) (0.07)
Net realized gains.................... (1.43) (0.54) (0.18) (0.04) (0.04) --
------- ------- ------- ------- ------- -------
Total Distributions................. (1.63) (0.97) (0.59) (0.41) (0.33) (0.07)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD......................... $ 12.59 $ 12.98 $ 11.71 $ 10.73 $ 9.64 $ 10.06
======= ======= ======= ======= ======= =======
Total Return............................ 9.86%(b) 20.16% 14.87% 16.06% (1.01)% 5.45%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $94,794 $94,971 $50,323 $37,658 $42,751 $30,441
Ratio of expenses to average net
assets.............................. 0.84%(c) 0.80% 0.94% 1.06% 1.06% 0.90%(c)
Ratio of net investment income to
average net assets.................. 3.14%(c) 3.55% 3.58% 3.72% 2.91% 3.03%(c)
Ratio of expenses to average net
assets *............................ 1.03%(c) 1.00% 1.19% 1.31% 1.33% 1.34%(c)
Ratio of net investment income to
average net assets *................ 2.95%(c) 3.35% 3.33% 3.47% 2.64% 2.59%(c)
Portfolio turnover (d)................ 24.80% 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid (e)...... $0.0553 $0.0497 $0.0616
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions has not occurred, the ratios would have been as indicated.
(a) Fiduciary Shares commenced offering on April 5, 1993.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
79
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993(A)
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 13.00 $ 11.72 $ 10.74 $ 9.65 $ 10.06 $ 10.00
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income................. 0.19 0.39 0.37 0.35 0.27 0.05
Net realized and unrealized gains
(losses) from investments........... 1.03 1.83 1.16 1.13 (0.38) 0.07
------- ------- ------- ------- ------- -------
Total from Investment Activities.... 1.22 2.22 1.53 1.48 (0.11) 0.12
------- ------- ------- ------- ------- -------
Distributions:
Net investment income................. (0.19) (0.40) (0.37) (0.34) (0.26) (0.06)
In excess of net investment income.... -- -- -- (0.01) -- --
Net realized gains.................... (1.43) (0.54) (0.18) (0.04) (0.04) --
------- ------- ------- ------- ------- -------
Total Distributions................. (1.62) (0.94) (0.55) (0.39) (0.30) (0.06)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD......................... $ 12.60 $ 13.00 $ 11.72 $ 10.74 $ 9.65 $ 10.06
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).... 9.63%(b) 19.85% 14.48% 15.76% (1.19)% 5.23%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $38,874 $31,379 $17,849 $ 4,745 $ 1,691 $ 571
Ratio of expenses to average net
assets.............................. 1.09%(c) 1.05% 1.19% 1.31% 1.33% 1.15%(c)
Ratio of net investment income to
average net assets.................. 2.89%(c) 3.30% 3.33% 3.57% 2.68% 2.84%(c)
Ratio of expenses to average net
assets *............................ 1.38%(c) 1.34% 1.54% 1.66% 1.67% 1.62%(c)
Ratio of net investment income to
average net assets *................ 2.60%(c) 3.01% 2.98% 3.22% 2.34% 2.37%(c)
Portfolio turnover (d)................ 24.80% 80.96% 73.38% 115.36% 56.55% 4.05%
Average commission rate paid (e)...... $0.0553 $0.0497 $0.0616
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions has not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on April 2, 1993.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
80
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
-----------------------------------------------------------------
CLASS B
-----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 13.04 $ 11.76 $ 10.76 $ 9.67 $ 10.37
------- ------- ------- ------- -------
Investment Activities:
Net investment income................................ 0.14 0.30 0.28 0.27 0.08
Net realized and unrealized gains
(losses) from investments.......................... 1.04 1.83 1.18 1.14 (0.70)
------- ------- ------- ------- -------
Total from Investment Activities................... 1.18 2.13 1.46 1.41 (0.62)
------- ------- ------- ------- -------
Distributions:
Net investment income................................ (0.14) (0.31) (0.28) (0.27) (0.08)
In excess of net investment income................... -- -- -- (0.01) --
Net realized gains................................... (1.43) (0.54) (0.18) (0.04) --
------- ------- ------- ------- -------
Total Distributions................................ (1.57) (0.85) (0.46) (0.32) (0.08)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD......................... $ 12.65 $ 13.04 $ 11.76 $ 10.76 $ 9.67
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)................... 9.29%(b) 18.90% 13.79% 14.90% (5.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................... $69,790 $43,900 $18,575 $ 3,019 $ 1,862
Ratio of expenses to average net assets.............. 1.84%(c) 1.81% 1.94% 2.07% 2.40%(c)
Ratio of net investment income to average net
assets............................................. 2.14%(c) 2.54% 2.58% 2.77% 1.99%(c)
Ratio of expenses to average net assets *............ 2.03%(c) 2.01% 2.19% 2.31% 2.40%(c)
Ratio of net investment income to average net assets
*.................................................. 1.95%(c) 2.34% 2.33% 2.52% 1.99%(c)
Portfolio turnover (d)............................... 24.80% 80.96% 73.38% 115.36% 56.55%
Average commission rate paid (e)..................... $0.0553 $0.0497 $0.0616
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions has not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced operations on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
81
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
-----------------------------------------------------------------------------------
FIDUCIARY
-----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 21.93 $ 17.65 $ 15.13 $ 13.22 $ 13.21 $ 12.24
-------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income............ 0.17 0.36 0.40 0.40 0.39 0.43
Net realized and unrealized gains
(losses) from investments...... 1.79 4.89 3.22 2.28 0.01 0.97
-------- -------- -------- -------- -------- --------
Total from Investment
Activities.................. 1.96 5.25 3.62 2.68 0.40 1.40
-------- -------- -------- -------- -------- --------
Distributions:
Net investment income............ (0.17) (0.36) (0.40) (0.40) (0.39) (0.43)
Net realized gains............... (2.23) (0.61) (0.70) (0.37) -- --
-------- -------- -------- -------- -------- --------
Total Distributions............ (2.40) (0.97) (1.10) (0.77) (0.39) (0.43)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.................... $ 21.49 $ 21.93 $ 17.65 $ 15.13 $ 13.22 $ 13.21
======== ======== ======== ======== ======== ========
Total Return....................... 9.30%(a) 30.90% 24.53% 21.04% 3.27% 11.56%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).......................... $689,912 $649,007 $321,827 $170,919 $198,787 $153,144
Ratio of expenses to average net
assets......................... 1.02%(b) 1.00% 0.98% 1.01% 0.98% 0.90%
Ratio of net investment income to
average net assets............. 1.53%(b) 1.91% 2.44% 2.85% 3.18% 3.37%
Ratio of expenses to average net
assets *....................... 1.02%(b) 1.00% 1.01% 1.01% 1.05% 1.07%
Ratio of net investment income to
average net assets *........... 1.53%(b) 1.91% 2.41% 2.85% 3.11% 3.20%
Portfolio turnover (c)........... 5.01% 28.18% 14.92% 4.03% 22.69% 7.53%
Average commission rate paid
(d)............................ $ 0.0693 $ 0.0681 $ 0.0673
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
82
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 21.90 $ 17.64 $ 15.11 $ 13.20 $ 13.20 $ 12.23
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income................. 0.14 0.31 0.38 0.03 0.36 0.40
Net realized and unrealized gains
(losses) from investments........... 1.80 4.87 3.20 2.29 0.00 0.98
------- ------- ------- ------- ------- -------
Total from Investment Activities 1.94 5.18 3.58 2.32 0.36 1.38
------- ------- ------- ------- ------- -------
Distributions:
Net investment income................. (0.14) (0.31) (0.35) (0.03) (0.34) (0.41)
In excess of net investment income.... -- -- -- (0.01) (0.02) --
Net realized gains.................... (2.23) (0.61) (0.70) (0.37) -- --
------- ------- ------- ------- ------- -------
Total Distributions................. (2.37) (0.92) (1.05) (0.41) (0.36) (0.41)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD......................... $ 21.47 $ 21.90 $ 17.64 $ 15.11 $ 13.20 $ 13.20
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).... 9.23%(a) 30.39% 24.23% 20.79% 2.95% 11.38%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $96,787 $78,976 $44,284 $13,793 $12,054 $ 9,513
Ratio of expenses to average net
assets.............................. 1.27%(b) 1.25% 1.23% 1.26% 1.23% 1.11%
Ratio of net investment income to
average net assets.................. 1.28%(b) 1.65% 2.19% 2.61% 3.01% 3.32%
Ratio of expenses to average net
assets *............................ 1.37%(b) 1.34% 1.36% 1.36% 1.40% 1.43%
Ratio of net investment income to
average net assets *................ 1.18%(b) 1.56% 2.06% 2.51% 2.84% 3.00%
Portfolio turnover (c)................ 5.01% 28.18% 14.92% 4.03% 22.69% 7.53%
Average commission rate paid (d)...... $0.0693 $0.0681 $0.0673
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
83
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
-----------------------------------------------------------------
CLASS B
-----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................. $ 21.95 $ 17.68 $ 15.14 $ 13.23 $ 13.83
-------- ------- ------- ------- -------
Investment Activities:
Net investment income........................... 0.06 0.17 0.24 0.26 0.11
Net realized and unrealized gains
(losses) from investments..................... 1.78 4.89 3.23 2.29 (0.60)
-------- ------- ------- ------- -------
Total from Investment Activities.............. 1.84 5.06 3.47 2.55 (0.49)
-------- ------- ------- ------- -------
Distributions:
Net investment income........................... (0.06) (0.18) (0.23) (0.25) (0.11)
In excess of net investment income.............. -- -- -- (0.02) --
Net realized gains.............................. (2.23) (0.61) (0.70) (0.37) --
-------- ------- ------- ------- -------
Total Distributions........................... (2.29) (0.79) (0.93) (0.64) (0.11)
-------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................... $ 21.50 $ 21.95 $ 17.68 $ 15.14 $ 13.23
======== ======= ======= ======= =======
Total Return (Excludes Sales Charge).............. 8.73%(b) 29.48% 23.41% 19.91% (3.37)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............... $118,646 $79,518 $29,169 $ 3,468 $ 1,714
Ratio of expenses to average net assets......... 2.01%(c) 2.00% 1.98% 2.01% 1.95%(c)
Ratio of net investment income to average net
assets........................................ 0.54%(c) 0.89% 1.44% 1.88% 2.70%(c)
Ratio of expenses to average net assets *....... 2.01%(c) 2.00% 2.01% 2.02% 1.95%(c)
Ratio of net investment income to average net
assets *...................................... 0.54%(c) 0.89% 1.41% 1.87% 2.70%(c)
Portfolio turnover (d).......................... 5.01% 28.18% 14.92% 4.03% 22.69%
Average commission rate paid (e)................ $ 0.0693 $0.0681 $0.0673
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
84
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
-------------------
CLASS C
-------------------
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997(A)
-------------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 21.40
-------------------
Investment Activities:
Net investment income..................................... 0.02
Net realized and unrealized gains (losses) from
investments............................................ 0.82
-------------------
Total from Investment Activities....................... 0.84
-------------------
Distributions:
Net investment income..................................... (0.03)
Net realized gains........................................ (0.70)
-------------------
Total Distributions.................................... (0.73)
-------------------
NET ASSET VALUE,
END OF PERIOD............................................. $ 21.51
===================
Total Return (Excludes Sales Charge)........................ 3.95%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 357
Ratio of expenses to average net assets................... 2.01%(c)
Ratio of net investment income to average net assets...... 0.54%(c)
Portfolio turnover (d).................................... 5.01%
Average commission rate paid (e).......................... $ 0.0693
</TABLE>
- ------------
(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.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged.
See notes to financial statements.
85
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
----------------------------------------------------------------------------------
FIDUCIARY
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $ 21.80 $ 16.66 $ 14.03 $ 11.59 $ 11.92 $ 10.92
-------- -------- -------- -------- -------- -------
Investment Activities:
Net investment income............. 0.17 0.35 0.33 0.32 0.29 0.30
Net realized and unrealized gains
(losses) from investments....... 2.09 5.27 3.16 2.59 (0.20) 1.13
-------- -------- -------- -------- -------- -------
Total from Investment
Activities................... 2.26 5.62 3.49 2.91 0.09 1.43
-------- -------- -------- -------- -------- -------
Distributions:
Net investment income............. (0.17) (0.33) (0.33) (0.29) (0.29) (0.30)
In excess of net investment
income.......................... -- -- (0.01) (0.02) (0.04) --
Net realized gains................ (0.63) (0.15) (0.52) (0.16) (0.09) (0.13)
-------- -------- -------- -------- -------- -------
Total Distributions............. (0.80) (0.48) (0.86) (0.47) (0.42) (0.43)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD..................... $ 23.26 $ 21.80 $ 16.66 $ 14.03 $ 11.59 $ 11.92
======== ======== ======== ======== ======== =======
Total Return........................ 10.47%(a) 34.30% 25.47% 25.79% 0.63% 13.04%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................... $567,634 $480,819 $321,058 $234,895 $165,370 $96,446
Ratio of expenses to average net
assets.......................... 0.35%(b) 0.30% 0.30% 0.33% 0.46% 0.50%
Ratio of net investment income to
average net assets.............. 1.50%(b) 1.87% 2.18% 2.57% 2.44% 2.46%
Ratio of expenses to average net
assets *........................ 0.64%(b) 0.61% 0.59% 0.66% 0.59% 0.87%
Ratio of net investment income to
average net assets *............ 1.21%(b) 1.56% 1.89% 2.24% 2.31% 2.09%
Portfolio turnover (c)............ 3.34% 5.81% 9.08% 2.71% 11.81% 2.71%
Average commission rate paid
(d)............................. $ 0.0609 $ 0.0449 $ 0.0490
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
86
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
---------------------------------------------------------------------------
CLASS A
---------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ------- ------- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................... $ 21.81 $ 16.67 $ 14.02 $11.59 $11.91 $10.92
-------- ------- ------- ------ ------ ------
Investment Activities:
Net investment income.................... 0.14 0.29 0.27 0.29 0.28 0.30
Net realized and unrealized gains
from investments....................... 2.08 5.28 3.18 2.58 (0.20) 1.10
-------- ------- ------- ------ ------ ------
Total from Investment Activities....... 2.22 5.57 3.45 2.87 0.08 1.40
-------- ------- ------- ------ ------ ------
Distributions:
Net investment income.................... (0.14) (0.28) (0.27) (0.28) (0.27) (0.28)
In excess of net investment income....... -- -- (0.01) -- (0.04) --
Net realized gains....................... (0.63) (0.15) (0.52) (0.16) (0.09) (0.13)
-------- ------- ------- ------ ------ ------
Total Distributions.................... (0.77) (0.43) (0.80) (0.44) (0.40) (0.41)
-------- ------- ------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................ $ 23.26 $ 21.81 $ 16.67 $14.02 $11.59 $11.91
======== ======= ======= ====== ====== ======
Total Return (Excludes Sales Charge)....... 10.28%(a) 33.94% 25.16% 25.43% 0.56% 12.75%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........ $150,595 $98,338 $32,186 $3,003 $1,416 $ 512
Ratio of expenses to average net
assets................................. 0.60%(b) 0.55% 0.55% 0.56% 0.62% 0.52%
Ratio of net investment income to average
net assets............................. 1.26%(b) 1.59% 1.93% 2.38% 2.37% 2.51%
Ratio of expenses to average net assets
*...................................... 0.99%(b) 0.95% 0.94% 1.01% 0.94% 0.99%
Ratio of net investment income to average
net assets *........................... 0.87%(b) 1.19% 1.54% 1.94% 2.05% 2.04%
Portfolio turnover (c)................... 3.34% 5.81% 9.08% 2.71% 11.81% 2.71%
Average commission rate paid (d)......... $ 0.0609 $0.0449 $0.0490
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
87
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
----------------------------------------------------------------
CLASS B
----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------
1997 1997 1996 1995 1994(A)
------------ -------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 21.80 $ 16.68 $ 14.05 $11.61 $12.39
-------- -------- ------- ------ ------
Investment Activities:
Net investment income.................................. 0.06 0.16 0.16 0.18 0.09
Net realized and unrealized gains (losses)
from investments..................................... 2.09 5.27 3.16 2.61 (0.78)
-------- -------- ------- ------ ------
Total from Investment Activities..................... 2.15 5.43 3.32 2.79 (0.69)
-------- -------- ------- ------ ------
Distributions:
Net investment income.................................. (0.07) (0.16) (0.16) (0.19) (0.09)
In excess of net investment income..................... -- -- (0.01) -- --
Net realized gains..................................... (0.63) (0.15) (0.52) (0.16) --
-------- -------- ------- ------ ------
Total Distributions.................................. (0.70) (0.31) (0.69) (0.35) (0.09)
-------- -------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD........................... $ 23.25 $ 21.80 $ 16.68 $14.05 $11.61
======== ======== ======= ====== ======
Total Return (Excludes Sales Charge)..................... 9.95%(b) 32.93% 24.05% 24.58% (5.57)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...................... $240,865 $168,699 $38,538 $1,408 $ 248
Ratio of expenses to average net assets................ 1.35%(c) 1.30% 1.30% 1.34% 1.10%(c)
Ratio of net investment income to average net assets... 0.50%(c) 0.83% 1.18% 1.60% 2.08%(c)
Ratio of expenses to average net assets *.............. 1.64%(c) 1.61% 1.59% 1.67% 1.15%(c)
Ratio of net investment income to average net assets
*.................................................... 0.21%(c) 0.52% 0.89% 1.27% 2.03%(c)
Portfolio turnover (d)................................. 3.34% 5.81% 9.08% 2.71% 11.81%
Average commission rate paid (e)....................... $ 0.0609 $ 0.0449 $0.0490
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
88
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
CLASS C
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997 (A)
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 22.60
-------
Investment Activities:
Net investment income..................................... 0.02
Net realized and unrealized gains (losses) from
investments............................................. 0.78
-------
Total from Investment Activities........................ 0.80
-------
Distributions:
Net investment income..................................... (0.02)
Net realized gains........................................ (0.12)
-------
Total Distributions..................................... (0.14)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 23.26
=======
Total Return (Excludes Sales Charge)........................ 3.54%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 152
Ratio of expenses to average net assets................... 1.35%(c)
Ratio of net investment income to average net assets...... 0.50%(c)
Ratio of expenses to average net assets *................. 1.64%(c)
Ratio of net investment income to average net assets *.... 0.21%(c)
Portfolio turnover (d).................................... 3.34%
Average commission rate paid (e).......................... $0.0609
</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.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged.
See notes to financial statements.
89
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
----------------------------------------
FIDUCIARY
----------------------------------------
SIX MONTHS YEAR MARCH 26,
ENDED ENDED 1996 TO
DECEMBER 31, JUNE 30, JUNE 30,
1997 1997 1996 (A)
------------ -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.51 $ 10.39 $ 10.00
-------- -------- --------
Investment Activities:
Net investment income..................................... 0.04 0.11 0.03
Net realized and unrealized gains (losses) from
investments............................................. 1.40 2.85 0.39
-------- -------- --------
Total from Investment Activities........................ 1.44 2.96 0.42
-------- -------- --------
Distributions:
Net investment income..................................... (0.04) (0.11) (0.03)
Net realized gains........................................ (1.36) (1.73) --
-------- -------- --------
Total Distributions..................................... (1.40) (1.84) (0.03)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.55 $ 11.51 $ 10.39
======== ======== ========
Total Return................................................ 12.77%(c) 31.97% 10.49%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $505,228 $430,837 $191,212
Ratio of expenses to average net assets................... 0.99%(d) 0.98% 0.95%(d)
Ratio of net investment income to average net assets...... 0.75%(d) 1.06% 1.13%(d)
Ratio of expenses to average net assets *................. 0.99%(d) 1.00% 1.04%(d)
Ratio of net investment income to average net assets *.... 0.75%(d) 1.04% 1.04%(d)
Portfolio turnover (e).................................... 34.44% 113.17% 65.21%
Average commission rate paid (f).......................... $ 0.0561 $ 0.0532 $ 0.0373
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period from
March 26, 1996 through June 30, 1996.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the years.
See notes to financial statements.
90
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------
SIX MONTHS SEVEN MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED NOVEMBER 30,
DECEMBER 31, JUNE 30, JUNE 30, --------------------------------
1997 1997 1996(A) 1995 1994 1993
------------ ---------- ------------ -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 11.50 $ 10.39 $ 11.15 $ 9.00 $ 10.02 $ 9.42
-------- ------- ------- -------- -------- --------
Investment Activities:
Net investment income................. 0.03 0.09 0.94 0.12 0.13 0.11
Net realized and unrealized gains
(losses) from investments........... 1.40 2.83 0.08 2.44 (0.56) 0.83
-------- ------- ------- -------- -------- --------
Total from Investment Activities.... 1.43 2.92 1.02 2.56 (0.43) 0.94
-------- ------- ------- -------- -------- --------
Distributions:
Net investment income................. (0.03) (0.08) (0.94) (0.12) (0.14) (0.12)
In excess of net investment income.... -- -- (0.01) -- -- --
Net realized gains.................... (1.36) (1.73) (0.83) (0.29) (0.45) (0.22)
-------- ------- ------- -------- -------- --------
Total Distributions................. (1.39) (1.81) (1.78) (0.41) (0.59) (0.34)
-------- ------- ------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD.......... $ 11.54 $ 11.50 $ 10.39 $ 11.15 $ 9.00 $ 10.02
======== ======= ======= ======== ======== ========
Total Return (Excludes Sales Charge).... 12.63%(b) 31.53% 10.40%(b) 29.57% (4.32)% 10.13%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $ 59,719 $47,306 $35,984 $217,978 $173,198 $171,141
Ratio of expenses to average net
assets.............................. 1.24%(c) 1.23% 0.97%(c) 0.95% 0.96% 0.96%
Ratio of net investment income to
average net assets.................. 0.50%(c) 0.83% 0.85%(c) 1.25% 1.34% 1.21%
Ratio of expenses to average net
assets *............................ 1.34%(c) 1.34% 1.05%(c) 0.95% 0.96% 0.96%
Ratio of net investment income to
average net assets *................ 0.40%(c) 0.72% 0.77%(c) 1.25% 1.34% 1.21%
Portfolio turnover (d)................ 34.44% 113.17% 65.21% 77.00% 53.00% 66.00%
Average commission rate paid (e)...... $ 0.0561 $0.0532 $0.0373
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of the One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Financial highlights for the periods prior to
March 26, 1996 represent the Paragon Value Growth Fund. The per share data
for the periods prior to March 26, 1996 have been restated to reflect the
impact of restatement of net asset value from $15.26 to $10.00 effective
March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
91
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH FUND
--------------------------------------------------------------------------
CLASS B
--------------------------------------------------------------------------
SIX MONTHS SEVEN MONTHS SEPTEMBER 9,
ENDED YEAR ENDED ENDED YEAR ENDED 1994 TO
DECEMBER 31, JUNE 30, JUNE 30, NOVEMBER 30, NOVEMBER 30,
1997 1997 1996(A) 1995 1994(B)
------------ ---------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 11.47 $ 10.39 $ 11.16 $ 9.01 $ 9.85
------- ------- ------- ------- -------
Investment Activities:
Net investment income................. (0.01) 0.01 0.91 0.05 0.02
Net realized and unrealized gains
(losses) from investments........... 1.39 2.82 0.07 2.46 (0.84)
------- ------- ------- ------- -------
Total from Investment Activities.... 1.38 2.83 0.98 2.51 (0.82)
------- ------- ------- ------- -------
Distributions:
Net investment income................. -- (0.02) (0.91) (0.07) (0.02)
In excess of net investment income.... -- -- (0.01) -- --
Net realized gains.................... (1.36) (1.73) (0.83) (0.29) --
------- ------- ------- ------- -------
Total Distributions................. (1.36) (1.75) (1.75) (0.36) (0.02)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD......................... $ 11.49 $ 11.47 $ 10.39 $ 11.16 $ 9.01
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).... 12.22% (c) 30.52% 9.96%(c) 28.74% (8.31)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $14,607 $10,517 $ 4,673 $ 2,923 $ 412
Ratio of expenses to average net
assets.............................. 1.99% (d) 1.98% 1.86%(d) 1.70% 1.71% (d)
Ratio of net investment income to
average net assets.................. (0.25)%(d) 0.07% 0.13%(d) 0.38% 0.76% (d)
Ratio of expenses to average net
assets *............................ 1.99% (d) 2.00% 1.94%(d) 1.70% 1.71% (d)
Ratio of net investment income to
average net assets *................ (0.25)%(d) 0.05% 0.05%(d) 0.38% 0.76% (d)
Portfolio turnover (e)................ 34.44% 113.17% 65.21% 77.00% 53.00%
Average commission rate paid (f)...... $0.0561 $0.0532 $0.0373
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of the One Group, the Paragon Value Growth Fund
became the Value Growth Fund. Financial highlights for the periods prior to
March 26, 1996 represent the Paragon Value Growth Fund. The per share data
for the periods prior to March 26, 1996 have been restated to reflect the
impact of restatement of net asset value from $15.21 to $10.00 effective
March 26, 1996.
(b) Class B Shares commenced offering September 9, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
92
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE GROWTH
FUND
------------
CLASS C
------------
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997(A)
------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.76
-------
Investment Activities:
Net realized and unrealized gains from investments
(losses)............................................... 0.41
-------
Total from Investment Activities.......................... 0.41
-------
Distributions:
Net realized gains........................................ (0.63)
-------
Total Distributions.................................... (0.63)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.54
=======
Total Return (Excludes Sales Charge)........................ (3.48)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 1
Ratio of expenses to average net assets................... 1.99% (c)
Ratio of net investment income to average net assets...... (0.25)%(c)
Portfolio turnover (d).................................... 34.44%
Average commission rate paid (e).......................... $0.0561
</TABLE>
- ------------
(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.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged.
See notes to financial statements.
93
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
-----------------------------------------------------------------------------------
FIDUCIARY
-----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 14.79 $ 12.83 $ 12.87 $ 11.34 $ 11.64 $ 11.34
-------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income............ 0.11 0.27 0.31 0.31 0.20 0.18
Net realized and unrealized gains
(losses) from investments...... 1.33 3.01 1.20 2.18 (0.01) 0.58
-------- -------- -------- -------- -------- --------
Total from Investment
Activities.................. 1.44 3.28 1.51 2.49 0.19 0.76
-------- -------- -------- -------- -------- --------
Distributions:
Net investment income............ (0.11) (0.26) (0.31) (0.32) (0.19) (0.18)
Net realized gains............... (0.93) (1.06) (1.24) (0.64) (0.30) (0.28)
-------- -------- -------- -------- -------- --------
Total Distributions............ (1.04) (1.32) (1.55) (0.96) (0.49) (0.46)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.................... $ 15.19 $ 14.79 $ 12.83 $ 12.87 $ 11.34 $ 11.64
======== ======== ======== ======== ======== ========
Total Return....................... 9.82%(a) 27.10% 12.71% 23.42% (1.59)% 6.73%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).......................... $709,375 $686,156 $584,527 $365,376 $169,127 $132,833
Ratio of expenses to average net
assets......................... 0.96%(b) 0.97% 0.97% 1.00% 0.95% 0.86%
Ratio of net investment income to
average net assets............. 1.40%(b) 1.99% 2.43% 2.74% 1.72% 1.62%
Ratio of expenses to average net
assets *....................... 0.96%(b) 0.97% 0.98% 1.01% 1.02% 1.12%
Ratio of net investment income to
average net assets *........... 1.40%(b) 1.99% 2.42% 2.73% 1.65% 1.36%
Portfolio turnover (c)........... 21.89% 77.05% 186.84% 203.13% 111.72% 51.75%
Average commission rate paid
(d)............................ $ 0.0595 $ 0.0575 $ 0.0415
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
94
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
---------------------------------------------------------------------------
CLASS A
---------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ------- ------- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD...................... $ 14.85 $ 12.87 $ 12.89 $11.34 $11.64 $11.33
------- ------- ------- ------ ------ ------
Investment Activities:
Net investment income.................... 0.09 0.23 0.27 0.28 0.17 0.16
Net realized and unrealized gains
(losses) from investments.............. 1.33 3.04 1.22 2.20 (0.01) 0.59
------- ------- ------- ------ ------ ------
Total from Investment Activities....... 1.42 3.27 1.49 2.48 0.16 0.75
------- ------- ------- ------ ------ ------
Distributions:
Net investment income.................... (0.09) (0.23) (0.27) (0.27) (0.16) (0.16)
In excess of net investment income....... -- -- -- (0.02) -- --
Net realized gains....................... (0.93) (1.06) (1.24) (0.64) (0.30) (0.28)
------- ------- ------- ------ ------ ------
Total Distributions.................... (1.02) (1.29) (1.51) (0.93) (0.46) (0.44)
------- ------- ------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................ $ 15.25 $ 14.85 $ 12.87 $12.89 $11.34 $11.64
======= ======= ======= ====== ====== ======
Total Return (Excludes Sales Charge)....... 9.65%(a) 26.90% 12.40% 22.64% 1.35% 6.64%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........ $17,408 $14,832 $ 9,380 $3,481 $ 698 $ 451
Ratio of expenses to average net
assets................................. 1.21%(b) 1.22% 1.22% 1.25% 1.20% 1.10%
Ratio of net investment income to average
net assets............................. 1.15%(b) 1.72% 2.18% 2.52% 1.57% 1.41%
Ratio of expenses to average net assets
*...................................... 1.31%(b) 1.31% 1.33% 1.37% 1.37% 1.50%
Ratio of net investment income to average
net assets *........................... 1.05%(b) 1.63% 2.07% 2.41% 1.40% 1.01%
Portfolio turnover (c)................... 21.89% 77.05% 186.84% 203.13% 111.72% 51.75%
Average commission rate paid (d)......... $0.0595 $0.0575 $0.0415
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
95
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY VALUE FUND
-----------------------------------------------------------------
CLASS B
-----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................... $ 14.95 $ 12.98 $ 12.96 $11.41 $11.87
------- ------- ------- ------ ------
Investment Activities:
Net investment income......................... 0.04 0.14 0.18 0.17 0.05
Net realized and unrealized gains (losses)
from investments............................ 1.33 3.04 1.26 2.19 (0.46)
------- ------- ------- ------ ------
Total from Investment Activities............ 1.37 3.18 1.44 2.36 (0.41)
------- ------- ------- ------ ------
Distributions:
Net investment income......................... (0.05) (0.15) (0.18) (0.17) (0.05)
Net realized gains............................ (0.93) (1.06) (1.24) (0.64) --
------- ------- ------- ------ ------
Total Distributions......................... (0.98) (1.21) (1.42) (0.81) (0.05)
------- ------- ------- ------ ------
NET ASSET VALUE,
END OF PERIOD................................. $ 15.34 $ 14.95 $ 12.98 $12.96 $11.41
======= ======= ======= ====== ======
Total Return (Excludes Sales Charge)............ 9.25%(b) 25.86% 11.95% 22.28% 3.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............. $12,814 $ 9,288 $ 4,135 $ 861 $ 182
Ratio of expenses to average net assets....... 1.96%(c) 1.97% 1.97% 2.00% 2.00%(c)
Ratio of net investment income to average
net assets.................................. 0.39%(c) 0.96% 1.43% 1.74% 1.06%(c)
Ratio of expenses to average net assets *..... 1.96%(c) 1.97% 1.98% 2.01% 2.00%(c)
Ratio of net investment income to average
net assets *................................ 0.39%(c) 0.96% 1.42% 1.72% 1.06%(c)
Portfolio turnover (d)........................ 21.89% 77.05% 186.84% 203.13% 111.72%
Average commission rate paid (e).............. $0.0595 $0.0575 $0.0415
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
96
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
-----------------------------------------------------------------------------------
FIDUCIARY
-----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 15.65 $ 14.69 $ 13.20 $ 11.90 $ 12.76 $ 11.49
-------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income............ 0.08 0.22 0.29 0.28 0.26 0.28
Net realized and unrealized gains
from investments............... 3.17 2.57 2.27 1.57 0.29 1.27
-------- -------- -------- -------- -------- --------
Total from Investment
Activities.................. 3.25 2.79 2.56 1.85 0.55 1.55
-------- -------- -------- -------- -------- --------
Distributions:
Net investment income............ (0.08) (0.22) (0.29) (0.27) (0.26) (0.28)
Net realized gains............... (2.74) (1.61) (0.78) (0.28) (1.15) --
-------- -------- -------- -------- -------- --------
Total Distributions............ (2.82) (1.83) (1.07) (0.55) (1.41) (0.28)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.................... $ 16.08 $ 15.65 $ 14.69 $ 13.20 $ 11.90 $ 12.76
======== ======== ======== ======== ======== ========
Total Return....................... 21.58%(a) 20.56% 20.10% 16.03% 4.04% 13.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).......................... $591,390 $562,302 $522,474 $448,530 $418,238 $211,785
Ratio of expenses to average net
assets......................... 0.97%(b) 0.98% 0.99% 1.00% 0.93% 0.89%
Ratio of net investment income to
average net assets............. 0.91%(b) 1.52% 2.04% 2.21% 2.14% 2.30%
Ratio of expenses to average net
assets *....................... 0.97%(b) 0.98% 1.00% 1.10% 0.98% 1.08%
Ratio of net investment income to
average net assets *........... 0.91%(b) 1.52% 2.03% 2.11% 2.09% 2.11%
Portfolio turnover (c)........... 39.06% 92.66% 90.55% 176.66% 56.33% 108.79%
Average commission rate paid
(d)............................ $ 0.0595 $ 0.0601 $ 0.0576
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
97
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 15.68 $ 14.72 $ 13.22 $ 11.91 $ 12.75 $ 11.49
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income................. 0.06 0.19 0.25 0.24 0.24 0.25
Net realized and unrealized gains from
investments......................... 3.18 2.57 2.28 1.59 0.30 1.26
------- ------- ------- ------- ------- -------
Total from Investment Activities.... 3.24 2.76 2.53 1.83 0.54 1.51
------- ------- ------- ------- ------- -------
Distributions:
Net investment income................. (0.06) (0.19) (0.25) (0.24) (0.23) (0.25)
Net realized gains.................... (2.74) (1.61) (0.78) (0.26) (1.10) --
In excess of net realized gains....... -- -- -- (0.02) (0.05) --
------- ------- ------- ------- ------- -------
Total Distributions................. (2.80) (1.80) (1.03) (0.52) (1.38) (0.25)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD......................... $ 16.12 $ 15.68 $ 14.72 $ 13.22 $ 11.91 $ 12.75
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).... 21.47%(a) 20.21% 19.80% 15.43% 3.95% 13.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $29,367 $23,909 $20,838 $13,560 $10,448 $ 3,435
Ratio of expenses to average net
assets.............................. 1.22%(b) 1.23% 1.24% 1.26% 1.18% 1.12%
Ratio of net investment income to
average net assets.................. 0.66%(b) 1.26% 1.79% 1.99% 2.00% 2.06%
Ratio of expenses to average net
assets *............................ 1.32%(b) 1.31% 1.35% 1.36% 1.33% 1.46%
Ratio of net investment income to
average net assets *................ 0.56%(b) 1.18% 1.68% 1.89% 1.85% 1.72%
Portfolio turnover (c)................ 39.06% 92.66% 90.55% 176.66% 56.33% 108.79%
Average commission rate paid (d)...... $0.0595 $0.0601 $0.0576
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
98
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DISCIPLINED VALUE FUND
-----------------------------------------------------------------
CLASS B
-----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................. $ 15.64 $ 14.69 $ 13.19 $ 11.90 $12.60
------- ------- ------- ------- ------
Investment Activities:
Net investment income........................... -- 0.08 0.15 0.15 0.07
Net realized and unrealized gains from
investments................................... 3.17 2.55 2.27 1.58 (0.70)
------- ------- ------- ------- ------
Total from Investment Activities.............. 3.17 2.63 2.42 1.73 (0.63)
------- ------- ------- ------- ------
Distributions:
Net investment income........................... (0.01) (0.07) (0.14) (0.15) (0.06)
In excess of net investment income.............. -- -- -- (0.01) (0.01)
Net realized gains.............................. (2.74) (1.61) (0.78) (0.28) --
------- ------- ------- ------- ------
Total Distributions........................... (2.75) (1.68) (0.92) (0.44) (0.07)
------- ------- ------- ------- ------
NET ASSET VALUE,
END OF PERIOD................................... $ 16.06 $ 15.64 $ 14.69 $ 13.19 $11.90
======= ======= ======= ======= ======
Total Return (Excludes Sales Charge).............. 21.02% (b) 19.19% 18.93% 14.92% (5.00)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............... $25,238 $20,499 $16,305 $11,222 $5,356
Ratio of expenses to average net assets......... 1.97% (c) 1.98% 1.99% 2.00% 1.96%(c)
Ratio of net investment income to average net
assets........................................ (0.10)%(c) 0.51% 1.04% 1.26% 1.80%(c)
Ratio of expenses to average net assets *....... 1.97% (c) 1.98% 2.00% 2.01% 1.96%(c)
Ratio of net investment income to average
net assets *.................................. (0.10)%(c) 0.51% 1.03% 1.25% 1.80%(c)
Portfolio turnover (d).......................... 39.06% 92.66% 90.55% 176.66% 56.33%
Average commission rate paid (e)................ $0.0595 $0.0601 $0.0576
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
99
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
------------------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ---------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............. $ 19.44 $ 15.44 $ 13.47 $ 11.32 $ 10.92 $ 9.85
---------- ---------- -------- -------- -------- -------
Investment Activities:
Net investment income........... 0.03 0.12 0.18 0.20 0.20 0.23
Net realized and unrealized
gains from investments........ 1.67 4.79 2.14 3.04 0.67 1.12
---------- ---------- -------- -------- -------- -------
Total from Investment
Activities................. 1.70 4.91 2.32 3.24 0.87 1.35
---------- ---------- -------- -------- -------- -------
Distributions:
Net investment income........... (0.02) (0.11) (0.18) (0.20) (0.20) (0.23)
Net realized gains.............. (2.88) (0.80) (0.17) (0.89) (0.27) (0.05)
---------- ---------- -------- -------- -------- -------
Total Distributions........... (2.90) (0.91) (0.35) (1.09) (0.47) (0.28)
---------- ---------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD................... $ 18.24 $ 19.44 $ 15.44 $ 13.47 $ 11.32 $ 10.92
========== ========== ======== ======== ======== =======
Total Return...................... 9.03%(a) 33.11% 17.36% 21.85% 8.04% 13.92%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)......................... $1,253,716 $1,142,864 $745,986 $531,595 $150,035 $41,317
Ratio of expenses to average net
assets........................ 1.01%(b) 0.99% 0.96% 1.00% 0.78% 0.39%
Ratio of net investment income
to average net assets......... 0.34%(b) 0.69% 1.20% 1.72% 1.87% 2.24%
Ratio of expenses to average net
assets *...................... 1.01%(b) 0.99% 0.99% 1.00% 1.13% 1.43%
Ratio of net investment income
to average net assets *....... 0.34%(b) 0.69% 1.17% 1.72% 1.52% 1.21%
Portfolio turnover (c).......... 34.66% 57.17% 35.51% 14.22% 9.04% 10.61%
Average commission rate paid
(d)........................... $ 0.0564 $ 0.0681 $ 0.0647
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
100
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
-------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................... $ 19.92 $ 15.83 $ 13.83 $ 11.62 $11.78
-------- -------- ------- ------- ------
Investment Activities:
Net investment income......................... 0.01 0.08 0.14 0.17 0.04
Net realized and unrealized gains (losses)
from investments............................ 1.71 4.88 2.17 3.10 (0.16)
-------- -------- ------- ------- ------
Total from Investment Activities............ 1.72 4.96 2.31 3.27 (0.12)
-------- -------- ------- ------- ------
Distributions:
Net investment income......................... (0.01) (0.07) (0.14) (0.16) (0.04)
In excess of net investment income............ -- -- -- (0.01) --
Net realized gains............................ (2.88) (0.80) (0.17) (0.89) --
-------- -------- ------- ------- ------
Total Distributions......................... (2.89) (0.87) (0.31) (1.06) (0.04)
-------- -------- ------- ------- ------
NET ASSET VALUE,
END OF PERIOD................................. $ 18.75 $ 19.92 $ 15.83 $ 13.83 $11.62
======== ======== ======= ======= ======
Total Return (Excludes Sales Charge)............ 8.87% (b) 32.57% 16.85% 21.52% (1.02)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............. $152,579 $125,910 $75,114 $27,428 $ 368
Ratio of expenses to average net assets....... 1.26% (c) 1.24% 1.21% 1.26% 1.25%(c)
Ratio of net investment income to average
net assets.................................. 0.09% (c) 0.44% 0.95% 1.49% 1.78%(c)
Ratio of expenses to average net assets *..... 1.36% (c) 1.32% 1.34% 1.36% 1.35%(c)
Ratio of net investment income to average net
assets *.................................... (0.01)%(c) 0.36% 0.82% 1.39% 1.68%(c)
Portfolio turnover (d)........................ 34.66% 57.17% 35.51% 14.22% 9.04%
Average commission rate paid (e).............. $ 0.0564 $ 0.0681 $0.0647
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on January 1, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
101
<PAGE>
----------------------------------------------------------------------------
The One Group Family of Mutual Funds
----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE COMPANY GROWTH FUND
------------------------------------------------------------------
CLASS B
------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- -------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................... $ 19.61 $ 15.63 $ 13.63 $11.47 $11.57
-------- -------- ------- ------ ------
Investment Activities:
Net investment income (loss).................. (0.04) (0.04) 0.05 0.09 0.03
Net realized and unrealized gains (losses)
from
investments................................. 1.66 4.82 2.17 3.06 (0.10)
-------- -------- ------- ------ ------
Total from Investment Activities............ 1.62 4.78 2.22 3.15 (0.07)
-------- -------- ------- ------ ------
Distributions:
Net investment income......................... -- -- (0.05) (0.09) (0.03)
In excess of net investment income............ -- -- -- (0.01) --
Net realized gains............................ (2.88) (0.80) (0.17) (0.89) --
-------- -------- ------- ------ ------
Total Distributions......................... (2.88) (0.80) (0.22) (0.99) (0.03)
-------- -------- ------- ------ ------
NET ASSET VALUE,
END OF PERIOD................................. $ 18.35 $ 19.61 $ 15.63 $13.36 $11.47
======== ======== ======= ====== ======
Total Return (Excludes Sales Charge)............ 8.49% (b) 31.74% 16.41% 20.65% (0.66)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............. $184,424 $132,268 $56,261 $6,918 $ 334
Ratio of expenses to average net assets....... 2.01% (c) 2.00% 1.96% 2.01% 1.99%(c)
Ratio of net investment income to average net
assets...................................... (0.65)%(c) (0.33)% 0.20% 0.74% 0.96%(c)
Ratio of expenses to average net assets *..... 2.01% (c) 2.00% 1.99% 2.01% 1.99%(c)
Ratio of net investment income to average
net assets *................................ (0.65)%(c) (0.33)% 0.17% 0.74% 0.96%(c)
Portfolio turnover (d)........................ 34.66% 57.17% 35.51% 14.22% 9.04%
Average commission rate paid (e).............. $ 0.0564 $ 0.0681 $0.0647
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
102
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE
COMPANY
GROWTH FUND
------------
CLASS C
------------
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997(A)
------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 18.98
-------
Investment Activities:
Net investment income (loss).............................. (0.01)
Net realized and unrealized gains from investments........ 0.58
-------
Total from Investment Activities....................... 0.57
-------
Distributions:
Net realized gains........................................ (1.34)
-------
Total Distributions.................................... (1.34)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 18.21
=======
Total Return (Excludes Sales Charge)........................ 2.98% (b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 50
Ratio of expenses to average net assets................... 2.01% (c)
Ratio of net investment income to average net assets...... (0.65)%(c)
Portfolio turnover (d).................................... 34.66%
Average commission rate paid (e).......................... $0.0564
</TABLE>
- ------------
(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.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged.
See notes to financial statements.
103
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
------------------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $ 19.46 $ 18.81 $ 18.40 $ 15.96 $ 16.96 $ 14.54
-------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income (loss)...... (0.04) 0.25 0.20 0.06 0.07 0.06
Net realized and unrealized gains
from investments................ 2.60 3.59 3.83 2.98 (0.05) 2.99
-------- -------- -------- -------- -------- --------
Total from Investment
Activities................... 2.56 3.84 4.03 3.04 0.02 3.05
-------- -------- -------- -------- -------- --------
Distributions:
Net investment income............. -- (0.27) (0.20) (0.06) (0.07) (0.06)
Net realized gains................ (2.58) (2.92) (3.42) (0.54) (0.95) (0.57)
-------- -------- -------- -------- -------- --------
Total Distributions............. (2.58) (3.19) (3.62) (0.60) (1.02) (0.63)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD...... $ 19.44 $ 19.46 $ 18.81 $ 18.40 $ 15.96 $ 16.96
======== ======== ======== ======== ======== ========
Total Return........................ 13.23% (a) 22.75% 24.63% 19.75% (0.16)% 21.36%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................... $733,898 $623,911 $532,525 $413,518 $389,567 $232,898
Ratio of expenses to average net
assets.......................... 1.01% (b) 0.99% 1.00% 0.98% 0.98% 0.89%
Ratio of net investment income to
average net assets.............. (0.43)%(b) 1.32% 1.15% 0.38% 0.42% 0.41%
Ratio of expenses to average net
assets *........................ 1.01% (b) 0.99% 1.01% 0.98% 1.03% 1.11%
Ratio of net investment income to
average net assets *............ (0.43)%(b) 1.32% 1.14% 0.38% 0.37% 0.19%
Portfolio turnover (c)............ 82.27% 301.35% 435.30% 132.63% 70.67% 64.64%
Average commission rate paid
(d)............................. $ 0.0594 $ 0.0386 $ 0.0451
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
104
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
------------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $ 19.37 $ 18.76 $ 18.36 $ 15.93 $ 16.96 $ 14.54
-------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income (loss)...... (0.04) 0.21 0.17 0.02 0.04 0.03
Net realized and unrealized gains
(losses) from investments....... 2.55 3.58 3.80 2.98 (0.08) 3.00
-------- -------- -------- -------- -------- --------
Total from Investment
Activities................... 2.51 3.79 3.97 3.00 (0.04) 3.03
-------- -------- -------- -------- -------- --------
Distributions:
Net investment income............. -- (0.26) (0.15) (0.01) (0.03) (0.04)
In excess of net investment
income.......................... -- -- -- (0.02) (0.01) --
Net realized gains................ (2.58) (2.92) (3.42) (0.54) (0.95) (0.57)
-------- -------- -------- -------- -------- --------
Total Distributions (2.58) (3.18) (3.57) (0.57) (0.99) (0.61)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD...... $ 19.30 $ 19.37 $ 18.76 $ 18.36 $ 15.93 $ 16.96
======== ======== ======== ======== ======== ========
Total Return (Excludes Sales
Charge)........................... 13.03% (a) 22.52% 24.32% 19.50% (0.52)% 21.70%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................... $ 62,939 $ 43,370 $ 28,052 $ 11,178 $ 8,097 $ 5,757
Ratio of expenses to average net
assets.......................... 1.26% (b) 1.25% 1.25% 1.23% 1.22% 1.11%(b)
Ratio of net investment income to
average net assets.............. (0.66)%(b) 0.92% 0.90% 0.12% 0.27% 0.25%(b)
Ratio of expenses to average net
assets *........................ 1.36% (b) 1.34% 1.36% 1.33% 1.38% 1.48%(b)
Ratio of net investment income to
average net assets *............ (0.76)%(b) 0.83% 0.79% 0.02% 0.11% (0.12)%(b)
Portfolio turnover (c)............ 82.27% 301.35% 435.30% 132.63% 70.67% 64.64%
Average commission rate paid (d) $ 0.0594 $ 0.0386 $ 0.0451
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(d) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
105
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES FUND
-------------------------------------------------------------------
CLASS B
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------
1997 1997 1996 1995 1994(A)
-------------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 18.82 $ 18.43 $ 18.14 $ 15.85 $ 17.44
------- ------- ------- ------- -------
Investment Activities:
Net investment income (loss)................... (0.07) 0.11 0.09 (0.07) (0.02)
Net realized and unrealized gains from
investments.................................. 2.43 3.44 3.69 2.90 (1.56)
------- ------- ------- ------- -------
Total from Investment Activities............. 2.36 3.55 3.78 2.83 (1.58)
------- ------- ------- ------- -------
Distributions:
Net investment income.......................... -- (0.22) (0.07) -- (0.01)
In excess of net investment income............. -- (0.02) -- -- --
Net realized gains............................. (2.58) (2.92) (3.42) (0.54) --
------- ------- ------- ------- -------
Total Distributions.......................... (2.58) (3.16) (3.49) (0.54) (0.01)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD................... $ 18.60 $ 18.82 $ 18.43 $ 18.14 $ 15.85
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)............. 12.60% (b) 21.73% 23.53% 18.47% (9.07)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).............. $61,686 $37,409 $12,910 $ 2,787 $ 1,131
Ratio of expenses to average net assets........ 2.01% (c) 2.00% 2.00% 1.98% 2.12%(c)
Ratio of net investment income to average
net assets................................... (1.41)%(c) 0.01% 0.15% (0.63)% (0.55)%(c)
Ratio of expenses to average net assets *...... 2.01% (c) 2.00% 2.01% 1.98% 2.12%(c)
Ratio of net investment income to average net
assets *..................................... (1.41)%(c) 0.01% 0.14% (0.63)% (0.55)%(c)
Portfolio turnover (d)......................... 82.27% 301.35% 435.30% 132.63% 70.67%
Average commission rate paid (e)............... $0.0594 $0.0386 $0.0451
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
106
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH
OPPORTUNITIES
FUND
-------------
CLASS C
-------------
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997(A)
-------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 21.47
-------
Investment Activities:
Net investment income (loss).............................. (0.03)
Net realized and unrealized gains from investments........ (0.25)
-------
Total from Investment Activities....................... (0.28)
-------
Distributions:
Net realized gains........................................ (1.78)
-------
Total Distributions.................................... (1.78)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 19.41
=======
Total Return (Excludes Sales Charge)........................ (1.07)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 2
Ratio of expenses to average net assets................... 2.01% (c)
Ratio of net investment income to average net assets...... (1.41)%(c)
Portfolio turnover (d).................................... 82.27%
Average commission rate paid (e).......................... $0.0594
</TABLE>
- ------------
(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.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged.
See notes to financial statements.
107
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SMALL CAPITALIZATION FUND
-----------------------------------------
FIDUCIARY
-----------------------------------------
SIX MONTHS YEAR MARCH 26,
ENDED ENDED 1996 TO
DECEMBER 31, JUNE 30, JUNE 30,
1997 1997 1996 (A)
------------ -------- ---------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 10.94 $ 10.75 $ 10.00
------- ------- -------
Investment Activities:
Net investment income (loss)........................ (0.01) (0.02) --
Net realized and unrealized gains (losses) from
investments...................................... 1.74 1.31 0.78
------- ------- -------
Total from Investment Activities................. 1.73 1.29 0.78
------- ------- -------
Distributions:
Net realized gains.................................. (1.33) (1.10) (0.03)
------- ------- -------
Total Distributions.............................. (1.33) (1.10) (0.03)
------- ------- -------
NET ASSET VALUE, END OF PERIOD........................ $ 11.34 $ 10.94 $ 10.75
======= ======= =======
Total Return.......................................... 16.30% (b) 13.44% 13.39%(b)(c)
======= ======= =======
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................... $86,817 $78,318 $83,371
Ratio of expenses to average net assets............. 1.08% (d) 1.02% 0.96%(d)
Ratio of net investment income to average net
assets........................................... (0.26)%(d) (0.16)% (0.16)%(d)
Ratio of expenses to average net assets *........... 1.13% (d) 1.12% 1.05%(d)
Ratio of net investment income to average net assets
*................................................ (0.31)%(d) (0.26)% (0.25)%(d)
Portfolio turnover (e).............................. 36.86% 92.01% 59.57%
Average commission rate paid (f).................... $0.0667 $0.0676 $0.0685
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Not annualized.
(c) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period from
March 26, 1996 through June 30, 1996.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
108
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SMALL CAPITALIZATION FUND
----------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------
SIX MONTHS YEAR SEVEN MONTHS
ENDED ENDED ENDED YEAR ENDED JUNE 30,
DECEMBER 31, JUNE 30, JUNE 30, ---------------------------
1997 1997 1996 (A) 1995 1994 1993
------------ -------- ------------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 10.94 $ 10.73 $ 11.50 $ 9.36 $ 10.11 $ 9.48
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income (loss).......... (0.03) (0.04) (0.07) (0.04) (0.04) (0.02)
Net realized and unrealized gains
(losses)
from investments.................... 1.75 1.35 1.40 2.35 (0.63) 0.88
------- ------- ------- ------- ------- -------
Total from Investment Activities.... 1.72 1.31 1.33 2.31 (0.67) 0.86
------- ------- ------- ------- ------- -------
Distributions:
Net investment income................. -- -- -- -- -- (0.01)
Net realized gains.................... (1.33) (1.10) (2.10) (0.17) (0.08) (0.22)
------- ------- ------- ------- ------- -------
Total Distributions................. (1.33) (1.10) (2.10) (0.17) (0.08) (0.23)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.......... $ 11.33 $ 10.94 $ 10.73 $ 11.50 $ 9.36 $ 10.11
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).... 16.21% (b) 13.52% 12.85% (b) 25.07% (6.66)% 9.10%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $18,477 $17,299 $18,356 $95,467 $77,540 $74,982
Ratio of expenses to average net
assets.............................. 1.32% (c) 1.27% 1.05% (c) 1.03% 1.00% 1.01%
Ratio of net investment income to
average net assets.................. (0.52)%(c) (0.41)% (0.33)%(c) (0.36)% (0.38)% (0.21)%
Ratio of expenses to average net
assets *............................ 1.47% (c) 1.45% 1.07% (c) 1.03% 1.00% 1.01%
Ratio of net investment income to
average net assets *................ (0.67)%(c) (0.59)% (0.35)%(c) (0.36)% (0.38)% (0.21)%
Portfolio turnover (d)................ 36.86% 92.01% 59.57% 65.00% 51.00% 59.00%
Average commission rate paid (e)...... $0.0667 $0.0676 $0.0685
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Financial highlights for the periods
prior to March 26, 1996 represents the Paragon Gulf South Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.70 to $10.00
effective March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
109
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SMALL CAPITALIZATION FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B
---------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS YEAR SEVEN MONTHS YEAR SEPTEMBER
12,
ENDED ENDED ENDED ENDED 1994 TO
DECEMBER 31, JUNE 30, JUNE 30, NOVEMBER 30, NOVEMBER 30,
1997 1997 1996 (A) 1995 1994 (B)
------- ------- ------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................ $ 10.84 $ 10.72 $ 11.56 $ 9.47 $10.40
------- ------- ------- ------ ------
Investment Activities:
Net investment income (loss)....... (0.04) (0.10) (0.06) (0.07) (0.01)
Net realized and unrealized gains
(losses) from investments........ 1.69 1.32 1.35 2.33 (0.92)
------- ------- ------- ------ ------
Total from Investment
Activities..................... 1.65 1.22 1.29 2.26 (0.93)
------- ------- ------- ------ ------
Distributions:
Net realized gains................. (1.33) (1.10) (2.13) (0.17) --
------- ------- ------- ------ ------
Total Distributions.............. (1.33) (1.10) (2.13) (0.17) --
------- ------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD....... $ 11.16 $ 10.84 $ 10.72 $11.56 $ 9.47
======= ======= ======= ====== ======
Total Return (Excludes Sales
Charge)............................ 15.71% (c) 12.74% 12.47% (c) 24.21% (9.08)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)............................ $ 4,987 $ 3,835 $ 2,545 $1,814 $ 231
Ratio of expenses to average net
assets........................... 2.09% (d) 2.02% 1.87% (d) 1.78% 1.75% (d)
Ratio of net investment income to
average net assets............... (1.24)%(d) (1.16)% (1.10)%(d) (1.16)% (0.90)%(d)
Ratio of expenses to average net
assets *......................... 2.14% (d) 2.12% 1.92% (d) 1.78% 1.75% (d)
Ratio of net investment income to
average net assets *............. (1.29)%(d) (1.26)% (1.15)%(d) (1.16)% (0.90)%(d)
Portfolio turnover (e)............. 36.86% 92.01% 59.57% 65.00% 51.00%
Average commission rate paid (f)... $0.0667 $0.0676 $0.0685
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Gulf South Growth
Fund became the Gulf South Growth Fund. Financial highlights for the periods
prior to March 26, 1996 represents the Paragon Gulf South Growth Fund. The
per share data for the periods prior to March 26, 1996 have been restated to
reflect the impact of restatement of net asset value from $15.48 to $10.00
effective March 26, 1996.
(b) Class B Shares commenced offering September 12, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(f) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for
only the last seven months of the year.
See notes to financial statements.
110
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SMALL CAPITALIZATION FUND
--------------------------
CLASS C
--------------------------
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997 (A)
--------------------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.03
-------
Investment Activities:
Net investment income (loss).............................. (0.01)
Net realized and unrealized gains (losses) from
investments............................................. (0.36)
-------
Total from Investment Activities........................ (0.37)
-------
Distributions:
Net realized gains (1.33)
-------
Total Distributions..................................... (1.33)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.33
=======
Total Return (Excludes Sales Charge)........................ (2.43)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 1
Ratio of expenses to average net assets................... 2.09% (c)
Ratio of net investment income to average net assets...... (1.24)%(c)
Ratio of expenses to average net assets *................. 2.14% (c)
Ratio of net investment income to average net assets *.... (1.29)%(c)
Portfolio turnover (d).................................... 36.86%
Average commission rate paid (e).......................... $0.0667
</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.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged.
See notes to financial statements.
111
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
----------------------------------------------------------------------------------
FIDUCIARY
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------------------------------------------------
1997 1997 1996 1995 1994 1993(A)
------------- -------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $ 16.89 $ 15.17 $ 13.93 $ 13.46 $ 11.80 $ 10.00
-------- -------- -------- -------- -------- -------
Investment Activities:
Net investment income............. 0.03 0.15 0.11 0.13 0.11 0.06
Net realized and unrealized gains
(losses) from investments....... (1.24) 2.02 1.43 0.46 1.68 1.75
-------- -------- -------- -------- -------- -------
Total from Investment
Activities................... (1.21) 2.17 1.54 0.59 1.79 1.81
-------- -------- -------- -------- -------- -------
Distributions:
Net investment income............. (0.02) (0.30) (0.16) (0.08) (0.11) (0.01)
In excess of net investment
income.......................... -- -- (0.02) -- -- --
Net realized gains................ (0.43) (0.15) (0.12) (0.04) (0.01) --
In excess of net realized gains... -- -- -- -- (0.01) --
-------- -------- -------- -------- -------- -------
Total Distributions............. (0.45) (0.45) (0.30) (0.12) (0.13) (0.01)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD..................... $ 15.23 $ 16.89 $ 15.17 $ 13.93 $ 13.46 $ 11.80
======== ======== ======== ======== ======== =======
Total Return........................ (7.16)%(b) 14.64% 11.22% 4.20% 15.44% 26.96%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................... $441,609 $449,949 $347,790 $218,299 $145,640 $35,384
Ratio of expenses to average net
assets.......................... 0.91% (c) 0.86% 0.97% 1.04% 1.02% 1.22%(c)
Ratio of net investment income to
average net assets.............. 0.31% (c) 1.00% 1.04% 1.25% 1.27% 1.37%(c)
Ratio of expenses to average net
assets *........................ 0.91% (c) 0.86% 1.00% 1.04% 1.02% 2.34%(c)
Ratio of net investment income to
average net assets *............ 0.31% (c) 1.00% 1.01% 1.25% 1.27% 0.25%(c)
Portfolio turnover (d)............ 7.57% 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid
(e)............................. $ 0.0047 $ 0.0034 $ 0.0022
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Fiduciary Shares commenced offering on April 5, 1993.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
112
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993(A)
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 16.92 $ 15.16 $ 13.92 $ 13.49 $ 11.80 $ 11.74
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income.................. 0.04 0.11 0.14 0.12 0.09 0.02
Net realized and unrealized gains
(losses) from investments............ (1.28) 2.03 1.40 0.43 1.67 0.04
------- ------- ------- ------- ------- -------
Total from Investment Activities..... (1.24) 2.14 1.54 0.55 1.76 0.06
------- ------- ------- ------- ------- -------
Distributions:
Net investment income.................. -- (0.23) (0.16) (0.08) (0.05) --
In excess of net investment income..... -- -- (0.02) -- -- --
Net realized gains..................... (0.43) (0.15) (0.12) (0.04) (0.02) --
------- ------- ------- ------- ------- -------
Total Distributions.................. (0.43) (0.38) (0.30) (0.12) (0.07) --
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........... $ 15.25 $ 16.92 $ 15.16 $ 13.92 $ 13.49 $ 11.80
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)..... (7.31)%(b) 14.31% 11.20% 3.87% 15.18% 2.87%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...... $16,236 $12,562 $10,789 $ 5,028 $ 2,395 $ 153
Ratio of expenses to average net
assets............................... 1.16% (c) 1.11% 1.22% 1.28% 1.26% 1.47%(c)
Ratio of net investment income to
average net assets................... 0.03% (c) 0.73% 0.79% 1.09% 1.15% 2.10%(c)
Ratio of expenses to average net assets
*.................................... 1.27% (c) 1.19% 1.35% 1.38% 1.36% 2.35%(c)
Ratio of net investment income to
average net assets *................. (0.08)%(c) 0.65% 0.66% 0.99% 1.05% 1.22%(c)
Portfolio turnover (d)................. 7.57% 9.61% 6.28% 4.67% 7.74% 3.10%
Average commission rate paid (e)....... $0.0047 0.0034 0.0022
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on April 2, 1993.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
113
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX FUND
----------------------------------------------------------------
CLASS B
----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............................. $ 16.44 $ 14.79 $ 13.73 $13.40 $13.00
------- ------- ------- ------ ------
Investment Activities:
Net investment income (loss)..................... (0.01) 0.09 0.03 0.03 0.06
Net realized and unrealized gains (losses) from
investments.................................... (1.24) 1.86 1.32 0.41 0.34
------- ------- ------- ------ ------
Total from Investment Activities............... (1.25) 1.95 1.35 0.44 0.40
------- ------- ------- ------ ------
Distributions:
Net investment income............................ -- (0.15) (0.15) (0.07) --
In excess of net investment income............... -- -- (0.02) -- --
Net realized gains............................... (0.43) (0.15) (0.12) (0.04) --
------- ------- ------- ------ ------
Total Distributions............................ (0.43) (0.30) (0.29) (0.11) --
------- ------- ------- ------ ------
NET ASSET VALUE,
END OF PERIOD.................................... $ 14.76 $ 16.44 $ 14.79 $13.73 $13.40
======= ======= ======= ====== ======
Total Return (Excludes Sales Charge)............... (7.61)%(b) 13.37% 9.97% 3.17% 3.23%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................ $10,784 $10,033 $ 5,856 $3,687 $1,872
Ratio of expenses to average net assets.......... 1.91% (c) 1.86% 1.97% 2.04% 2.00%(c)
Ratio of net investment income to average net
assets......................................... (0.69)%(c) 0.08% 0.04% 0.25% 1.37%(c)
Ratio of expenses to average net assets *........ 1.91% (c) 1.86% 2.00% 2.04% 2.00%(c)
Ratio of net investment income to average net
assets *....................................... (0.69)%(c) 0.08% 0.01% 0.25% 1.37%(c)
Portfolio turnover (d)........................... 7.57% 9.61% 6.28% 4.67% 7.74%
Average commission rate paid (e)................. $0.0047 $0.0034 $0.0022
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged. For
the year ended June 30, 1996, the average commission was calculated for only
the last seven months of the year.
See notes to financial statements.
114
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY
INDEX FUND
-------------
CLASS C
-------------
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997(A)
-------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 15.70
-------
Investment Activities:
Net investment income (loss).............................. (0.03)
Net realized and unrealized gains (losses) from
investments............................................ (0.14)
-------
Total from Investment Activities....................... (0.17)
-------
Distributions:
Net realized gains........................................ (0.30)
-------
Total Distributions.................................... (0.30)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 15.23
=======
Total Return (Excludes Sales Charge)........................ (1.07)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 1
Ratio of expenses to average net assets................... 1.91% (c)
Ratio of net investment income to average net assets...... (0.69)%(c)
Portfolio turnover (d).................................... 0.0757
Average commission rate paid (e).......................... $0.0047
</TABLE>
- ------------
(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.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio security transactions divided by the total number of
portfolio shares purchased and sold for which commissions were charged.
See notes to financial statements.
115
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
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, including
management fees and expenses,
you may obtain a prospectus from
The One Group Services Company.
Read the prospectus carefully
before investing.
BANC ONE
INVESTMENT [LOGO]
ADVISORS
CORPORATION
TOG-F-033-AN(6/97)
<PAGE>
Municipal
Income Funds
Semi-Annual Report
For the six months ended December 31, 1997
INTERMEDIATE TAX-FREE BOND FUND
MUNICIPAL INCOME FUND
KENTUCKY MUNICIPAL BOND FUND
OHIO MUNICIPAL BOND FUND
LOUISIANA MUNICIPAL BOND FUND
WEST VIRGINIA MUNICIPAL BOND FUND
ARIZONA MUNICIPAL BOND FUND
[THE ONE GROUP FAMILY OF MUTUAL FUNDS LOGO]
<PAGE>
- -------------------------------------------------------------------
| IMPORTANT CUSTOMER INFORMATION. INVESTMENT PRODUCTS: |
| |
| o are not deposits or obligations of, or guaranteed by, |
| BANC ONE CORPORATION or any of its affiliates. ---- |
| FDIC |
| o are not insured by the FDIC, and LOGO |
| ---- |
| o are subject to investment risks, including possible |
| loss of the principal amount invested. |
| |
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Report From Your Investment Advisor........................................ 2
Portfolio Performance Review............................................... 4
Schedules of Portfolio Investments......................................... 7
Statements of Assets and Liabilities....................................... 61
Statements of Operations................................................... 63
Statements of Changes in Net Assets........................................ 65
Notes to Financial Statements.............................................. 68
Financial Highlights....................................................... 77
1
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
We are pleased to present this semiannual report for The One Group(R) Family of
Mutual Funds. On the following pages, you will find an overview of the financial
markets and your fund's performance for the period from July 1, 1997, through
December 31, 1997.
DEAR VALUED SHAREHOLDER:
Thank you for continuing to support The One Group Family of Mutual Funds during
an interesting, challenging and ultimately rewarding year for investors.
Despite strong volatility throughout 1997 and turmoil in Asia, the Dow Jones
Industrial Average was up 24.94% for 1997. Never before had the index returned
more than 20% for three consecutive years. The S&P 500 Index soared even higher,
closing the year up 33.36%.
At the same time, and largely the result of low inflation, a strong U.S. dollar
and the flight to quality spurred by the Asian crisis, U.S. bond yields ended
the year on an impressive note. The 30-year Treasury, for example, ended the
year yielding 5.92%, close to its 20-year low. (As bond yields fall, bond prices
go up.)
ONCE AGAIN, A PHILOSOPHY REINFORCED
While the calendar-year returns for both the stock and bond markets are
impressive, events in the final six months of 1997 may be the most memorable. On
August 6, the Dow closed at 8,259, a record high and its peak for the calendar
year. Shortly thereafter, though, volatility rocked the market, as the effects
of the Asian financial crisis worked their way west. These forces culminated on
Monday, October 27, when the Dow plummeted more than 554 points, its
largest-ever point decline.
This drop may be the defining moment for 1997's financial markets, and it
presented a significant challenge for investors. But, rather than panicking,
shareholders of The One Group demonstrated a clear understanding of market
dynamics and the importance of maintaining a long-term investment philosophy.
I am pleased to report that there were no significant redemptions of One Group
shares after "Black Monday." To us, this implies that our investors understand
the potential dangers of selling their investments based on short-term
volatility. In fact, The One Group experienced a record purchase day on Tuesday,
October 28, indicating that investors realize the benefits of staying focused on
the stock market's long-term potential.
TAX BILL CHANGES FACE OF INVESTING
The second half of 1997 may be remembered as much for the jubilance it brought
investors as for the turmoil. The Taxpayer Relief Act of 1997 became law,
ushering in lower capital gains taxes for investors and new investment
opportunities poised to change the face of investing for years to come.
The cut in the capital gains tax rate may make investing in stocks even more
attractive for many investors. As you are planning for your future financial
needs and taking into consideration your appropriate asset allocation, please do
not overlook the impact of the new tax treatment of capital gains.
And, while you're planning for your financial future, take note that the 1997
tax law makes investing in IRAs even more attractive, particularly with the
introduction of the Roth IRA, a new type of account that offers tax-exempt
distributions in retirement. In addition, the Traditional IRA has been enhanced
with many new features.
The One Group can help you incorporate any of these retirement accounts into
your investment plan. Speak to your investment representative or call
1-800-480-4111 for more information on IRAs.
SEEK ADVICE FOR A YEAR'S WORTH OF EVENTS
With 1997's record volatility and the new investment opportunities introduced by
the tax law, now may be an ideal time to meet with your investment professional
and make sure your investment plan remains on track to meet your financial
needs.
As you probably know, your asset allocation--or the way your investment dollars
are strategically distributed among stock, bond and cash investments according
to your goals, risk tolerance and investing time frame--may be the
single-greatest determinant of your long-term investment success. After a year
full of market ups and downs, your asset allocation probably shifted. For
example, stock market appreciation may have caused your allocation to equities
to swing higher than called for in your plan. Your investment professional can
help you evaluate your plan and, if necessary, get it back on track.
2
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Furthermore, your investment representative can help you make the most of the
Taxpayer Relief Act of 1997. Many of the provisions take effect with the 1998
tax year, so make sure you start off the year with the strategy that's most
appropriate for you.
Thank you for investing with The One Group Family of Mutual Funds and for your
ongoing support of the firm's time-tested investment philosophies. We look
forward to helping you achieve your financial goals in 1998 and beyond.
Sincerely,
LOGO
David J. Kundert
President and CEO,
Banc One Investment Advisors Corporation,
Investment Advisor to The One Group
David J. Kundert photo
For a prospectus with more complete information on The One Group Investor Funds,
including management fees and expenses, please contact The One Group at
1-800-480-4111. Please read the prospectus carefully before investing.
(2/98)
3
<PAGE>
The One Group Investor Funds
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
ECONOMIC GROWTH REMAINS STRONG
Despite showing a slight slowdown from the first half of the year, U.S. economic
growth during the second half of 1997 remained robust at a growth rate of 3.7%.
For the entire 12-month period, the U.S. economy grew by a 3.8% growth rate.
Firm employment gains and strong consumer confidence fueled the growth rate. The
unemployment rate headed steadily downward, ending the year at 4.7%. The economy
witnessed an average of 301,500 new non-farm jobs being created per month, when
all that is needed to absorb the growth in the labor force and keep the
unemployment rate steady is 150,000.
LONG-TERM INTEREST RATES DECLINE
Slightly higher inflation in 1996 kept long-term interest rates relatively high
throughout much of 1997. With prices climbing 3.3% on a year-over-year basis in
1996, investors feared that inflation would keep that pace or even climb higher
in 1997.
But, as the year unfolded it became apparent that inflation was, indeed, under
control. For the final six months of the year the inflation rate was 2.0%, and
for the entire year prices were up only 1.7%, the best performance in 11 years.
Low prices helped pave the way for a significant decline in long-term interest
rates by the end of the year. Also significant was the impact of the Asian
financial crisis, which caused currency values to plunge and sent financial
markets into turmoil. As worldwide events unfolded during the second half of the
year, it became clear that the Asian economies would weaken. This caused
investors throughout the world to turn to the safety of U.S. Treasury
securities, which helped drive up prices.
As a result of these events, long-term interest rates showed a significant
decline during the second half of 1997--a decline that was much greater than the
economic fundamentals supported. At the end of the year, the yield on the
30-year U.S. Treasury bond was 5.92%, after starting the year at 6.64% and
climbing to a high of 7.17% in early April.
FED REMAINS IDLE
The Federal Reserve remained on the sidelines during the second half of the
year, after raising interest rates just once in all of 1997--a 0.25% increase of
the federal funds rate in March. This lack of monetary policy action kept
short-term interest rates relatively steady for the remainder of the year.
The impact of the Asian currency crisis and market meltdowns may have
contributed to the Fed's decision to keep rates unchanged in the second half of
1997. While strong economic growth certainly created a valid reason for another
rate hike, the Fed resisted the temptation, figuring that the Asian situation
would contribute to slower growth ahead.
LOOKING AHEAD
In terms of U.S. economic growth, the Asian crisis remains a factor that can't
be ignored. Thirty percent of U.S. exports go to Asia, and with many Asian
countries facing currency devaluations of 35% to 80%, consumers in that region
have significantly less purchasing power. Furthermore, there's the possibility
that this currency crisis could spread to Latin America, where another 20% of
U.S. exports are at risk if there are some currency devaluations.
The United States accounts for 28% of the non-Asian global economy, and,
therefore, should be heavily influenced by the change in trade flows from Asia.
Asian stock markets have dropped nearly 70% over the last several months, which
undoubtedly will be reflected in lower overall consumption, particularly for
foreign imports. And, as prices on goods produced in Asia continue to fall, U.S.
imports from that region should go up.
As a result, cheaper goods coming from Asia, and possibly Latin America, should
force domestic competitors to lower their prices (or face sharply lower sales
prospects). This could push the U.S. inflation rate to as low as 1.5% in 1998,
compared to 1.7% in 1997 and 3.3% in 1996. At the same time, fewer U.S. exports
and greater imports should cause economic growth to slow to a 2% year-over-year
average for 1998.
4
<PAGE>
The One Group Investor Funds
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Given all the instability overseas and the impending effects of a slowdown in
the U.S. economy, we believe that the Federal Reserve will lower interest rates
in 1998, probably sometime in the second half of the year. Long-term interest
rates should continue their downward trend, due to lower inflation and lower
economic growth. By the end of the year, we may see the yield on the 30-year
Treasury bond somewhere between 5.5% and 5.75%.
/s/ Anthony Chan
Anthony Chan, Ph.D.
Managing Director and Chief Economist
Banc One Investment Advisors
5
<PAGE>
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
AS VOLATILITY HEATS UP, INTEREST RATES DECLINE
Volatility initiated by financial and market distress in Asia was the key factor
at work in the bond market during the second half of 1997. As Asian currencies
fell, the credit quality of Yankee bonds (securities that represent
dollar-denominated, foreign-issued debt) deteriorated rapidly, causing the
Yankee bond market to experience substantial losses in select issues.
Furthermore, because credit ratings in the region have been significantly
downgraded, it has been very difficult for Asian governments and corporations to
issue new bonds to finance their ongoing operations.
Long-term U.S. interest rates fell as a result of the immediate flight to
quality and the longer-run implications for slower domestic growth and lower
inflation. The five-year U.S. Treasury, for example, declined by 67 basis points
(one basis point equals 1/100th of a percent) during the period, from 6.37% to
5.70%.
SMART STRATEGIES LEAD TO SOLID FUND RETURNS
In absolute terms, all of The One Group bond funds enjoyed share price increases
and solid total returns due to the declining interest rate environment in the
second half of the year. Funds with longer durations and strong exposure to U.S.
government securities performed the best. (Duration is a measure of a fund's
sensitivity to interest rate changes. A higher number indicates greater
sensitivity; a lower number indicates less sensitivity.) Funds with exposure to
corporate and Yankee bonds posted gains, but they lagged their competitors.
We attribute the funds' relatively strong performance to the strategies we
implemented early in the year. After the first quarter, when yields on 10-year
Treasury bonds approached 7%, we positioned our portfolios to take advantage of
the added yield available as well as the expected decline in rates. That
cautious stance early in the year allowed our fund managers to take advantage of
the weaker market at that time and position their portfolios for the friendlier
market that was to come later in the year.
Furthermore, as we entered 1997, tight yield spreads (or differences in yield
relative to risk) versus Treasuries and the extended length of the business
cycle caused us to take a very cautious stance toward the corporate sector. In
fact, we limited our corporate exposure during the year to securities in the
short to intermediate maturity range, which proved to be an appropriate
strategy. Overall, the corporate sector underperformed Treasuries, but in the
short to intermediate range, corporate performance matched that of the Treasury
market.
Finally, we remained positive toward mortgage-backed securities, which continued
to perform in line with or better than U.S. Treasuries until December, when
spreads widened due to lower mortgage rates and growing prepayment risks.
Overall, mortgages outperformed Treasuries by 92 basis points during the final
six months of the year.
MUNICIPAL MARKET REMAINS FAVORABLE
Technical supply and demand forces remained positive during the period, which
led to solid returns in the municipal bond market. The One Group municipal bond
funds posted relatively strong returns, reinforcing the continued performance
consistency of the fund family's national and state-specific municipal bond
funds.
Compared to the U.S. Treasury market, though, the municipal bond market was
unable to keep pace during the six-month period, as intermediate-term municipal
securities underperformed comparable Treasuries by about 50 basis points.
FLIGHT TO QUALITY BENEFITS MONEY MARKETS
Short-term interest rates remained relatively stable throughout the period. Late
in the year, though, the money markets benefited from reduced supply and the
strong demand that emerged after the financial crisis in Asia. As uncertainty
reigned, investors throughout the world sought safety in the form of
shorter-term, less volatile U.S. money market instruments.
All of The One Group money market funds maintained their stringent quality and
liquidity standards during the period and generated solid returns.
FOCUS REMAINS ON VOLATILITY
Low inflation and slowing domestic growth should lead to lower interest rates in
1998. At the same time, we expect price volatility to increase, which will cause
us to maintain a fairly cautious stance in terms of duration, credit quality and
overall risk management.
While corporate bonds may remain under pressure in 1998, we still expect them to
offer good performance versus other sectors, as corporate America remains strong
and any weakness will likely be modest. Mortgage-backed securities and municipal
securities also may be under pressure due to rising prepayments and refinancing
concerns. Municipals will be aided to some degree by continued strong supply and
demand influences. In the mortgage-sector we will look for issues offering good
structure, or less prepayment risk.
For individual investors, the key to success in this type of environment is to
diversify. Find a portfolio mix that suits your objectives, and stick with it
for the long haul. And remember, volatility can create attractive opportunities,
particularly for those of us who take the time to apply a long-term process and
orientation to our strategic thinking and to our management of money.
LOGO
Gary J. Madich
Senior Managing Director of Fixed-Income Securities
Banc One Investment Advisors Corporation
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
6
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS (103.5%):
Alaska (0.6%):
$ 1,000 Anchorage, GO, 6.00%, 10/1/10,
FGIC............................. $ 1,134
2,000 State Housing Finance, Series A-1,
5.30%, 12/1/12, Callable 12/1/07
@ 102, MBIA...................... 2,018
--------
3,152
--------
Arizona (2.3%):
1,000 Educational Loan Marketing Corp.,
AMT, 7.30%, 9/1/03, Callable
9/1/99 @ 102, MBIA............... 1,057
1,000 Educational Loan Marketing Corp.,
AMT, 7.35%, 9/1/04, Callable
9/1/99 @ 102, MBIA............... 1,056
775 Educational Loan Marketing Corp.,
AMT, 7.38%, 9/1/05, Callable
9/1/99 @ 102, MBIA............... 819
1,105 Maricopa County Development
Authority, Multifamily Housing,
5.65%, 1/1/09, Callable 1/1/07
@ 101............................ 1,134
1,280 Maricopa County Development
Authority, Multifamily Housing,
6.05%, 7/1/17, Callable 1/1/07
@ 101............................ 1,324
700 Phoenix Industrial Development
Authority, 6.00%, 12/1/10,
Callable 12/1/03 @ 102........... 735
2,835 Phoenix Airport Revenue, AMT,
Series D, 6.00%, 7/1/06, MBIA.... 3,121
2,060 Pima County, Arizona Industrial
Development Authority, 5.45%,
4/1/10, Callable 4/1/07 @ 102,
MBIA............................. 2,198
--------
11,444
--------
Arkansas (1.7%):
5,265 Conway Sales & Use Tax, Series A,
5.20%, 12/1/12, Callable 12/1/06
@ 101, FSA....................... 5,376
1,000 Jefferson County, Pollution Control
Revenue, 5.60%, 10/1/17, Callable
12/1/02 @ 102.................... 1,008
1,060 Sebastian County, Community Junior
College, 5.35%, 4/1/10, Callable
4/1/07 @ 101, AMBAC.............. 1,119
1,000 State Capital Appreciation, Series
97A, 0.00%, 6/1/14............... 426
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arkansas, continued:
$ 580 State Development Authority, Single
Family Mortgage Revenue, Series
G, 5.50%, 1/1/10................. $ 601
--------
8,530
--------
California (4.3%):
2,000 ABAG Finance Authority for
Nonprofit Corp., 5.75%, 10/1/17,
Callable 10/1/07 @ 102........... 2,057
2,000 ABAG Finance Authority for
Nonprofit Corp., Multi-Family
Housing Revenue, AMT, 5.70%,
11/1/26, Callable 11/1/06 @
100.............................. 2,115
1,945 ABAG Finance Authority,
Multi-Family Housing Revenue,
AMT, 6.75%, 4/20/07, GNMA........ 2,144
500 Castaic Lake Water Agency,
Certificates Partnership, Water
System Improvement Project,
7.00%, 8/1/04, Callable 8/1/00 @
102, MBIA........................ 547
3,500 Long Beach Harbor, Series A, AMT,
6.00%, 5/15/12, FGIC............. 3,883
1,000 Los Angeles County California
Public Works, 5.13%, 6/1/17,
Callable 6/1/06 @ 101, AMBAC..... 1,000
1,750 Riverside County, 5.75%, 6/1/09.... 1,953
3,000 Sacramento Municipal Utility
District, 5.40%, 11/15/06,
Callable 11/15/03 @ 102, FSA..... 3,167
1,000 San Francisco City & County
Airports, Common International
Airport Revenue, 6.30%, 5/1/11,
Callable 5/1/02 @ 102, AMBAC..... 1,090
1,000 Southern Public Power Authority,
Transmission Project, Revenue,
0.00%, 7/1/15, MBIA.............. 411
1,000 State, 7.00%, 10/1/07.............. 1,206
1,400 State Wide Communities Development,
2.40%, 1/1/09, Callable 1/1/04 @
102, AMBAC....................... 1,368
--------
20,941
--------
Colorado (11.1%):
3,290 Arapahoe County, Capital
Improvements, Project E-470,
0.00%, 8/31/03................... 2,583
1,135 Arapahoe County, School District #
001 Englewood, 0.00%, 11/1/09.... 656
</TABLE>
Continued
7
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 1,580 Boulder County, Revenue, NCAR
Project, 6.90%, 12/1/07, Callable
12/1/01 @ 101.................... $ 1,738
2,000 Boulder Larimer & Weld Counties,
5.00%, 12/15/18, Callable
12/15/07 @ 101, FGIC............. 1,979
3,195 Centennial Water & Sanitation,
Series A, 5.13%, 12/1/12,
Callable 12/1/07 @ 101, FSA...... 3,264
875 Denver City & County, Airport
Revenue, AMT, 6.75%, 11/15/13,
Callable 11/15/02 @ 102,
MBIA-IBC......................... 963
2,000 Denver City & County, Airport
Revenue, Series B, AMT, 5.75%,
11/15/09, Callable 11/15/06 @
102, MBIA........................ 2,176
9,750 Denver City & County, School
District # 1, GO, 0.00%,
12/1/06.......................... 6,508
1,000 Denver City & County, School
District, No. 001, GO Refunding,
6.50%, 12/1/10................... 1,185
3,000 El Paso County, School District,
7.13%, 12/1/19, Callable 12/1/07
@ 125............................ 3,829
1,135 Health Facilities Authority
Revenue, 6.40%, 1/1/10, Callable
1/1/07 @ 101..................... 1,186
370 Housing Finance Authority, 5.25%,
5/1/05........................... 381
255 Housing Finance Authority, AMT,
5.63%, 5/1/04.................... 266
3,220 Housing Finance Authority, GO,
Series A, 6.40%, 8/1/06, Callable
8/1/02 @ 102, MBIA............... 3,404
4,000 Housing Finance Authority,
Multifamily Program, 5.65%,
10/1/15, Callable 1/26/98 @
100.............................. 4,009
3,000 Housing Finance Authority,
Multifamily Program, 5.70%,
10/1/21, Callable 1/26/98 @
100.............................. 3,019
700 Housing Finance Authority,
Refunding, Single Family, Series
D, 5.65%, 12/1/04, Callable
5/1/03 @ 100..................... 725
3,250 Housing Finance Authority, Series
97 B-3, 6.80%, 11/1/28, Callable
5/1/07 @ 105..................... 3,647
250 Housing Finance Authority, Series
C, AMT, 5.00%, 5/1/05............ 253
665 Housing Finance Authority, Single
Family Program, Series F, AMT,
6.75%, 12/1/04................... 694
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 500 Jefferson County, Partnership,
6.45%, 12/1/04, Callable 12/1/02
@ 102, MBIA...................... $ 555
4,000 Meridian Metropolitan District,
7.50%, 12/1/11, Callable 12/1/01
@ 101............................ 4,411
325 Mountain Village Metropolitan
District, San Miguel County,
8.10%, 12/1/11, Callable 12/1/02
@ 101............................ 377
675 Mountain Village Metropolitan
District, San Miguel County,
8.10%, 12/1/11, Prerefunded
12/1/02 @ 101.................... 794
1,535 Pueblo County, Single Family
Mortgage Revenue, 6.40%, 11/1/13,
Callable 11/1/04 @ 102........... 1,626
1,065 Student Obligation, 6.00%,
9/1/01........................... 1,123
740 Student Obligation Bond Authority,
Student Loan Revenue, AMT, 7.25%,
9/1/05, Callable 9/01/00 @ 100... 777
1,250 Summit County, School District No.
1, Refunding, 6.75%, 12/1/04,
FGIC............................. 1,436
--------
53,564
--------
Connecticut (2.2%):
1,000 Bridgeport, Refunding, 6.50%,
9/1/08, AMBAC.................... 1,176
2,100 State Clean Water Fund Revenue,
5.13%, 5/1/18, Callable 5/1/05
@ 101............................ 2,104
1,575 State GO, Series A, 5.30%, 5/15/10,
Callable 5/15/06 @ 101........... 1,658
2,475 State GO, Series B, 6.00%,
10/1/05.......................... 2,753
1,015 State Health & Educational
Facilities, Series 97E, 5.50%,
7/1/09, Callable 7/1/07 @ 102.... 1,067
1,695 State Housing Finance Authority,
6.70%, 11/15/12, Callable
11/15/02 @ 102................... 1,824
--------
10,582
--------
Florida (4.5%):
5 Broward County, Florida Resource
Recovery Revenue, North, 7.95%,
12/1/08, Callable 12/1/99 @
103.............................. 5
1,260 Broward County, Housing Authority,
5.55%, 7/1/09, Callable 7/1/06 @
102.............................. 1,309
1,500 Cape Coral, Special Obligation
Revenue, Water Improvements,
Special Assessment - Water
Utility, 6.38%, 6/1/09, Callable
6/1/02 @ 102, FSA................ 1,644
</TABLE>
Continued
8
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
$ 1,305 Clay County, Housing Finance
Authority Revenue, Single Family
Mortgage, AMT, 6.20%, 9/1/11,
Callable 3/1/05 @ 102............ $ 1,380
1,010 Clay County, Housing Finance
Authority Revenue, Single Family
Mortgage, AMT, 6.25%, 9/1/13,
Callable 3/1/05 @ 102............ 1,068
2,010 Clay County, Housing Financial
Authority, AMT, 5.25%, 10/1/07,
Callable 4/1/07 @ 102............ 2,072
1,000 Dade County, Aviation Revenue,
Series A, 6.00%, 10/1/08,
Callable 10/1/05 @ 102, AMBAC.... 1,111
1,155 Department of Corrections,
Okeechobee Correctional Facility,
6.00%, 3/1/06, Callable 3/1/05 @
102, AMBAC....................... 1,288
2,000 Escambia County, Housing Finance
Authority, Multifamily Housing
Revenue, 5.75%, 4/1/04, Callable
12/30/03 @ 100, GNMA............. 2,052
5,000 Greater Orlando Aviation Authority,
AMT, 5.13%, 10/1/15, Callable
10/1/07 @ 101, FGIC.............. 4,987
1,185 Indian River County, Hospital
Revenue, 5.95%, 10/1/09, Callable
1/1/07 @ 102, FSA................ 1,327
1,285 Indian River County, Hospital
Revenue, 6.00%, 10/1/10, Callable
1/1/07 @ 102, FSA................ 1,399
235 Manatee County, Housing Finance
Authority, Mortgage Revenue,
6.38%, 11/1/05................... 242
530 Manatee County, Housing Finance
Authority, Mortgage Revenue,
6.75%, 11/1/13................... 572
1,000 Orlando Water & Electricity
Revenue, 8.00%, 4/1/03........... 1,178
655 Tampa Water & Sewer Revenue, ETM,
0.00%, 10/1/05................... 486
--------
22,120
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Georgia (0.9%):
$ 1,500 Atlanta Airport Facilities, 6.50%,
1/1/08, AMBAC.................... $ 1,752
1,000 Atlanta Airport Facilities Revenue,
Series A, 6.50%, 1/1/07, AMBAC... 1,156
1,215 Columbus Water & Sewer Revenue,
6.30%, 5/1/06, Callable 11/1/02 @
102, FGIC........................ 1,335
--------
4,243
--------
Hawaii (1.1%):
1,000 Honolulu City & County, GO, Series
A, 5.60%, 4/1/07, FSA............ 1,086
3,500 Honolulu City & County, GO, Series
A, 7.35%, 7/1/08................. 4,336
--------
5,422
--------
Idaho (3.5%):
1,630 Bannock County School District, No.
025, 5.00%, 8/1/10, Callable
8/1/07 @ 100..................... 1,673
1,695 Bannock County School District, No.
025, 5.10%, 8/1/12, Callable
8/1/07 @ 100..................... 1,733
900 Housing Agency, Single Family
Mortgages, Series D1, 5.90%,
7/1/06........................... 943
1,600 Southern Idaho Regional Solid Waste
District, 5.45%, 11/1/13,
Callable 11/1/03 @ 101, LOC:
Credit Local de France........... 1,655
1,515 Student Loan Fund Marketing
Association, Inc., 6.40%,
10/1/99, GSL..................... 1,551
1,000 Student Loan Fund Marketing
Association, Inc., AMT, 5.10%,
4/1/02, GSL...................... 1,011
4,500 Student Loan Fund Marketing
Association, Inc., Series C, AMT,
5.60%, 4/01/07, Callable,
10/01/03 @ 102, GSL.............. 4,731
1,050 Student Loan Fund Marketing
Association, Inc., Student Loan
Revenue, 6.25%, 4/1/98........... 1,053
1,300 University of Idaho, University
Revenue, 5.75%, 4/1/06, FSA...... 1,427
1,060 University of Idaho, University
Revenue, 5.50%, 4/1/13, Callable
4/1/07 @ 101, MBIA............... 1,118
--------
16,895
--------
</TABLE>
Continued
9
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Illinois (6.6%):
$ 1,000 Chicago Metro Water Reclamation
District--Greater Chicago Capital
Improvements, GO, Pre-Refunded,
7.25%, 12/1/12................... $ 1,262
4,245 Chicago Metro Water Reclamation
District--Greater Chicago Capital
Improvements, GO, Pre-Refunded,
6.25%, 12/1/14, Callable 12/1/05
@ 100............................ 4,791
3,045 Chicago Park District, GO, 6.35%,
11/15/08, Callable 11/15/05 @
102, MBIA........................ 3,436
2,585 Chicago Water Revenue, 6.50%,
11/1/10, FGIC.................... 3,050
1,450 Chicago, Single Family Mortgage
Revenue, 0.00%, 10/1/09, Callable
10/1/05 @ 78.60, MBIA............ 711
1,595 Chicago, Single Family Mortgage
Revenue, 0.00%, 10/1/09, Callable
4/1/98 @ 48.84, MBIA............. 720
705 Decatur Economic Development,
7.75%, 6/1/07, Callable 6/1/02 @
102.............................. 798
7,125 Development Finance Authority,
Pollution Control Revenue, 7.25%,
6/1/11, Callable 6/1/01 @ 102.... 7,785
875 Evanston Residential Mortgage,
6.38%, 1/1/09, Callable 7/1/02 @
102, AMBAC....................... 929
458 Health Facilities Authority
Revenue, 7.90%, 8/15/03, Callable
2/10/98 @ 101, MBIA.............. 464
1,645 Health Facilities Authority
Revenue, 6.13%, 11/15/07,
Callable 11/15/04 @ 102, MBIA.... 1,821
1,500 Health Facilities Authority
Revenue, 6.75%, 1/1/10, Callable
1/1/00 @ 102, FGIC............... 1,592
1,125 Kane & De Kalb Counties, School
District #32, 0.00%, 1/1/13,
FGIC............................. 533
2,500 Student Assistance, Student Loan
Revenue, Series M, AMT, 6.60%,
3/1/07, Callable 3/1/02 @ 102.... 2,686
1,350 Winnebago County, School District
No. 122, Harlem-Loves Park,
Refunding, 6.35%, 6/1/07, FGIC... 1,552
--------
32,130
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Indiana (2.7%):
$ 2,150 Brownsburg Indiana Building, 5.50%,
2/1/15, Callable 2/1/07 @ 102,
MBIA............................. $ 2,231
1,000 Fort Wayne Hospital Authority,
Parkview Memorial Hospital
Project, Series A, 7.50%,
11/15/11, Callable 11/15/99 @
102, FGIC........................ 1,074
500 Indiana State University, 6.90%,
8/1/03, Callable 8/1/00 @ 102.... 544
2,840 Indianapolis Economic Development
Revenue, Knob-in-the-Woods
Project, 6.38%, 12/1/04,
Mandatory Put 12/1/04 @ 100...... 3,141
500 Lawrence Township School District,
6.75%, 1/5/05.................... 569
1,500 New Albany Floyd County, School
Building, 6.20%, 7/1/03.......... 1,638
1,500 New Albany Floyd County, School
Building, 6.20%, 7/1/04.......... 1,656
1,000 Noblesville Hamilton County,
Building, 7.00%, 2/1/13,
Prerefunded 2/1/01 @102.......... 1,101
1,000 State Vocational Technical College
Building Facilities Fee, 6.50%,
7/1/07, Callable 1/1/05 @ 102,
AMBAC............................ 1,140
--------
13,094
--------
Iowa (1.2%):
700 Des Moines Water Revenue, Series B,
5.50%, 12/1/04, Callable 12/1/01
@ 100............................ 729
1,675 Finance Authority, 6.35%, 7/1/09,
Callable 1/1/03 @ 102, AMBAC..... 1,776
1,000 Finance Authority, Private College
Revenue, 5.75%, 12/1/08, MBIA.... 1,113
860 Finance Authority, Single Family
Mortgage Revenue, Series F,
6.15%, 7/1/04, Callable 1/1/03 @
102, AMBAC....................... 892
1,500 Student Loan Liquidity Corp.,
Student Loan Revenue, Series C,
6.50%, 12/1/99, AMBAC............ 1,565
--------
6,075
--------
</TABLE>
Continued
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kansas (1.1%):
$ 2,220 Sedgwick & Shawnee, Single Family
Revenue, 5.50%, 6/1/29, Step
Coupon, 6.70% after 10/1/98...... $ 2,464
850 Sedgwick County, Family Mortgage
Revenue, Series A-1, 6.50%,
12/1/16, Callable 12/1/07 @ 105,
GNMA............................. 919
1,750 Wichita Hospital Revenue, St.
Francis Regional Hospital, 6.25%,
10/1/10, Callable 10/1/02 @ 102,
MBIA............................. 1,902
--------
5,285
--------
Kentucky (0.8%):
800 Campbell & Kenton Counties,
Sanitation District #1, 6.50%,
8/1/05, ETM...................... 836
1,000 Kenton County, Public Properties
Corp., 5.63%, 12/1/12, Callable
12/1/06 @ 101.................... 1,062
2,000 Owensboro Electric Light & Power
Revenue, 0.00%, 1/1/09, Callable
1/1/98 @ 33.44, BIG.............. 690
1,000 Winchester Industrial Building,
7.75%, 7/1/12, Callable 7/1/02 @
102.............................. 1,135
--------
3,723
--------
Louisiana (0.8%):
239 Housing Agency Mortgage Revenue,
7.80%, 12/1/09, Callable 6/1/04 @
105, GNMA........................ 269
1,550 Public Facilities Authority
Revenue, AMT, 6.75%, 9/1/06,
Callable 9/1/02 @ 102............ 1,647
2,000 St. Charles Parish Pollution
Control, 8.25%, 6/1/14, Callable
6/1/99 @ 103..................... 2,155
--------
4,071
--------
Maryland (0.6%):
1,150 Anne Arundel County, GO, Series B,
AMT, 7.70%, 3/15/06, Callable
3/15/99 @ 102.................... 1,219
1,500 State Health & Education, John
Hopkins, 6.00%, 7/1/10........... 1,674
--------
2,893
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Massachusetts (1.4%):
$ 1,650 Beverly, 6.60%, 3/15/09, Callable
3/15/04 @ 102, FSA............... $ 1,859
740 Education Loan Authority, AMT,
7.25%, 1/1/09, Callable 1/1/01 @
102.............................. 797
2,400 State, GO, Series C, 6.00%,
8/1/09........................... 2,721
1,465 Worcester, GO, Series A, 6.10%,
5/1/08, Callable 5/1/05 @ 102,
MBIA............................. 1,630
--------
7,007
--------
Michigan (0.8%):
2,000 State Hospital Finance Authority
Revenue, Mercy Mount Clemens
Corp., 6.25%, 5/15/11, Callable
5/15/01 @ 102.................... 2,124
1,500 State Hospital Finance Authority,
Series A, 8.10%, 10/1/13,
Callable 10/1/05 @ 102........... 1,787
--------
3,911
--------
Minnesota (0.3%):
1,500 Northern Municipal Power Agency,
Minnesota Electric, Series A,
5.90%, 1/1/07, Callable 1/1/03 @
102, AMBAC....................... 1,639
--------
Mississippi (0.4%):
1,475 Home Corp., Single Family Series D,
5.25%, 7/1/12, Callable 7/1/07 @
105, FNMA/GNMA................... 1,617
1,005 State Housing Finance Corp., 0.00%,
9/15/16.......................... 380
--------
1,997
--------
Missouri (2.9%):
1,895 Carthage Waterworks & Wastewater
Treatment Systems, 6.30%, 7/1/09,
Callable 7/1/04 @ 101, MBIA...... 2,100
1,520 Fort Zumwalt School District,
5.20%, 3/1/09, Callable 3/1/07 @
100, AMBAC....................... 1,588
1,735 Fort Zumwalt School District,
5.30%, 3/1/10, Callable 3/1/07 @
100, AMBAC....................... 1,813
1,415 Kansas City Industrial Development
Authority, Multifamily Housing
Revenue, Series A, AMT, 5.63%,
7/1/05........................... 1,491
1,430 Kansas City Municipal Corp.
Revenue, 5.40%, 1/15/08, Callable
1/15/06 @ 101, AMBAC............. 1,526
</TABLE>
Continued
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Missouri, continued:
$ 2,500 St. Louis Convention & Sports
Complex, 5.50%, 8/15/13, Callable
8/15/03 @ 102, MBIA.............. $ 2,589
2,955 St. Louis Land Clearance
Redevelopment Authority Housing
Revenue, 5.95%, 7/1/22, Mandatory
Put 4/1/07 @ 100, FNMA........... 3,169
--------
14,276
--------
Nebraska (0.5%):
2,250 Higher Education Loan Program,
Series A-6, AMT, 5.90%, 6/1/03... 2,370
--------
Nevada (1.6%):
1,025 Douglas County, School District,
Series A, 5.90%, 6/1/08, Callable
6/1/02 @ 101, FGIC............... 1,091
2,000 Las Vegas, Sewer Revenue, 6.60%,
10/1/12, Callable 4/1/02 @ 102,
FGIC............................. 2,223
1,000 Municipal Bond Bank Project
#20-23A, 7.00%, 7/1/01, ETM...... 1,043
3,010 Washoe County, School District, GO,
6.13%, 8/1/07, Callable 8/1/02 @
101, MBIA........................ 3,250
--------
7,607
--------
New Hampshire (0.3%):
1,225 Higher Education & Health
Facilities Authority Revenue,
6.25%, 1/1/06, Callable 7/1/04 @
102.............................. 1,360
--------
New Jersey (0.4%):
1,630 South Brunswick Township, 6.40%,
8/1/07, Callable 8/1/05 @ 100,
FGIC............................. 1,846
--------
New Mexico (3.5%):
68 Albuquerque, 7.65%, 8/15/07,
FGIC............................. 71
1,000 Albuquerque Airport Revenue, AMT,
6.50%, 7/1/11, Callable 7/1/00 @
105, AMBAC....................... 1,095
3,000 Albuquerque Gross Receipts Tax,
5.38%, 7/1/01, Callable 7/1/99 @
100, MBIA........................ 3,043
3,055 Bernalillo County, Gross Receipts
Tax, 5.75%, 10/1/15.............. 3,365
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
New Mexico, continued:
$ 1,195 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.45%, 4/1/99, AMBAC........ $ 1,224
2,070 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.55%, 4/1/00, AMBAC........ 2,156
5,455 Educational Assistance Foundation,
Student Loan Revenue, Series A,
AMT, 6.85%, 4/1/05, Callable
4/1/02 @ 102, AMBAC.............. 5,908
--------
16,862
--------
New York (4.8%):
1,500 Metropolitan Transportation
Authority, 6.38%, 7/1/10,
Callable 7/1/02 @ 102, FGIC...... 1,660
3,000 Metropolitan Transportation
Authority, Series B, 5.00%,
7/1/10, Callable 7/1/07 @ 102,
AMBAC............................ 3,078
2,950 Monroe County, 6.10%, 3/1/08,
Callable 3/1/01 @ 102, MBIA...... 3,171
1,395 Nassau County, 5.63%, 8/1/03,
FGIC............................. 1,492
1,500 State Dorm Authority, Series A,
5.50%, 7/1/04.................... 1,560
2,950 State Dorm Authority, Series A,
5.50%, 7/1/05.................... 3,066
1,500 State Dorm Authority, Series A,
5.50%, 7/1/06.................... 1,561
3,000 State, GO, Series B, 5.25%, 8/1/12,
Callable 8/1/07 @ 101............ 3,002
5,000 State, GO, Series F, 5.13%, 8/1/11,
Callable 2/1/08 @ 101............ 4,964
--------
23,554
--------
North Carolina (0.5%):
2,500 Educational Facilities, Wake
Forest, 5.00%, 11/1/12, Callable
11/1/07 @ 102.................... 2,532
--------
North Dakota (3.3%):
3,700 Grand Forks Health Care System,
5.60%, 8/15/17, Callable 8/15/07
@ 102, MBIA...................... 3,830
6,050 Grand Forks Sales Tax Revenue Bond,
5.10%, 12/15/10, Callable
12/15/07 @ 100................... 6,251
</TABLE>
Continued
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
North Dakota, continued:
$ 600 Housing Finance Agency, AMT, 6.25%,
7/1/09, Callable 7/1/04 @ 102.... $ 622
3,500 Mercer County, Pollution Control
Revenue, 6.65%, 6/1/22, Callable
6/1/02 @ 102, FGIC............... 3,836
1,270 Water Development, 5.70%, 7/1/17,
Callable 7/1/07 @ 100, AMBAC..... 1,345
--------
15,884
--------
Ohio (2.2%):
500 Hamilton Waterworks Water Utility
Improvement, 6.40%, 10/15/07,
Callable 10/15/01 @ 102, MBIA.... 547
2,100 Mount Vernon, Industrial
Development Revenue, 5.90%,
3/1/03, Callable 3/10/98 @ 100... 2,104
2,500 Northeast Regional Sewer District,
5.60%, 11/15/13, Callable
11/15/05 @ 101, AMBAC............ 2,657
2,470 State Economic Development, 7.50%,
9/1/10, Callable 9/1/02 @ 102.... 2,785
2,500 State Higher Educational
Facilities, 0.00%, 7/1/07........ 2,458
--------
10,551
--------
Oklahoma (0.8%):
2,500 Baptist Health Center, IDR, 6.25%,
8/15/12, Callable 8/15/05 @ 102,
AMBAC............................ 2,784
1,000 Housing Finance Agency, PG-B-1,
5.60%, 3/1/28, Callable 9/1/07 @
102.............................. 1,022
--------
3,806
--------
Oregon (3.0%):
2,350 Jackson County, School District #5
Ashland, GO, 5.70%, 6/1/07,
FSA.............................. 2,591
2,580 Lane County, School District #019,
6.00%, 10/15/11, FGIC............ 2,924
1,000 Lane County, School District #52
Bethel, GO, 6.00%, 6/1/06, FSA... 1,120
3,630 Marion County, 5.50%, 10/1/05,
AMBAC............................ 3,916
1,435 Port of Portland Airport Revenue,
Series 7-A, 6.75%, 7/1/09,
Callable 7/1/01 @ 101, MBIA...... 1,566
2,075 Washington County, School District
No. 88, GO, 6.10%, 6/1/05,
Callable 12/15/04 @ 100, FSA..... 2,314
--------
14,431
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Pennsylvania (5.1%):
$ 3,500 Allegheny County, GO, 0.00%,
2/15/02, MBIA.................... $ 4,002
3,200 Dauphin County, Industrial
Development Authority, Pollution
Control Revenue, 6.00%, 1/1/08,
Callable 1/1/98 @ 100, MBIA...... 3,206
1,085 Delaware County, Pennsylvania
Hospital Authority, 6.00%,
12/15/20, Callable 12/1/03 @
102.............................. 1,125
2,700 Harrisburg, Capital Appreciation,
Series D, 0.00%, 3/15/13,
AMBAC............................ 1,263
1,800 Harrisburg, Capital Appreciation,
Series D, 0.00%, 9/15/13,
AMBAC............................ 821
2,505 Harrisburg, Capital Appreciation,
Series F, 0.00%, 3/15/13,
AMBAC............................ 1,172
1,665 Harrisburg, Capital Appreciation,
Series F, 0.00%, 9/15/13,
AMBAC............................ 760
1,500 Hospital Revenue Bond, 6.40%,
1/1/06, Callable 1/1/05 @ 102,
AMBAC............................ 1,698
2,750 Indiana County, Industrial
Development Authority, Pollution
Control Revenue, 6.00%, 6/1/06,
MBIA............................. 3,069
1,295 Millcreek Township School District
A, 0.00%, 9/15/11, FGIC.......... 659
2,350 Philadelphia Airport Revenue,
Series A, AMT, 5.50%, 6/15/05,
AMBAC............................ 2,508
2,500 Philadelphia Water & Waste, 5.65%,
6/15/12, Callable 6/15/03 @ 102,
FGIC............................. 2,600
2,000 State Financial Authority Revenue,
6.60%, 11/1/09, Callable 11/1/03
@ 102, LOC: Societe Generale..... 2,217
--------
25,100
--------
Puerto Rico (1.1%):
5,000 Commonwealth Infrastructure, Series
A, 5.25%, 7/1/10, Callable 7/1/08
@ 101, AMBAC..................... 5,250
--------
Rhode Island (0.2%):
1,000 Housing & Mortgage Financial Corp.,
Series 15-B, 6.20%, 10/1/06,
Callable 4/1/04 @ 102, MBIA...... 1,068
--------
</TABLE>
Continued
13
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
South Carolina (2.1%):
$ 1,760 Greenville School Public
Facilities, 5.60%, 3/1/10........ $ 1,896
1,045 Hilton Head Island, GO, 5.50%,
8/1/09, MBIA..................... 1,138
1,270 Piedmont, Municipal Power Agency,
Electric Revenue, Series A,
5.25%, 1/1/11, MBIA.............. 1,333
1,360 Piedmont, Municipal Power Agency,
Electric Revenue, Series A,
5.50%, 1/1/13, MBIA.............. 1,453
250 Piedmont, Municipal Power Agency,
Electric Revenue, Series A,
6.55%, 1/1/16, Callable 1/1/98 @
100.............................. 250
2,250 State Electric Expansion System,
5.88%, 7/1/18, Callable 2/10/98 @
100.............................. 2,252
825 State Public Service, 5.88%,
7/1/18, Callable 2/10/98 @ 100,
MBIA............................. 826
1,000 York County, School District #3,
GO, 5.40%, 3/1/08, Callable
3/1/06 @ 101, FSA................ 1,069
--------
10,217
--------
South Dakota (1.4%):
3,675 Health & Educational Facility
Authority Revenue, St. Luke's
Midland Regional Medical, 6.63%,
7/1/11, Callable 7/1/01 @ 102,
MBIA............................. 3,991
250 State Lease Revenue, Series A,
6.48%, 9/1/05, FSA............... 281
2,645 Student Loan Assistance Corp.,
Student Loan Revenue, Series B,
AMT, 7.63%, 8/1/06, Callable
8/1/99 @ 102, MBIA............... 2,782
--------
7,054
--------
Tennessee (2.4%):
1,050 Chattanooga-Hamilton County,
Hospital Authority, Hospital
Revenue, 5.63%, 10/1/09, FSA..... 1,156
1,555 Dyer County, Industrial Development
Revenue, 6.00%, 2/1/07, Callable
2/1/04 @ 102..................... 1,655
2,000 Housing Development, 6.20%, 7/1/18,
Callable 7/1/05 @ 102............ 2,125
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
$ 1,785 Memphis-Shelby Airport, 6.75%,
9/1/12, Callable 9/1/02 @ 102.... $ 1,966
1,330 Metropolitan Government, Nashville
& Davidson County, 7.00%,
1/1/14........................... 1,332
2,500 Shelby County, Series B, 5.00%,
8/1/11, Callable 8/1/07 @ 101.... 2,547
1,000 Trenton Industrial Development
Revenue, Series A, 5.40%,
10/1/02.......................... 1,002
--------
11,783
--------
Texas (7.7%):
2,800 Austin Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, ETM, 0.00%, 12/1/11......... 1,336
1,000 Austin Utility Systems Revenue,
0.00%, 5/15/08, MBIA............. 618
5,125 Cass County, Industrial Development
Revenue, Series A, 5.30%,
7/1/09........................... 5,335
5,000 Coastal Bend Health Facilities,
Incarnate Word Health Services,
5.93%, 11/15/13, Callable
11/15/02 @ 102, AMBAC............ 5,324
3,600 Grand Prairie Health Facilities
Refunding, Dallas/Fort Worth
Medical Center Project, 6.50%,
11/1/04, AMBAC................... 4,047
3,300 Grand Prairie Health Facilities
Refunding, Dallas/Fort Worth
Medical Center Project, 6.88%,
11/1/10, AMBAC................... 3,749
5,000 Harris County, Capital
Appreciation, Toll Road, Sub-Lien
A, GO, 0.00%, 8/15/03, MBIA...... 3,915
3,700 Harris County, Capital
Appreciation, Toll Road, Sub-Lien
A, GO, 0.00%, 8/15/05, MBIA...... 2,630
1,455 Health Facilities Development Corp.
Hospital Revenue, All Saints
Episcopal Hospital, 6.25%,
8/15/12, Callable 8/15/03 @ 102,
MBIA............................. 1,597
1,045 Housing Agency Residential
Development Revenue, Series D,
AMT, 8.40%, 1/1/21, Callable
7/1/99 @ 102..................... 1,095
900 San Antonio Electric & Gas, 6.50%,
2/1/12, Callable 2/1/99 @
101.5............................ 934
600 San Antonio Electric & Gas,
Refunding, 6.50%, 2/1/12......... 626
</TABLE>
Continued
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 1,000 San Antonio Electric & Gas, Series
B, 7.00%, 2/1/09, Callable 2/1/99
@ 101.5.......................... $ 1,046
345 Southeast Texas Housing Financial
Corp., Series B, 6.75%, 5/1/10... 362
1,245 State Higher Education Coordinating
Board, Student Loan, AMT, 7.45%,
10/1/06, Callable 10/1/01 @
102.............................. 1,348
1,020 Texas Tech University Revenues,
5.95%, 2/15/13, Callable 2/15/05
@ 100, AMBAC..................... 1,098
2,200 United Independent School District,
5.25%, 8/15/14, Callable 8/15/06
@ 100............................ 2,243
--------
37,303
--------
Utah (0.9%):
2,000 Intermountain Power Agency, Power
Supply Revenue, Series B, 6.50%,
7/1/09, MBIA..................... 2,353
4,750 Intermountain Power Agency, Series
D, 0.00%, 7/1/20, Callable 7/1/02
@ 20.61.......................... 800
1,340 State Housing Finance Authority,
AMT, 6.35%, 7/1/12, Callable
1/1/05 @ 102..................... 1,420
--------
4,573
--------
Vermont (0.3%):
1,430 University of Vermont & State
Agricultural College, Series 1973
A, 5.80%, 7/1/13, Callable
2/10/98 @ 101.................... 1,445
--------
Virginia (1.6%):
3,905 State Housing Development
Authority, Commonwealth Mortgage,
Series A, AMT, 6.80%, 7/1/06,
AMBAC............................ 4,265
1,340 State Housing Development
Authority, Commonwealth Mortgage,
Series J, 6.65%, 7/1/10, Callable
1/1/05 @ 102..................... 1,447
2,000 State Housing Development
Authority, Series B Sub B2,
6.70%, 1/1/15, Callable 1/1/06 @
102.............................. 2,199
--------
7,911
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Washington (4.1%):
$ 1,830 Chelan County, Washington Public
Utilities Revenue, 5.90%, 7/1/13,
Mandatory Put 7/1/03 @ 102....... $ 1,921
1,360 King County, School District #400,
GO, 6.50%, 12/1/08............... 1,602
1,084 Kitsap County, Consolidated
Housing, 7.00%, 8/20/08, GNMA.... 1,212
1,000 Seattle Light & Power Revenue,
6.00%, 8/1/13, Callable 8/1/02 @
102.............................. 1,065
1,000 Seattle Solid Waste, Series B,
7.00%, 5/1/03, Callable 5/1/99 @
102, BIG......................... 1,058
1,215 Seattle, Light and Power Revenue,
5.00%, 7/1/13, Callable 7/1/07 @
102.............................. 1,224
1,540 Seattle, Light and Power Revenue,
5.00%, 7/1/14, Callable 7/1/07 @
102.............................. 1,543
1,450 Seattle, Light and Power Revenue,
5.00%, 7/1/16, Callable 7/1/07 @
102.............................. 1,439
1,450 Seattle, Light and Power Revenue,
5.00%, 7/1/16, Callable 7/1/07 @
102.............................. 1,439
3,000 Snohomish County, Public Utility
District #001, Electric Revenue,
6.00%, 1/1/13, Callable 1/1/03 @
102, FGIC........................ 3,213
700 State Certificates Partnership,
Series A, 6.80%, 4/1/06, Callable
4/1/01 @ 102..................... 757
3,500 State Nuclear Project #1, Series A,
6.00%, 7/1/08, AMBAC............. 3,910
1,000 State Public Power, Nuclear Project
#1, 5.13%, 7/1/11, Callable
7/1/07 @ 102..................... 1,003
--------
19,947
--------
West Virginia (3.1%):
1,500 Board of Regents Revenue, Series A,
5.90%, 4/1/04, ETM............... 1,598
2,495 Harrison County, Community Split
Obligation, Series A, 6.25%,
5/15/10.......................... 2,881
3,500 School Building Authority, Series
B, 5.40%, 7/1/17, Callable 7/1/07
@ 102, FSA....................... 3,599
</TABLE>
Continued
15
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued
$ 1,150 State College Revenue, 6.00%,
4/1/12, Callable 4/1/03 @ 102,
AMBAC............................ $ 1,242
2,000 State Housing Development Fund,
Housing Finance, AMT, 7.20%,
11/1/20, Callable 5/1/02 @ 102... 2,145
2,175 University Athletics, Series B,
5.00%, 5/1/22, Callable 5/1/08 @
101, AMBAC....................... 2,136
1,800 University Student Union, Series B,
5.00%, 5/1/17, Callable 5/1/08 @
101, AMBAC....................... 1,769
--------
15,370
--------
Wisconsin (0.3%):
500 Mukwonago School District, 5.80%,
3/1/07, Prerefunded 3/1/02 @100,
AMBAC............................ 532
1,000 State, Series A, 6.30%, 5/1/07,
Prerefunded 5/1/02 @ 100......... 1,084
--------
1,616
--------
Wyoming (0.5%):
875 Community Development Authority
Single Family Mortgage, Series A,
7.25%, 6/1/07, Callable 6/1/01 @
102.............................. 917
1,395 Sweetwater County, School District
#2, Green River, GO, 7.00%,
6/1/04, MBIA..................... 1,607
--------
2,524
--------
Total Municipal Bonds 504,958
--------
WEEKLY DEMAND NOTES (1.3%):
Illinois (0.5%):
2,600 State Health Facilities Authority,
4.15%, 7/1/27, LOC: First
National Bank of Chicago*........ 2,600
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
WEEKLY DEMAND NOTES, CONTINUED:
Indiana (0.8%):
$ 1,000 Indiana Capital Health Program,
3.75%, 8/1/06*................... $ 1,000
1,000 Indiana Hospital Equipment
Financing Authority Revenue,
Series A, 3.75%, 12/1/15*........ 1,000
1,860 Indiana State Housing Finance
Authority, 4.25%, 1/1/29, LOC:
Federal Home Loan Bank*.......... 1,860
--------
3,860
--------
Total Weekly Demand Notes 6,460
--------
INVESTMENT COMPANIES (0.1%):
656 Provident Muni Cash................ 656
--------
Total Investment Companies 656
--------
Total (Cost $486,031) (a) $512,074
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $488,353.
Continued
16
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $26,077
Unrealized depreciation..................................... (34)
-------
Net unrealized appreciation................................. $26,043
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at December 31, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
GSL Guaranteed Student Loans
IDR Industrial Development Revenue
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
17
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
DAILY DEMAND NOTES (2.9%):
North Dakota (0.2%):
$ 1,125 Grand Forks North Dakota, United
Hospital, 5.10%, 12/1/16........... $ 1,125
--------
Pennsylvania (1.9%):
11,490 Allegheny County Pennsylvania
Industrial Development, Logwood at
Oakmont Inc., 5.25%, 7/1/27*....... 11,490
--------
Washington (0.3%):
1,300 Washington State Health Care
Facilities Authority Mason Medical,
5.00%, 2/15/27*.................... 1,300
800 Washington State Housing Finance,
5.10%, 1/1/21, LOC: US Bank of
Washington*........................ 800
--------
2,100
--------
Wisconsin (0.5%):
3,500 State Health Facilities, 3.70%,
1/1/16, LOC: Toronto Dominion
Bank*.............................. 3,500
--------
Total Daily Demand Notes 18,215
--------
MONTHLY DEMAND NOTES (0.1%):
California (0.1%):
600 Windsor, Multi-Family Revenue, 4.35%,
8/1/25, LOC: Banque Paribas*....... 600
--------
Total Monthly Demand Notes 600
--------
MUNICIPAL BONDS (96.9%):
Alabama (0.3%):
565 Alabama Housing Finance Authority,
Series A-1, 5.80%, 10/1/08,
Callable 4/1/05 @ 102, GNMA........ 596
1,000 Mobile Alabama Board of School
Commissioners, 5.00%, 3/1/08,
Callable 3/1/04 @ 102, AMBAC....... 1,032
--------
1,628
--------
Alaska (2.5%):
285 Alaska State Department
Administration, 4.40%, 9/1/98...... 286
755 Anchorage Alaska, Series A, 5.40%,
4/1/07, Callable 4/1/06 @ 100,
MBIA............................... 803
3,570 Energy Authority, Utility Revenue,
5.20%, 7/1/17, Callable 7/1/08 @
100, FSA........................... 3,583
1,185 Home Mortgage Revenue Refunding,
8.00%, 3/1/09, Callable 3/1/02 @
102, FNMA.......................... 1,279
155 Juneau City & Boro Home Mortgage
Revenue, 8.00%, 2/1/09, Callable
2/1/02 @ 100, FNMA................. 167
1,750 North Slope, Series B, 0.00%,
6/30/04............................ 1,306
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Alaska, continued:
$ 8,440 State Housing Finance Corp., 0.00%,
12/1/17, Callable 6/1/07 @ 54,
MBIA............................... $ 2,608
30,000 State Housing Finance Corp., Series
A-2, AMT, 0.00%, 6/1/37, Callable
12/1/07 @ 17.74.................... 3,018
2,750 Student Loan Corp., Series A, AMT,
5.75%, 7/1/14, Callable 7/1/07 @
100, AMBAC......................... 2,906
--------
15,956
--------
Arizona (0.5%):
200 Arizona State Transportation Board,
Series A, 6.10%, 7/1/01, OID @
99.641............................. 214
325 Maricopa County, Industrial
Development, Multi-Family Housing,
7.25%, 7/1/17, Callable 7/1/07 @
101................................ 337
1,500 Maricopa County, Industrial
Development, Multi-Family Housing
Revenue, Series A, 6.25%, 7/1/27,
Callable 1/1/07 @ 101.............. 1,557
250 Phoenix Arizona, Series 1985A, 7.00%,
7/1/03, Callable 01/01/98 @ 101.... 284
1,000 Yuma, Individual & Multi-Family
Apartments, Series A, 5.40%,
12/20/17, Callable 12/20/04 @ 100,
GNMA............................... 1,007
--------
3,399
--------
Arkansas (1.9%):
343 Drew County, Public Facilities Board,
7.90%, 8/1/11, Callable 8/1/03 @
103, FNMA.......................... 372
149 Drew County, Public Facilities Board,
7.75%, 8/1/11, Callable 2/1/04 @
100................................ 160
517 Jacksonville, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.90%, 1/1/11,
Callable 7/1/03 @ 103.............. 567
231 Jacksonville, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.75%, 1/1/11,
Callable 7/1/05 @ 103.............. 252
990 Jefferson County, PCR, Power & Light
Co. Project, 6.13%, 10/1/07,
Callable 4/1/06 @ 100, BIG......... 991
216 Lonoke County, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, 7.38%, 4/1/11,
Callable 4/1/03 @ 103.............. 234
</TABLE>
Continued
18
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arkansas, continued:
$ 626 Lonoke County, Residential Housing
Facilities Board, Single Family
Mortgage Revenue, Series A-2,
7.90%, 4/1/11, FNMA................ $ 687
1,000 Paragould, Hospital Revenue, 6.38%,
10/1/17, Callable 10/1/06 @ 102.... 1,074
1,143 Pope County, Residential Facilities,
Housing Board Mortgage Revenue,
Series B, 7.75%, 9/1/11, Callable
8/1/02 @ 102, FHA.................. 1,231
1,500 State Capital Appreciation, College
Savings, Series 97A, 0.00%,
6/1/16............................. 566
2,000 State Capital Appreciation, College
Savings, Series A, 0.00%, 6/1/15... 802
1,930 State Development Authority Revenue
Refunding, 8.00%, 8/15/11, Callable
8/15/01 @ 103...................... 2,078
3,650 State Development Finance Authority
Revenue, 0.00%, 6/1/15............. 1,414
880 State Development Finance Authority
Revenue, Single Family Housing,
7.75%, 4/1/21, Callable 4/1/99 @
102, GNMA.......................... 912
478 Stuttgart Public Facilities Board
Revenue, Series A-2, 7.90%, 9/1/11,
Callable 9/1/03 @ 103.............. 524
257 Stuttgart Public Facilities Board
Revenue, Series B, 7.75%, 9/1/11,
Callable 3/1/06 @ 103.............. 282
--------
12,146
--------
California (2.5%):
430 ABAG Finance Authority for Nonprofit
Corp., 5.85%, 10/1/27, Callable
10/1/07 @ 102...................... 444
1,255 Fairfield, Water Revenue, 0.00%,
4/1/15, Callable 4/1/05 @ 56.7,
AMBAC.............................. 505
1,690 Fresno Housing Authority, Project B,
AMT, 5.60%, 8/1/30, Callable 8/1/07
@ 102.............................. 1,738
1,080 Housing Finance Agency Revenue, Home
Mortgage, AMT, 7.50%, 2/1/23,
Callable 8/1/05 @ 102, FHA......... 1,191
15 Housing Finance Agency Revenue, Home
Mortgage, Series C, AMT, 7.45%,
8/1/11, Callable 8/1/01 @ 102...... 15
680 Housing Finance Agency Revenue, Local
or Guaranteed Housing, Series B,
8.63%, 8/1/15, Callable 8/1/00 @
100, MBIA.......................... 712
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
California, continued:
$ 570 Housing Finance Agency Revenue,
Series H, AMT, 6.80%, 8/1/19,
Callable 8/1/04 @ 102, FHA......... $ 599
780 Housing Finance Agency Revenue,
Single Family Housing, Series F,
7.88%, 8/1/19, Callable 8/1/98 @
102................................ 803
100 Los Angeles, California Water & Power
Electric, 4.50%, 8/15/98........... 100
1,000 Oakland, Revenue Refunding, Series A,
7.60%, 8/1/21, Callable 8/1/98 @
102, FGIC.......................... 1,041
815 Redondo Beach, Redevelopment Agency,
Residential Mortgage Revenue,
Series B, 6.25%, 6/1/11, Callable
6/1/03 @ 100....................... 836
350 Rural Home Mortgage Financing
Authority Revenue, Single Family
Mortgage Revenue, AMT, 7.25%,
12/1/24, Callable 12/1/04 @ 103,
GNMA............................... 379
810 Rural Home Mortgage Financing
Authority, AMT, 7.55%, 11/1/26..... 944
805 Rural Home Mortgage Financing
Authority, AMT, 7.75%, 5/1/27...... 937
2,230 Rural Home Mortgage, Class 5, AMT,
5.50%, 3/1/29, LOC: GNMA........... 2,467
1,180 San Joaquin Hills Toll Road,
Pre-refunded, 0.00%, 1/1/14........ 533
4,435 San Joaquin Hills Toll Road,
Pre-refunded, 0.00%, 1/1/16........ 1,790
1,105 State Department of Veterans'
Affairs, AMT, 7.38%, 8/1/12,
Callable 2/1/98 @ 101.5............ 1,125
--------
16,159
--------
Colorado (16.2%):
5,250 Arapahoe County, Highway Revenue,
Series C, 0.00%, 8/31/15, Callable
8/31/05 @ 48.6..................... 1,819
4,920 Aurora County, Industrial
Development, Series A, 5.38%,
12/1/11, Callable 12/1/02 @ 102.... 4,920
5,030 Aurora, Single Family Mortgage
Revenue, Series A2, 0.00%, 9/1/15,
Prerefunded 3/1/13 @ 75.2.......... 1,758
2,205 Brush Creek Metropolitan District,
GO, Refunding, 6.70%, 11/15/09,
Callable 11/15/03 @ 101............ 2,402
400 Central City Water Revenue, GO, Water
Utility Improvements, 8.63%,
9/15/11, Prerefunded 9/15/02 @
100................................ 474
</TABLE>
Continued
19
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 655 Central City Water Revenue, GO, Water
Utility Improvements, 7.50%,
12/1/12, Prerefunded 12/1/02 @
100................................ $ 748
2,500 Colorado Health Facilities Authority
Steamboat Springs, 5.75%, 9/15/22,
callable 9/15/08 @ 101............. 2,517
3,700 Colorado Springs Airport Revenue,
AMT, 6.90%, 1/1/12, Callable 1/1/03
@ 102, MBIA........................ 4,095
1,275 Dawson Ridge, Metropolitan District
No.1, ETM, 0.00%, 10/1/12.......... 600
1,000 Denver Housing Corp., Series A,
5.35%, 10/1/12, Callable 10/1/07 @
101................................ 1,017
2,500 Denver, City & County Airport
Revenue, AMT, 5.63%, 11/15/08,
Callable 11/15/06 @ 102, MBIA...... 2,709
875 Denver, City & County Airport
Revenue, AMT, 6.75%, 11/15/13,
Callable 11/15/02 @ 102,
MBIA-IBC........................... 963
20,610 Denver, City & County Mortgage, AMT,
0.00%, 8/1/29...................... 3,194
9,850 Denver, City & County Residual
Revenue, 0.00%, 7/10/14, Callable
7/1/01 @ 39.6...................... 3,125
525 Denver, City & County, Series C,
5.40%, 8/1/01, Callable 8/1/00 @
101................................ 548
5,935 Douglas County Colorado Multi-Family
Revenue, Parker Hilltop Apt
Project, 4.00%, 12/1/27, ATM....... 5,934
1,250 Eagle's Nest Metropolitan District,
GO, Refunding, 6.50%, 11/15/17,
Callable 11/15/97 @ 107............ 1,329
223 El Paso County, Home Mortgage, Series
C, 8.30%, 9/20/18, Callable 12/1/97
@ 100.............................. 249
1,145 El Paso County, Single Family
Mortgage Revenue, 0.00%, 9/1/15,
ETM................................ 461
2,500 Englewood, Multi-Family Housing,
Marks Apartment Revenue, 6.65%,
12/1/26, Callable 12/1/06 @ 102.... 2,668
1,415 Englewood, Multi-Family Housing,
Marks Apartment Revenue, Series B,
6.00%, 12/15/18, Callable 12/15/03
@ 100, LOC: Citibank............... 1,439
1,685 Housing Finance Authority, GO, 6.80%,
8/1/14, Callable 8/1/02 @ 102...... 1,783
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 2,560 Housing Finance Authority,
Multi-Family Mortgage Revenue,
Series B, 6.00%, 10/1/25, Callable
2/11/98 @ 100.5, FHA............... $ 2,204
165 Housing Finance Authority,
Multi-Family Revenue, AMT, 5.75%,
10/1/06, Callable 4/1/06 @ 102..... 175
875 Housing Finance Authority,
Multi-Family Revenue, Series A,
9.00%, 10/1/25, Callable 10/1/00 @
100, FHA........................... 882
255 Housing Finance Authority, Series A,
6.90%, 5/1/01...................... 269
2,500 Housing Finance Authority, Series
B-2, AMT, 7.00%, 5/1/26, Callable
5/1/07 @ 105....................... 2,792
2,500 Housing Finance Authority, Series
C-2, AMT, 6.88%, 11/1/28, Callable
11/1/07 @ 105...................... 2,772
3,550 Housing Finance Authority, Single
Family, 7.45%, 11/1/27, Callable
5/1/06 @ 105....................... 4,079
790 Housing Finance Authority, Single
Family Program, Series B, 6.13%,
5/1/13, Callable 11/1/04 @ 103,
FHA................................ 824
735 Housing Finance Authority, Single
Family Program, Series B, 7.50%,
11/1/24, Callable 11/1/04 @ 105,
FHA................................ 826
210 Housing Finance Authority, Single
Family Program, Series B-2, 6.90%,
8/1/17, Callable 2/1/01 @ 102,
FHA................................ 220
400 Housing Finance Authority, Single
Family Program, Series D-1, 6.60%,
8/1/17, Callable 8/1/01 @ 102,
FHA................................ 411
2,000 Housing Finance Authority, Single
Family Program, Series D-1, 7.38%,
6/1/26, Callable 12/1/05 @ 105..... 2,254
680 Housing Finance Authority, Single
Family Program, Series E, AMT,
6.25%, 12/1/09, Callable 12/1/04 @
103................................ 719
360 Housing Finance Authority, Single
Family Program, Sub Series A, AMT,
6.50%, 12/1/02..................... 376
9,500 Housing Finance Authority, Single
Family Revenue, AMT, 7.25%, 5/1/27,
Callable 5/1/07 @ 105.............. 10,731
910 Housing Finance Authority, Single
Family Revenue, Series 95C, 7.45%,
6/1/17, Callable 6/1/05 @ 105...... 1,037
490 Housing Finance Authority, Single
Family Revenue, Series A, 0.00%,
9/1/14, FHA........................ 91
</TABLE>
Continued
20
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Colorado, continued:
$ 370 Housing Finance Authority, Single
Family Revenue, Series A-3, AMT,
6.50%, 11/1/23, Callable 5/1/02 @
102................................ $ 385
3,500 Housing Finance Authority, Single
Family Revenue, Series C-1, AMT,
7.55%, 11/1/27, Callable 11/1/06 @
102................................ 3,974
1,000 Jefferson County, Single Family
Revenue, Refunding, Series A,
8.88%, 10/1/13, Callable 4/1/01 @
103, MBIA.......................... 1,074
7,525 Meridian Metropolitan District,
7.50%, 12/1/11, Callable 12/1/01 @
101................................ 8,298
1,500 Mesa County, Residual Revenue
Refunding, 0.00%, 12/1/11, ETM..... 753
2,895 Montrose County, Hospital Revenue,
Series B, 5.25%, 12/1/17, Callable
12/1/07 @ 102...................... 2,896
140 Mountain Village Metropolitan
District, 7.95%, 12/1/03,
Prerefunded 12/1/02 @ 101.......... 163
1,720 Mountain Village Metropolitan
District, 8.10%, 12/1/11,
Prerefunded 12/1/02 @ 101.......... 2,024
890 Mountain Village Metropolitan
District San Miguel County, 7.95%,
12/01/03, Callable 12/1/02 @ 101... 999
835 Mountain Village Metropolitan
District, San Miguel County, 8.10%,
12/1/11, Callable 12/1/02 @ 101.... 968
2,630 Mountain Village Metropolitan
District, San Miguel County, 5.15%,
12/1/13, Callable 12/01/07 @ 101... 2,683
3,700 Mountain Village Metropolitan
District, San Miguel County, 5.20%,
12/1/17, Callable 12/1/07 @ 101.... 3,728
--------
103,359
--------
Connecticut (2.3%):
4,350 Stamford, Connecticut Housing
Authority, Rippowam Project, 6.25%,
10/1/19, Callable 10/1/08 @ 103.... 4,605
9,200 Stamford, Connecticut Housing
Authority, Rippowam Project,
6.375%, 10/1/29, Callable 10/1/08 @
103................................ 9,738
175 State Housing Mortgage, Series A,
7.63%, 11/15/17, Callable 2/11/98 @
102................................ 179
--------
14,522
--------
Delaware (0.0%):
765 New Castle County, Single Family
Mortgage Revenue, 0.00%, 11/1/16,
FGIC............................... 122
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
District of Columbia (0.1%):
$ 400 State, 6.80%, 5/1/98................. $ 404
--------
Florida (5.1%):
1,030 Brevard County, Housing Finance
Authority, Single Family Mortgage
Revenue, AMT, 6.13%, 9/1/09,
Callable 9/1/04 @ 102.............. 1,067
4,510 Duval County, Housing Finance
Authority, Single Family Revenue,
Series C, 7.35%, 7/1/24, Callable
9/1/00 @ 103, FGIC Mortgage........ 4,822
565 Escambia County, Housing Finance
Authority, Single Family Revenue,
AMT, 6.60%, 10/1/12, Callable
4/1/05 @ 102, GNMA................. 588
2,000 Hillsborough County Aviation, Series
B, 5.13%, 10/1/17, Callable 10/1/06
@ 101, AMBAC....................... 1,994
470 Housing Finance Agency, Home
Ownership Revenue, 7.50%, 9/1/14,
Callable 9/1/00 @ 102, GNMA........ 497
2,000 Lee County, Housing Finance
Authority, Series A, AMT, 5.60%,
3/1/29, Callable 9/1/07 @ 105,
FNMA............................... 2,217
2,680 Lee County, Housing Finance
Authority, Single Family Revenue,
AMT, 7.20%, 3/1/27, Callable 3/1/07
@ 105.............................. 3,035
745 Leon County, Housing Finance
Authority, Multi-County Program,
Series B, AMT, 7.30%, 1/1/28....... 848
1,755 Manatee County, Housing Finance
Authority, Mortgage Revenue, 8.38%,
5/1/25, Callable 5/1/04 @ 105...... 2,030
2,305 Manatee County, Housing Finance
Authority, Mortgage Revenue, AMT,
7.20%, 5/1/28, Callable 3/1/07 @
105, GNMA.......................... 2,613
790 Orange County, Housing Finance
Authority, Mortgage Revenue, Series
A, AMT, 7.25%, 9/1/19, Callable
3/1/01 @ 103....................... 839
800 Orange County, Housing Finance
Authority, Mortgage Revenue, Series
A, AMT, 7.38%, 9/1/24, Callable
3/1/01 @ 103, FHA.................. 852
535 Palm Beach County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series A, AMT, 6.38%,
10/1/06, Callable 10/1/04 @ 102.... 560
</TABLE>
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
$ 1,765 Pinellas County, Housing Finance
Authority, Single Family Mortgage
Revenue, Multi-County, Series A,
6.35%, 2/1/17, Callable 2/1/05 @
102................................ $ 1,849
2,500 Pinellas County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series 95-A, AMT, 6.25%,
8/1/12, Callable 2/1/05 @ 102...... 2,651
2,150 Polk County, Housing Finance
Authority, Single Family Mortgage
Revenue, Series A, AMT, 7.88%,
9/1/22, Callable 3/1/00 @ 103...... 2,278
1,320 Santa Rosa Bay Bridge Authority, ACA,
0.00%, 7/1/08...................... 763
1,625 Santa Rosa Bay Bridge Authority, ACA,
0.00%, 7/1/09...................... 871
1,535 Santa Rosa Bay Bridge Authority, ACA,
0.00%, 7/1/12...................... 735
1,035 Santa Rosa Bay Bridge Authority, ACA,
0.00%, 7/1/14...................... 441
1,080 Santa Rosa Bay Bridge Authority, ACA,
0.00%, 7/1/16...................... 409
500 State Finance Department, 6.25%,
7/1/09, Callable 7/1/02 @ 101,
MBIA............................... 542
--------
32,501
--------
Georgia (1.5%):
785 De Kalb County, Housing Authority
Revenue, 6.40%, 5/1/05, Callable
5/1/04 @ 100....................... 823
5,000 De Kalb County, Housing Authority
Revenue, Multi-Family Housing,
7.05%, 1/1/39, Callable 1/1/08 @
104, FHA........................... 5,493
775 De Kalb County, Housing Authority
Revenue, Single Family Housing,
AMT, 7.65%, 6/1/18, Callable 6/1/04
@ 100, GNMA........................ 825
1,765 Fulton County, Housing Authority
Revenue, Multi-Family Housing,
Series A, AMT, 6.30%, 7/1/16,
Callable 7/1/06 @ 102.............. 1,842
500 Georgia Municipal Electric Power
Authority, GO, Series Q, 8.375%,
1/1/16, Callable 1/1/98 @ 102...... 510
--------
9,493
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Idaho (1.1%):
$ 1,500 Housing & Financial Assistance,
Single Family Mortgage, Series D,
AMT, 6.45%, 7/1/14, Callable 1/1/06
@ 102, FHA......................... $ 1,597
2,155 Housing & Financial Assistance,
Single Family Mortgage, Series H,
AMT, 6.05%, 7/1/14, Callable 1/1/07
@ 102, FHA......................... 2,262
275 Housing Agency, Single Family
Mortgage, AMT, 6.30%, 7/1/24,
Callable 1/1/03 @ 102.............. 284
160 Housing Agency, Single Family
Mortgage, Series A-2, AMT, 6.55%,
7/1/24, Callable 1/1/03 @ 102...... 167
1,075 Housing Finance Assignment, Single
Family Mortgage Revenue, Series
97-E2, AMT, 5.95%,
7/1/14, Callable 1/1/07 @ 101.5.... 1,120
1,520 Power County, PCR, 5.63%, 10/1/14.... 1,553
--------
6,983
--------
Illinois (5.5%):
5,890 Addison Alton Electric Public
Improvements Revenue, Sub Series 1,
0.00%, 7/1/11, Callable 7/1/04 @
62................................. 2,644
195 Aurora Kane & DuPage Counties, Single
Family Mortgage Revenue, Series A,
AMT, 7.95%, 10/1/25, GNMA.......... 221
12,410 Aurora, Illinois Fox Valley
Apartments, 5.3%, 11/1/27, Callable
11/1/05 @ 101...................... 12,496
330 Aurora, Single Family Mortgage
Revenue Refunding, Series B, AMT,
8.05%, 9/1/25, Callable 9/1/04 @
105................................ 379
2,780 Bolingbrook Mortgage Revenue, Capital
Appreciation, Sub Series 1, 0.00%,
1/1/11, Callable 1/1/00 @ 48.6..... 1,092
2,000 Chicago Single Family Mortgage
Revenue, AMT, 6.95%, 9/01/28,
Callable 9/01/07 @ 105, AMBAC...... 2,223
1,590 Chicago, Residential Mortgage
Revenue, 0.00%, 10/1/09, Callable
4/1/98 @ 48.84, MBIA............... 718
1,415 Chicago, Single Family Mortgage
Revenue, AMT, 7.63%, 9/1/27,
Callable 6/15/06 @ 105, GNMA....... 1,621
2,000 Chicago, Single Family Mortgage
Revenue, Series 97-A, AMT, 7.25%,
9/1/28, Callable 9/1/07 @ 105,
GNMA............................... 2,264
</TABLE>
Continued
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Illinois, continued:
$ 3,355 Chicago, Single Family Mortgage
Revenue, Series A, AMT, 7.00%,
9/1/27, Callable 3/1/06 @ 105...... $ 3,746
715 Danville, Single Family Mortgage
Revenue Refunding, 7.30%, 11/1/10,
Callable 11/1/03 @ 102............. 765
3,530 Freeport Single Family Mortgage
Revenue, 0.00%, 8/1/10, Callable
10/1/01 @ 49....................... 1,298
730 Housing Development Authority,
Residential Mortgage Revenue,
Series A, AMT, 7.35%, 8/1/10,
Callable 8/1/01 @ 102.............. 770
4,685 Moline, Mortgage Revenue, Capital
Appreciation, Sub Series 1, 0.00%,
5/1/11, Callable 5/1/05 @ 65....... 1,843
905 Quincy, Single Family Mortgage
Revenue Refunding, 6.88%, 3/1/10,
Callable 3/1/04 @ 102.............. 966
400 Rock Island, Residential Mortgage
Revenue Refunding, 7.70%, 9/1/08,
Callable 9/1/02 @ 102.............. 430
300 State, 6.38%, 6/1/98................. 303
300 State, 4.40%, 12/1/03, MBIA.......... 303
1,000 State Sales Tax, Series S, 4.80%,
6/15/06, OID @ 99.522.............. 1,031
--------
35,113
--------
Indiana (1.6%):
2,250 Marion County, Hospital Authority
Revenue, 6.50%, 9/1/13, Callable
9/1/99 @ 102....................... 2,520
3,500 State Housing Finance Authority,
Single Family Mortgage Revenue,
Series A-2, AMT, 6.45%, 7/1/14,
Callable 7/1/05 @ 102, FHA......... 3,743
695 State Housing Finance Authority,
Single Family Mortgage Revenue,
Series B-2, AMT, 7.80%, 1/1/22,
Callable 7/1/00 @ 102, GNMA........ 732
3,130 State Toll Finance Authority, Toll
Road Revenue, 6.00%, 7/1/15,
Callable 7/1/97 @ 100.............. 3,135
--------
10,130
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Iowa (1.2%):
$ 650 Davenport, Home Ownership Mortgage
Revenue Refunding, 7.90%, 3/1/10,
Callable 9/1/04 @ 102.............. $ 699
1,010 Finance Authority, Multi-Family
Revenue, AMT, 7.15%, 12/1/09....... 1,102
13,465 Finance Authority, Single Family
Mortgage Revenue, 0.00%, 9/1/16,
AMBAC.............................. 1,720
590 Finance Authority, Single Family
Revenue, AMT, 7.90%, 11/1/22,
Callable 11/1/99 @ 102, GNMA....... 618
2,525 Finance Authority, Single Family
Revenue, Mortgage Backed Securities
Program, Series C, 6.40%, 7/1/19,
Callable 1/1/05 @ 102, GNMA........ 2,683
885 Salix, PCR, Gas & Electric Project,
5.75%, 6/1/03, Callable 1/1/98 @
100................................ 890
--------
7,712
--------
Kansas (2.7%):
390 Finney County, Single Family Mortgage
Revenue, 8.95%, 10/1/09, Callable
4/1/98 @ 100....................... 391
755 Ford County, Single Family Mortgage
Revenue, 7.90%, 8/1/10, Callable
8/1/02 @ 103, FHA.................. 817
1,865 Johnson County, Single Family
Mortgage Revenue, 7.10%, 5/1/12,
Callable 5/1/04 @ 103.............. 2,039
500 Labette County, Single Family
Mortgage Revenue, Series A, 8.40%,
12/1/11, Callable 6/1/03 @ 103..... 537
340 Olathe & Labette County, Single
Family Mortgage Revenue, Series
A-I, AMT, 8.10%, 8/1/23, Callable
2/1/05 @ 105....................... 383
2,505 Olathe County, Multi-Family Housing
Project, Series A, 5.75%, 7/1/12,
Callable 7/1/07 @ 101.............. 2,552
1,005 Olathe County, Multi-Family Housing,
Project B, AMT, 5.80%, 7/1/12,
Callable 7/1/07 @ 101.............. 1,024
2,400 Reno & Labette County, Single Family
Mortgage Revenue, Series A, 0.00%,
12/1/15, ETM, FGIC................. 954
495 Reno County, Single Family Mortgage
Revenue, Series B, 8.70%, 9/1/11,
Callable 9/1/01 @ 103.............. 544
2,500 Sedgwick & Shawnee County, Series
A-1, AMT, 5.50%, 6/1/29, GNMA...... 2,745
</TABLE>
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kansas, continued:
$ 445 Sedgwick & Shawnee County, Single
Family Revenue, Series B, 8.05%,
5/1/14, GNMA....................... $ 499
465 Sedgwick & Shawnee County, Single
Family Revenue, Series B-2, 7.80%,
5/1/14, Callable 11/1/04 @ 103..... 513
470 Sedgwick & Shawnee County, Single
Family Revenue, Series C-2, 7.80%,
11/1/24, Callable 11/1/04 @ 105,
GNMA............................... 526
2,070 Sedgwick County, Mortgage Loan
Revenue, Series B, AMT, 7.80%,
6/1/22, Callable 6/1/00 @ 103,
AMBAC, GNMA........................ 2,196
2,120 Shawnee County, Single Family
Mortgage Revenue, 0.00%, 10/1/16,
Callable 10/1/01 @ 23, MBIA........ 317
975 Wichita, Single Family Mortgage
Revenue, Series A, 7.10%, 9/1/09,
Callable 3/1/03 @ 103.............. 1,035
--------
17,072
--------
Kentucky (0.3%):
510 Housing Corp. Revenue, Series D, AMT,
6.13%, 7/1/22, Callable 7/1/98 @
100................................ 527
1,605 Meade County, PCR, Olin Corp.
Project, 6.00%, 7/1/07, Callable
2/11/98 @ 100...................... 1,616
--------
2,143
--------
Louisiana (1.7%):
900 Calcasieu Parish, Single Family
Mortgage Revenue, Series 92B,
0.00%, 5/1/13, Callable 11/1/02 @
49................................. 322
1,390 Greater Baton Rouge Parking Authority
Sales & Use Tax, 6.375%, 7/1/03,
Callable 2/11/98 @ 100............. 1,393
2,250 Housing Finance Agency, Series B-2,
AMT, 6.75%, 12/1/28, Callable
6/1/07 @ 102, GNMA................. 2,465
850 Iberia Home Mortgage Authority,
Single Family Mortgage Revenue
Refunding, 7.38%, 1/1/11, Callable
1/1/01 @ 100....................... 924
2,475 Jefferson Parish Home Mortgage
Authority Single Family, 0.00%,
5/1/17............................. 898
700 Louisiana State, Series A, 8.00%,
5/1/98, AMBAC...................... 710
5,000 New Orleans, 0.00%, 9/1/14, AMBAC.... 2,181
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 80 Public Facilities Authority Revenue,
Single Family Mortgage, 7.50%,
10/1/15, Callable 4/15/98 @ 100.... $ 87
1,360 Public Facilities Authority Revenue,
Single Family Mortgage, Series C,
8.45%, 12/1/12, Callable 10/1/01 @
101, FHA........................... 1,454
166 St. Mary Public Finance Authority,
Single Family Revenue, Series A,
7.63%, 3/25/12, Callable 10/25/98 @
100................................ 185
--------
10,619
--------
Maine (0.4%):
1,750 State Housing Authority, AMT, 6.10%,
11/15/16, Callable 11/15/06 @
102................................ 1,836
810 State Housing Authority, Housing
Finance Revenue, Series I, AMT,
0.00%, 11/1/10, Callable 11/1/06 @
80.2............................... 420
535 State Housing Authority, Housing
Finance Revenue, Series I, AMT,
0.00%, 11/1/11, Callable 11/1/06 @
75.3............................... 259
215 State Housing Authority, Series D-5,
AMT, 6.90%, 11/15/01, Callable
5/15/01 @ 102...................... 225
--------
2,740
--------
Maryland (0.2%):
1,240 Maryland Community Development,
Multi-Family Housing Revenue,
Series E, AMT, 6.85%, 5/15/25,
Callable 5/15/04 @ 102, GNMA....... 1,338
--------
Massachusetts (1.3%):
2,500 Boston Industrial Development, North
End Community, Series A, 6.45%,
2/1/24, Callable 8/1/07 @ 105,
FHA................................ 2,739
170 State Housing Finance Agency, Single
Family Housing Revenue, AMT, 7.00%,
12/1/23, Callable 6/1/01 @ 102..... 174
1,020 State Housing Finance Agency, Single
Family Housing Revenue, AMT, 7.13%,
6/1/25, Callable 6/1/02 @ 102...... 1,096
2,000 State Industrial Pollution Control,
5.88%, 8/1/08, Callable 8/1/03 @
102................................ 2,060
2,440 State Port Authority Revenue, 7.13%,
7/1/12, Callable 2/11/98 @ 100.5... 2,458
--------
8,527
--------
</TABLE>
Continued
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Michigan (1.9%):
$ 200 Auburn Hills Michigan Building
Authority, 5.50%, 11/1/04.......... $ 213
6,500 Detroit Development, Series A, 5.38%,
5/1/18, Callable 5/1/07 @ 101.5.... 6,562
1,000 Michigan State Building, Series I,
5.10%, 10/1/07, Callable 10/01/03 @
102, AMBAC......................... 1,043
1,640 State Housing Development Authority,
Home Improvement, Series B, AMT,
7.65%, 12/1/12, Callable 12/1/99 @
102, FHA........................... 1,713
1,395 State Housing Development Authority,
Single Family Mortgage Revenue,
7.50%, 6/1/15, Callable 1/1/99 @
100.75............................. 1,464
880 State Housing Development Authority,
Single Family Mortgage Revenue,
Series A, 7.70%, 12/1/16, Callable
6/1/99 @ 102....................... 903
--------
11,898
--------
Minnesota (0.3%):
2,950 Minneapolis Mortgage Revenue, 0.00%,
10/1/12, Callable 10/1/05 @ 100.... 1,167
800 Minnesota State, 4.70%, 8/1/98....... 805
--------
1,972
--------
Mississippi (1.8%):
1,000 Higher Education Assistance Corp.,
Student Loan Revenue, AMT, 6.60%,
1/1/05, Callable 7/1/02 @ 102...... 1,073
1,440 Higher Education Assistance Corp.,
Student Loan Revenue, Series 92C,
AMT, 6.50%, 7/1/04, Callable 7/1/02
@ 102.............................. 1,545
825 Higher Education Assistance Corp.,
Student Loan Revenue, Series C,
AMT, 6.05%, 9/1/07, Callable 9/1/02
@ 102.............................. 873
1,275 Home Corp., Single Family Revenue,
7.10%, 12/1/10, Callable 3/1/98 @
100................................ 1,350
2,000 Home Corp., Single Family Revenue,
Series B, AMT, 7.90%, 3/1/25,
Callable 3/1/05 @ 106, GNMA........ 2,244
2,000 Home Corp., Single Family Revenue,
Series F, AMT, 7.55%, 12/1/27,
Callable 12/1/06 @ 105, GNMA,
FNMA............................... 2,280
1,340 Housing Finance Corp., Single Family
Mortgage Revenue, AMT, 8.25%,
10/15/18, Callable 10/15/99 @ 102,
FGIC............................... 1,419
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Mississippi, continued:
$ 375 Mississippi State, 6.60%, 10/1/98.... $ 383
305 Mississippi State, 6.60%, 10/1/99,
OID @ 99.638....................... 319
--------
11,486
--------
Missouri (1.6%):
645 Grandview Industrial Development
Authority, Multi-Family Housing
Revenue, 9.25%, 5/15/08, Callable
5/15/04 @ 103...................... 645
1,000 Jefferson City, Missouri School
District, Series A, 6.70%,
3/1/11............................. 1,198
1,500 St. Louis County Industrial
Development Authority,
Multi-Family, 5.35%, 7/1/18,
Callable 1/1/08 @ 100, FNMA........ 1,508
1,410 State Housing Development, Common
Mortgage Revenue, Single Family,
AMT, 7.38%, 8/1/23, Callable 2/1/01
@ 102, GNMA........................ 1,496
910 State Housing Development, Common
Mortgage Revenue, Single Family,
AMT, 7.25%, 9/1/26, Callable 3/1/06
@ 105, GNMA........................ 1,026
1,970 State Housing Development, Common
Mortgage Revenue, Single Family,
Series A, AMT, 7.20%, 9/1/26,
Callable 9/1/06 @ 105, GNMA........ 2,226
1,945 State Housing Development, Common
Mortgage Revenue, Single Family,
Series D, AMT, 7.10%, 9/1/27,
Callable 1/1/07 @ 102, GNMA........ 2,144
--------
10,243
--------
Montana (0.7%):
1,545 Greenwood Plaza Housing, Inc.,
10.43%, 1/1/22, Callable 1/1/98 @
102.5, FHA......................... 1,601
3,000 Lewis & Clark County Metropolitan
Environment, Asarco Inc. Project,
5.6%, 1/1/27, Callable 1/1/08 @
102................................ 3,060
--------
4,661
--------
Nebraska (0.1%):
1,890 Finance Authority, Single Family
Mortgage Revenue, 0.00%, 12/15/13,
FHA................................ 392
225 Finance Authority, Single Family
Mortgage Revenue, AMT, 6.35%,
3/15/06, Callable 9/15/02 @ 102.... 235
--------
627
--------
</TABLE>
Continued
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Nevada (2.7%):
$ 1,825 Housing Division, Issue C, AMT,
6.35%, 10/1/13, Callable 4/1/05 @
102, FHA........................... $ 1,943
1,495 Housing Division, Single Family
Mortgage, Series C, AMT, 6.60%,
4/1/14, Callable 4/1/06 @ 102...... 1,592
430 Housing Division, Single Family
Program, Series B-1, 6.20%,
10/1/15, Callable 4/1/04 @ 102..... 451
1,205 Housing Division, Single Family
Program, Series B-2, AMT, 7.90%,
10/1/21, Callable 4/1/00 @ 102..... 1,265
890 Housing Finance Authority, Single
Family Mortgage Revenue, Series Sub
B-1, AMT, 6.00%, 4/1/10, Callable
4/1/07 @ 102....................... 935
10,000 Washoe County, Water Facilities
Revenue, Sierra Pacific Power, AMT,
6.65%, 6/1/17, Callable 12/1/02 @
102, MBIA.......................... 11,012
--------
17,198
--------
New Hampshire (1.1%):
7,000 Higher Educational & Health
Facilities, 6.13%, 10/1/13,
Callable 10/1/03 @ 102............. 7,277
--------
New Jersey (0.4%):
800 Jersey City, 5.50%, 3/15/10, Callable
3/15/07 @ 102, MBIA................ 856
935 State Housing & Mortgage Finance
Agency Revenue, 7.38%, 10/1/17,
Callable 10/1/99 @ 102, MBIA....... 987
710 State Housing & Mortgage Finance
Agency, Home Mortgage Revenue,
8.38%, 4/1/17, Callable 4/1/98 @
103, MBIA.......................... 735
--------
2,578
--------
New Mexico (1.6%):
165 Bernalillo County, Multi-Family
Housing Revenue, Sub Series A2,
7.00%, 11/1/08, Callable 11/1/03 @
103................................ 169
1,000 Educational Assistance Foundation,
Student Loan Program, AMT, 6.20%,
11/1/08, Callable 11/01/06 @ 102... 1,101
600 Educational Assistance Foundation,
Student Loan Program, AMT, 6.30%,
11/1/09, Callable 11/1/06 @ 102.... 661
595 Hobbs, Single Family Mortgage Revenue
Refunding, 8.75%, 7/1/11, Callable
11/1/98 @ 100...................... 668
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
New Mexico, continued:
$ 1,140 Las Cruces, Housing Development
Corp., Multi-family Revenue Refund
Mortgage, Series A, 6.40%, 10/1/19,
Callable 4/1/02 @ 102.............. $ 1,179
170 Las Cruces, Housing Development
Corp., Multi-family Revenue Refund
Mortgage, Sub-Series B, 9.00%,
10/1/03............................ 176
385 Mortgage Finance Authority, Single
Family Mortgage Refunding, Series
A-2, 6.85%, 7/1/12, Callable 7/1/02
@ 102.............................. 410
1,645 Mortgage Finance Authority, Single
Family Mortgage Refunding, Series
A-2, 6.90%, 7/1/24, Callable 7/1/02
@ 02............................... 1,743
840 Mortgage Finance Authority, Single
Family Mortgage Revenue, Series 95,
AMT, 6.45%, 7/1/25, Callable 1/1/06
@ 102, GNMA........................ 875
1,000 Mortgage Finance Authority, Single
Family Mortgage, AMT, 6.05%,
7/1/16, Callable 7/1/07 @ 102,
GNMA............................... 1,052
260 Mortgage Finance Authority, Single
Family Mortgage, Series A, AMT,
7.80%, 3/1/21, Callable 9/1/99 @
102, FHA........................... 271
2,000 New Mexico Finance Authority Project
Revolving Fund, 5.00%, 6/1/17,
Callable 6/1/07 @ 100, AMBAC....... 1,989
--------
10,294
--------
New York (1.0%):
2,400 New York City, Industrial Development
Agency Revenue, Japan Airlines,
AMT, 6.00%, 11/1/15, Callable
11/1/04 @ 102, FHA................. 2,585
1,000 New York State Dorm Authority St.
Vincent Depaul Resource, 5.30%,
7/1/18, Callable 7/1/08 @ 102...... 995
3,000 New York, Series A, 5.25%, 8/1/10,
Callable 8/1/07 @ 101.............. 3,036
--------
6,616
--------
</TABLE>
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
North Carolina (0.2%):
$ 700 Municipal Power Agency, No. 1,
Catawba Electric Revenue, Series B,
6.00%, 1/1/20...................... $ 700
475 Municipal Power Agency, Series B,
6.00%, 1/1/20, Callable 2/11/98 @
100, MBIA.......................... 476
--------
1,176
--------
North Dakota (0.8%):
1,280 North Dakota State Municipal
Financing Project Series H, 5.125%,
6/1/17, Callable 6/1/07 @ 100,
FSA................................ 1,282
1,570 State Housing Finance Agency, Housing
Finance Program, Series A, AMT,
6.00%, 7/1/17, Callable 1/1/07 @
102................................ 1,643
485 State Housing Finance Agency, Single
Family Mortgage Revenue, Series
95A, AMT, 7.40%, 7/1/15, Callable
1/1/05 @ 102....................... 520
1,095 State Housing Finance Agency, Single
Family Mortgage Revenue, Series A,
AMT, 8.38%, 7/1/21, Callable 7/1/99
@ 103, FHA......................... 1,149
300 Student Loan, Series D, AMT, 6.15%,
7/1/09, Callable 7/1/06 @ 100,
AMBAC.............................. 326
--------
4,920
--------
Ohio (5.0%):
1,000 Akron, Bath, Copley, Hospital
Revenue, 7.00%, 1/1/12, ETM........ 1,187
4,500 Akron, Municipal Baseball Stadium,
0.00%, 12/1/16, Callable 12/1/06 @
102................................ 3,876
250 Capital Corp., Multi-Family Housing
Revenue, 7.45%, 11/01/03, Callable
2/11/98 @ 105, FNMA................ 263
2,000 Cleveland, Waterworks Revenue, Series
E, 6.00%, 1/1/17, Callable 2/11/98
@ 100.............................. 2,001
1,000 Dayton, Special Facilities Revenue,
Emery Air Freight Corp., 6.05%,
10/1/09............................ 1,079
650 East Liverpool, Hospital Authority,
Series 91B, 8.13%, 10/1/11,
Callable 10/1/01 @ 102............. 718
1,600 Forest Hills, Local School District,
GO, 6.25%, 12/1/20, Callable
12/1/06 @ 102, MBIA................ 1,798
1,900 Hamilton County, Multi-Family Housing
Revenue, AMT, 7.75%, 10/1/21,
Callable 10/1/06 @ 102............. 1,950
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Hilliard School District, 0.00%,
12/1/10............................ $ 543
555 Hilliard School District, 0.00%,
12/1/13............................ 253
1,330 Housing Financial Agency, Single
Family Mortgage Revenue, Series A,
7.65%, 3/1/29, Callable 9/1/99 @
102, GNMA.......................... 1,395
1,540 Housing Financial Agency, Single
Family Mortgage Revenue, Series D,
7.00%, 9/1/11, GNMA................ 1,640
970 Housing Financial Agency, Single
Family Mortgage Revenue, Series D,
7.05%, 9/1/16, Callable 9/1/01 @
102, GNMA.......................... 1,030
5,250 Mahoning District Water Revenue,
7.75%, 5/15/14, Callable 5/15/04 @
102................................ 5,892
1,000 Montgomery County, Hospital Revenue,
5.60%, 12/1/11, Callable 12/1/07 @
102................................ 1,028
350 Ohio Housing Finance Agency Series
A-1, 5.85%, 3/1/06, Callable 3/1/05
@ 102, GNMA........................ 369
590 Piqua City School District, 0.00%,
12/1/06............................ 396
590 Piqua City School District, 0.00%,
12/1/07, FGIC...................... 377
590 Piqua City School District, 0.00%,
12/1/08, FGIC...................... 356
590 Piqua City School District, 0.00%,
12/1/09............................ 334
2,500 State Educational Loan Revenue,
Series A-1, AMT, 5.55%, 12/1/11,
Callable 6/1/07 @ 102, AMBAC....... 2,635
1,000 Student Loan Funding Corp., Sub
Series A, AMT, 6.10%, 8/1/07,
Callable 8/1/03 @ 100.............. 1,052
650 Washington County, Health Care
Facilities, 6.35%, 10/1/27,
Callable 10/1/03 @ 102............. 662
1,200 Westlake, City School District,
5.90%, 12/1/16, Callable 12/1/06 @
102................................ 1,289
--------
32,123
--------
Oklahoma (3.6%):
700 Grand River Dam Authority, 5.0%,
6/1/99, OID @ 99.462............... 710
500 Grand River Dam Authority, 5.5%,
6/1/03, OID @ 98.835............... 530
800 Grand River Dam Authority, 5.75%,
6/1/06, OID @ 98.623............... 875
500 Grand River Dam Authority Revenue,
4.90%, 6/1/98...................... 502
</TABLE>
Continued
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Oklahoma, continued:
$ 2,730 Housing Finance Agency, Single Family
Revenue, AMT, 7.05%, 9/1/26,
Callable 9/1/06 @ 105.............. $ 3,051
3,000 Housing Finance Agency, Single Family
Revenue, Series B-2, AMT, 7.63%,
9/1/26, Callable 3/1/06 @ 105...... 3,351
140 Oklahoma Colleges Board of Regents,
4.30%, 10/1/01, MBIA............... 142
145 Oklahoma Colleges Board of Regents,
4.40%, 10/1/02, Callable 10/1/01 @
102, MBIA.......................... 147
285 Oklahoma Development Finance
Authority, 4.50%, 6/1/03, AMBAC.... 289
465 Oklahoma Development Finance
Authority, 5.20%, 7/1/06, AMBAC.... 492
490 Oklahoma Development Finance
Authority, 5.30%, 7/1/07, Callable
7/1/06 @ 102, AMBAC................ 523
1,000 Oklahoma Development Finance
Authority, 5.45%, 7/1/10, Callable
7/1/05 @ 101, FSA.................. 1,060
300 Oklahoma State Municipal Power,
Series B, 5.40%, 1/1/02, MBIA...... 314
1,010 Oklahoma State Power Series B, 5.20%,
1/1/00, MBIA....................... 1,035
400 Oklahoma State Power Series B, 5.30%,
1/1/01, MBIA....................... 415
700 Oklahoma State Power Supply System
Series A, 3.85%, 1/1/98, FGIC...... 700
100 Oklahoma State Power Supply System
Series A, 5.70%, 1/1/01, FGIC...... 105
200 Oklahoma State Power Supply System
Series A, 5.80%, 1/1/02, FGIC...... 213
200 Oklahoma State Power Supply System
Series A, 5.90%, 1/1/03, Callable
1/1/02 @ 102, FGIC................. 216
200 Oklahoma State Power Supply System
Series A, 6.00%, 1/1/04, Callable
1/1/02 @ 102, FGIC................. 217
400 Oklahoma State Power Supply System
Series B, 3.75%, 1/1/98, FGIC...... 400
200 Oklahoma State Student Loan Series B,
5.55%, 9/1/98, GSL................. 202
5 Oklahoma State Turnpike Authority,
7.35%, 1/1/99...................... 5
365 Oklahoma State Turnpike Authority,
7.35%, 1/1/99...................... 378
15 Oklahoma State Turnpike Authority,
7.40%, 1/1/00, Callable 1/1/99 @
102................................ 16
485 Oklahoma State Turnpike Authority,
7.75%, 1/1/09, Callable 1/1/99 @
102................................ 514
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Oklahoma, continued:
$ 335 Oklahoma State Turnpike Authority
Series F, 5.30%, 1/1/03, Callable
7/1/02 @ 102, FGIC................. $ 352
485 Oklahoma State Turnpike Authority,
Series 1, 7.40%, 1/1/00, Callable
1/1/99 @ 102....................... 512
10 Oklahoma State Turnpike Authority,
Series 1, 7.50%, 1/1/02, Callable
1/1/99 @ 102....................... 11
190 Oklahoma State Turnpike Authority,
Series 1, 7.50%, 1/1/02, Callable
1/1/99 @ 102....................... 201
15 Oklahoma State Turnpike Authority,
Series 1, 7.75%, 1/1/09, Callable
1/1/99 @ 102....................... 16
165 Oklahoma State Turnpike Authority,
Series G, 5.30%, 1/1/03, Callable
7/1/02 @ 102, FGIC................. 173
500 Oklahoma State Turnpike, Series A,
6.10%, 1/1/05, Callable 7/1/02 @
102................................ 542
220 Oklahoma State Water, 5.80%,
9/1/01............................. 232
180 Oklahoma State Water, 5.90%,
9/1/02............................. 193
245 Oklahoma State Water, 6.00%,
9/1/03............................. 266
230 Oklahoma State Water, 6.10%,
9/1/04............................. 253
255 Oklahoma State Water Resolution
Board, 5.70%, 10/1/02.............. 273
400 Oklahoma State Water Resolution
Board, 6.15%, 10/1/07, Callable
10/1/02 @ 102...................... 437
110 Oklahoma State Water, Series A,
6.15%, 9/1/01, AMBAC............... 118
65 Oklahoma State Water, Series B,
6.00%, 9/1/01...................... 69
60 Oklahoma State Water, Series B,
6.10%, 9/1/02...................... 65
50 Oklahoma State Water, Series B,
6.20%, 9/1/03...................... 55
310 Oklahoma State, Series A, 4.25%,
7/15/00............................ 313
200 Tulsa Airports, 6.40%, 6/1/06,
Callable 6/1/98 @ 100, FGIC........ 219
500 Tulsa Healthcare, 6.75%, 12/15/18,
Callable 6/15/01, @ 102............ 550
1,000 Tulsa Independent School, 4.375%,
6/1/98, AMBAC...................... 1,003
500 Tulsa Metropolitan Water, Series A,
5.50%, 11/1/03..................... 532
280 Tulsa School Project, 6.00%, 12/1/04,
FSA................................ 306
--------
23,093
--------
</TABLE>
Continued
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Oregon (0.9%):
$ 1,000 Albany Hospital Facilities, 5.90%,
10/1/20, Callable 10/1/00 @ 100.... $ 1,005
720 Eugene, Trojan Nuclear Project
Revenue, 5.90%, 9/1/09, Callable
7/10/97 @ 100...................... 721
1,545 Portland, Housing Authority,
Multi-Family Housing Revenue, AMT,
6.13%, 5/1/17, Callable 5/1/00 @
100................................ 1,619
1,240 Portland, Housing Authority, Series
A, 5.60%, 1/1/18, Callable 1/1/08 @
100................................ 1,259
1,055 State Housing & Community Services,
Single Family Mortgage Revenue,
Series 92G, AMT, 6.80%, 7/1/27,
Callable 11/18/02 @ 102............ 1,119
--------
5,723
--------
Pennsylvania (2.3%):
1,000 Clarion County, Hospital Authority
Revenue, 8.10%, 7/1/12, Callable
7/1/99 @ 102....................... 1,078
2,000 Greene County, Industrial Development
Authority, Pollution Control
Revenue, 6.10%, 2/1/07, Callable
7/10/97 @ 100...................... 2,002
1,280 Housing Finance Agency, Single Family
Mortgage, AMT, 6.75%, 10/1/08,
Callable 10/1/05 @ 102............. 1,502
4,250 Northumberland County, Commonwealth
Lease Revenue, 0.00%, 10/15/12..... 2,028
1,600 Philadelphia Hospital & Highered
Facilities Authority, Series A,
5.30%, 1/1/18, Callable 1/1/08 @
102, FHA........................... 1,610
2,550 Philadelphia, Gas Works Revenue,
Series A, 6.38%, 7/1/14, Callable
7/1/03 @ 102....................... 2,752
1,380 Pittsburgh, Urban Redevelopment
Authority, Mortgage Revenue, Series
A, AMT, 8.35%, 10/1/14, Callable
10/1/97 @ 103...................... 1,429
705 Pittsburgh, Urban Redevelopment
Authority, Mortgage Revenue, Sidney
Square, Project A, AMT, 6.10%,
9/1/10, Callable 9/1/06 @ 102...... 754
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Pennsylvania, continued:
$ 590 Pittsburgh, Urban Redevelopment
Authority, Single Family Mortgage
Revenue, Series C, AMT, 7.88%,
12/1/16, Callable 12/1/98 @ 102,
GNMA............................... $ 612
170 Scranton-Lackawanna, Hospital
Facilities Revenue, 7.25%, 7/1/99,
Callable 7/1/98 @ 102, BIG......... 176
1,515 Shaler Area School District, Series
B, 0.00%, 11/15/11................. 770
--------
14,713
--------
Puerto Rico (0.3%):
700 Puerto Rico Commonwealth, 6.00%,
7/1/07, MBIA....................... 788
1,000 Puerto Rico Public Education &
Health, Series L, 6.875%, 7/1/21,
Callable 7/1/02 @ 101.5,
Commonwealth, GTD.................. 1,126
--------
1,914
--------
Rhode Island (0.8%):
2,630 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, AMT,
6.15%, 4/1/17, Callable 10/1/06 @
102................................ 2,759
500 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, Series
15-B, 6.00%, 10/1/04, Callable
4/1/04 @ 102, MBIA................. 529
1,000 Housing & Mortgage Financial Corp.,
Home Ownership Opportunity, Series
3A, 7.85%, 10/1/16, Callable
10/1/00 @ 102...................... 1,058
615 Housing & Mortgage Financial Corp.,
Homeownership Opportunity, Series
C-1, AMT, 6.80%, 10/1/23, Callable
10/1/01 @ 102...................... 636
--------
4,982
--------
</TABLE>
Continued
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
South Carolina (2.4%):
$ 1,900 Beaufort County, Hospital Revenue,
Beaufort Memorial Hospital, 5.00%,
12/1/17, Callable 12/1/07 @ 102,
AMBAC.............................. $ 1,863
3,000 Piedmont, Municipal Power Agency,
Electric Revenue Refunding, Series
A, 6.60%, 1/1/21, Callable 1/1/98 @
100................................ 3,004
6,975 Piedmont, Municipal Power Agency,
Electric Revenue, Series A, 6.55%,
1/1/16, Callable 1/1/98 @ 100...... 6,982
1,000 Resource Authority, Local Government
Program Revenue, Series A, 7.25%,
6/1/20, Callable 6/1/00 @ 102...... 1,074
2,500 State Housing Authority, Single
Family Mortgage, Series B, 7.00%,
7/1/11, Callable 7/1/02 @ 100, FHA,
VA................................. 2,564
--------
15,487
--------
South Dakota (0.3%):
400 Housing Development Authority,
Homeowner Mortgage, Series D-1,
AMT, 6.80%, 5/1/12, Callable 5/1/03
@ 102.............................. 430
1,435 Student Loan Assistance Corp.,
Student Loan Revenue, Series B,
AMT, 7.63%, 8/1/06, Callable 8/1/99
@ 102, MBIA........................ 1,509
--------
1,939
--------
Tennessee (1.4%):
910 Bristol, Multi-Family Home Revenue,
Shelby Heights Project, Series 97,
6.10%, 3/1/12, Callable 3/1/07 @
101................................ 939
2,000 Housing Development Agency,
Homeownership Program, AMT, 7.38%,
7/1/23, Callable 7/1/01 @ 102...... 2,121
825 Housing Development Agency,
Homeownership Program, Series P,
7.70%, 7/1/16, Callable 7/1/00 @
103................................ 868
1,305 Housing Development Agency,
Homeownership Program, Series V,
AMT, 7.65%, 7/1/22, Callable 7/1/01
@ 102.............................. 1,386
665 La Follette, Housing Development
Corp., Mortgage Revenue Refunding,
Series A, 6.25%, 1/1/16, Callable
7/1/05 @ 102, MBIA, FHA............ 704
380 La Follette, Housing Development
Corp., Mortgage Revenue Refunding,
Series A, 6.37%, 1/1/20, Callable
7/1/05 @ 102, MBIA, FHA............ 403
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
$ 1,279 Memphis, Health, Educational &
Housing Revenue Refunding, 7.37%,
1/20/27, Callable 1/20/02 @ 103,
GNMA, FHA.......................... $ 1,378
200 Shelby Tennessee Education & Housing,
Series A, 7.40%, 6/1/03, Callable
6/1/98 @ 102, MBIA................. 207
741 Tennessee State, 5.50%, 3/1/98....... 743
--------
8,749
--------
Texas (10.9%):
1,470 Beaumont, Housing Finance Corp.
Single Family Mortgage Revenue
Refunding, 9.20%, 3/1/12, Callable
9/1/01 @ 103....................... 1,663
1,765 Bexar County, Housing Finance Corp.,
Residual Revenue, GO, 0.00%,
3/1/15, Callable 1/1/99 @ 35.2..... 607
160 Cameron County, Housing Finance
Corp., Single Family Housing
Revenue Refunding, 6.20%, 3/1/13,
Callable 9/1/02 @ 103, GNMA,
FNMA............................... 167
2,500 Central Housing Finance Corp., Single
Family Mortgage Revenue, Series A,
0.00%, 9/1/16, ETM................. 948
250 Central Texas Higher Education,
Series C, 4.35%, 12/1/98,
Guaranteed Student Loans........... 251
250 Central Texas Higher Education,
Series C, 4.65%, 12/1/00,
Guaranteed Student Loans........... 253
50 Central Texas Higher Education,
Series C, 4.75%, 12/1/01,
Guaranteed Student Loans........... 51
100 Clear Creek, Independent School
District, 7.5%, 2/15/06, PSFG...... 121
4,000 Dallas-Fort Worth, Regulation Airport
Revenue, 6.10%, 11/1/07, Callable
7/1/98 @ 100....................... 4,007
3,680 Dallas County, Housing Finance Corp.,
Single Family Mortgage Revenue,
0.00%, 1/1/17, FGIC................ 599
1,000 Dallas County, Improvement &
Refunding, Series A, 6.50%,
8/15/09, Callable 8/15/01 @ 100.... 1,080
300 Dallas, Series B, 6.25%, 2/15/06,
Callable 2/15/03 @ 100............. 326
600 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue
Refunding, Series A, AMT, 8.75%,
10/1/11, Callable 10/1/00 @ 100,
FHA................................ 677
</TABLE>
Continued
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 265 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 7.75%, 9/1/19, Callable 9/1/98
@ 103.............................. $ 275
450 El Paso, Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 8.20%, 3/1/21, Callable 3/1/99
@ 103.............................. 470
300 Fort Bend, Independent School
District, 6.5%, 2/15/02, Callable
2/15/01 @ 100, PSFG................ 321
3,385 Fort Worth, Housing Finance Corp.,
Home Mortgage Revenue Refunding,
Series A, 8.50%, 10/1/11, Callable
10/1/00 @ 100...................... 3,692
1,385 Galveston, Property Finance
Authority, Single Family Mortgage
Revenue Refunding, Series A, 8.50%,
9/1/11, Callable 9/1/01 @ 103...... 1,507
1,000 Houston, Hotel Occupancy Tax Revenue,
Series A, 7.00%, 7/1/15, Callable
7/1/01 @ 100, FGIC................. 1,094
2,365 Houston, Housing Financial Corp.,
Single Family Mortgage Revenue
Refunding, Series B-2, 0.00%,
6/1/14, Callable 12/1/06 @ 58...... 708
700 Houston, Series D, 5.25%, 3/1/08,
Callable 3/1/03 @ 100.............. 722
2,500 Houston, Single Family Mortgage
Revenue, Series B-1, 8.00%, 6/1/14,
Callable 12/1/06 @ 102............. 2,760
1,000 Katy, Independent School District
Series B, 5.00%, 2/15/07, Callable
8/15/02 @ 102, PSFG................ 1,024
855 Laredo, Housing Finance Corp., Single
Family Mortgage Revenue, AMT,
6.20%, 10/1/19, Callable 4/1/04 @
103, GNMA.......................... 888
500 Lewisville Texas Independent School
District, 5.25%, 8/15/06, Callable
8/15/04 @ 100, PSFG................ 526
635 Lubbock, Housing Finance Corp.,
Single Family Mortgage Revenue,
8.00%, 12/1/20, Callable 1/1/99 @
100, GNMA.......................... 645
400 Lubbock, Independent School District,
4.80%, 2/15/00, PSFG............... 407
1,000 Lufkin, Health Facilities Development
Corp., Health Systems Revenue
Refunding, 6.50%, 2/15/06.......... 1,078
250 Lyford, Cons Independent School
District, 5.25%, 8/15/12, Callable
8/15/08 @ 102...................... 245
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 1,000 Lyford, Cons Independent School
District, 5.50%, 8/15/22, Callable
8/15/08 @ 102...................... $ 985
520 Manor, Independent School District,
8.00%, 8/1/05, PSFG................ 642
1,045 Municipal Power Agency, 0.00%,
9/1/08............................. 637
500 National Research Lab, 6.75%,
12/1/04, Callable 12/1/01 @ 102.... 556
600 North Texas Higher Education
Authority, Student Loan Revenue,
Series D, 6.88%, 4/1/02, Callable
4/1/00 @ 102, AMBAC................ 641
9,000 Nueces County, Port Corpus Christi
Authority, Pollution Control
Revenue, AMT, 6.88%, 4/1/17,
Callable 4/1/02 @ 102.............. 9,817
5,185 Public Financing Authority, Series A,
5.00%, 2/1/16, Callable 2/1/08 @
101, AMBAC......................... 5,171
8,100 Red River Authority, Pollution
Control Revenue, AMT, 6.88%,
4/1/17, Callable 4/1/02 @ 102...... 8,844
1,000 San Angelo, Independent School
District, 5.50%, 2/15/09, Callable
2/15/06 @ 100, PSFG................ 1,063
1,500 San Antonio, Hotel Occupancy, 5.30%,
8/15/08, Callable 8/15/06 @ 102,
FGIC............................... 1,594
2,000 San Antonio, Hotel Occupancy Revenue,
0.00%, 8/15/17, FGIC............... 726
1,555 Southeast Texas Housing Finance
Corp., Residual Revenue, Series A,
ETM, 0.00%, 11/1/14................ 599
500 State, 7.00%, 12/1/99, ETM, Callable
06/01/98 @ 100..................... 506
1,500 State Department of Housing &
Community Affairs, Multi-Family
Housing Revenue, Series A, 6.30%,
1/1/16, Callable 1/1/07 @ 102...... 1,606
510 State Department of Housing &
Community Affairs, Multi-Family
Revenue, Series A, 5.90%, 7/1/06... 527
9,340 State Department of Housing &
Community Affairs, Single Family
Revenue Refunding, Series A, 0.00%,
3/1/15, Callable 9/1/04 @ 49.528... 2,986
2,985 State Higher Education Coordinating
Board, Student Loan Revenue, AMT,
0.00%, 10/1/25, Callable 10/1/01 @
100................................ 2,961
</TABLE>
Continued
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas, continued:
$ 375 State Ref-Vets Housing Assist, 5.45%,
06/01/00........................... $ 385
590 State Veterans Housing Assistance,
AMT, 6.05%, 12/1/12, Callable
12/1/02 @ 102...................... 607
195 Travis County, Housing Finance Corp.,
Residential Mortgage Revenue,
Series A, 7.00%, 12/1/11, Callable
12/1/01 @ 103...................... 209
80 Travis County, Housing Finance Corp.,
Single Family Mortgage Revenue
Refunding, Series A, 6.25%, 4/1/19,
Callable 4/1/99 @ 100, GNMA........ 84
1,220 Winter Garden Housing Finance Corp.,
Single Family Mortgage Revenue,
AMT, 6.20%, 10/1/19, Callable
4/1/99 @ 100, GNMA................. 1,263
--------
69,521
--------
Utah (1.0%):
1,000 Intermountain Power Agency, Utah
Power Supply, Series B, 6.00%,
7/1/16, Callable 2/11/98 @ 100..... 1,006
1,000 State Housing Finance Agency, Single
Family Mortgage, AMT, 5.95%,
7/1/09, Callable 1/1/07 @ 102,
FHA................................ 1,033
1,125 State Housing Finance Agency, Single
Family Mortgage, AMT, 6.25%,
7/1/14, Callable 1/1/07 @ 102,
FHA................................ 1,190
2,250 State Housing Finance Agency, Single
Family Mortgage, Issue A-1, 6.00%,
7/1/14, Callable 1/1/07 @ 102,
FHA................................ 2,363
225 State Housing Finance Agency, Single
Family Mortgage, Series A-1, 6.90%,
7/1/12, Callable 1/1/03 @ 102,
FHA................................ 239
600 Utah Regents Student Loans Series
I-1, 4.95%, 5/1/98, LOC AMBAC...... 602
--------
6,433
--------
Virginia (0.2%):
755 Virginia Beach Development Authority,
Multi-Family Housing Revenue, 2nd
Mortgage, Series B, 8.75%, 1/15/09,
Callable 7/15/98 @ 100............. 755
500 Virginia State Housing Development,
Series H, 5.60%, 11/01/06, Callable
5/01/05 @ 102...................... 526
--------
1,281
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Washington (1.9%):
$ 3,000 Chelan Public Utilities, Series D,
AMT, 6.35%, 7/1/28, Callable 7/1/07
@ 102, MBIA........................ $ 3,341
670 King County, Housing Authority Rural
Preservation Project, 5.60%,
1/1/18, Callable 1/1/08 @ 100,
AMT................................ 666
800 King County, Housing Authority Rural
Preservation Project, 5.75%,
1/1/28, Callable 1/1/08 @ 100,
AMT................................ 794
400 Snohomish County, 5.10%, 11/1/02,
MBIA............................... 417
2,750 State Public Power Supply, Nuclear
Project No. 2, Revenue Refunding,
Series B, 5.63%, 7/1/12, Callable
7/1/03 @ 102, FSA.................. 2,876
1,000 Washington State Housing Multifamily
Mortgage, 5.95%, 7/1/20, Callable
1/1/08 @ 103, GNMA................. 1,049
2,000 Washington State Housing Multifamily
Mortgage Revenue, 6.00%, 7/1/30,
Callable 1/1/08 @ 103, GNMA........ 2,098
1,950 Washington State Public Power Supply,
0.00%, 7/1/15...................... 775
--------
12,016
--------
West Virginia (2.2%):
1,000 Charleston Community Parking
Facilities Revenue, 0.00%,
12/1/20............................ 253
1,595 Charleston Community Parking
Facilities Revenue, 0.00%,
12/1/21............................ 378
1,630 Charleston Community Parking
Facilities Revenue, 0.00%,
12/1/22............................ 364
1,665 Charleston Community Parking
Facilities Revenue, 0.00%,
12/1/23............................ 348
3,175 Charleston Community Parking
Facilities, Sub-C, 0.00%,
12/1/26............................ 553
8,370 Kanawha-Putnam County, Single Family
Mortgage, Series A, ETM, 0.00%,
12/1/16, AMBAC..................... 3,160
2,600 Monongalia County, Series A, 6.00%,
11/15/27, Callable 11/15/02 @
102................................ 2,606
250 State, 6.00%, 6/1/99, Callable
2/11/98 @ 101, MBIA................ 253
1,500 State Housing Development Fund,
Housing Finance, AMT, 7.20%,
11/1/20, Callable 5/1/02 @ 102,
FHA................................ 1,609
</TABLE>
Continued
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 2,785 Various Forty, Series A, 5.20%,
8/1/17, Callable 8/1/07 @ 102...... $ 2,833
10,800 Various Forty, Series B, 0.00%,
8/1/30, Callable 8/1/07 @ 26.78.... 1,705
--------
14,062
--------
Wisconsin (0.4%):
690 Housing & Economic Development, Home
Ownership Revenue, AMT, 8.00%,
3/1/21, Callable 9/1/00 @ 102,
FHA................................ 710
440 State, Series A, 7.50%, 1/1/15,
Callable 2/11/98 @ 101............. 446
1,000 State, Series A, AMT, 7.50%, 1/1/21,
Callable 7/1/00 @ 100.............. 1,059
300 Wisconsin Housing & Economic
Development, GO, Series A, 5.35%,
11/1/08, Callable 10/01/03 @ 102... 308
--------
2,523
--------
Wyoming (0.2%):
500 Cheyenne, 5.30%, 12/1/00............. 518
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Wyoming, continued:
$ 95 Community Development Authority,
Single Family Mortgage, Series A,
6.88%, 6/1/14, Callable 6/1/01 @
102, FHA........................... $ 98
350 Community Development Authority,
Single Family Mortgage, Series E,
AMT, 7.75%, 6/1/09, Callable
11/30/98 @ 100.9................... 364
500 Wyoming Community Development Series
E, 5.70%, 6/1/13, Callable 12/01/03
@ 102, FHA......................... 511
--------
1,491
--------
Total Municipal Bonds 619,062
--------
INVESTMENT COMPANIES (0.7%):
4,587 Provident Muni Cash.................. 4,587
--------
Total Investment Companies 4,587
--------
Total (Cost $619,344) (a) $642,464
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $638,444.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $23,415
Unrealized depreciation..................................... (295)
-------
Net unrealized appreciation................................. $23,120
=======
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at December 31, 1997.
Continued
33
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Municipal Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<S> <C>
ACA American Capital Access
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Authority
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
GSL Guaranteed Student Loans
LOC Letters of Credit
MBIA Insured by Municipal Bond Insurance Association
OID Original Issue Discount
PCR Pollution Control Revenue
PSFG Permanent School Fund Guarantee
VA Veterans Administration
</TABLE>
See notes to financial statements.
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS (97.4%):
Arizona (0.9%):
$1,850 Maricopa County, Industrial
Development, Single Family
Mortgage Revenue, 0.00%, 12/31/14,
ETM............................... $ 783
--------
1,000 Tucson & Pima County, Single Family
Mortgage Revenue, 0.00%, 12/1/14,
ETM............................... 426
--------
1,209
--------
California (0.4%):
1,500 San Marcos, Public Facilities,
Revenue, 0.00%, 9/1/19, ETM....... 485
--------
Colorado (0.6%):
2,000 El Paso County, Single Family
Mortgage Revenue, 0.00%, 9/1/15,
ETM............................... 805
--------
Kansas (0.8%):
1,600 Kansas City, Single Family Mortgage
Revenue, Series 1983 A, 0.00%,
12/1/14, ETM...................... 675
1,000 Saline County, Single Family
Mortgage Revenue, Series 1983 A,
0.00%, 12/1/15, ETM............... 398
--------
1,073
--------
Kentucky (92.8%):
225 Ashland Utility Revenue, 6.65%,
4/1/04, Callable 4/1/98 @ 102..... 231
1,500 Berea College Utility Revenue, AMT,
5.90%, 6/1/17, Callable 6/1/07 @
102............................... 1,589
200 Boone County, Certificates of
Participation, Public Golf, 6.35%,
11/15/02.......................... 218
200 Boone County, Certificates of
Participation, Public Golf, 6.40%,
11/15/03, Callable 11/15/02 @
102............................... 221
250 Boone County, School District
Finance Corp., School Building
Revenue, 6.70%, 9/1/06, Callable
9/1/01 @ 103...................... 278
310 Boone County, School District
Finance Corp., School Building
Revenue, 7.10%, 8/1/07, Callable
8/1/00 @ 103...................... 341
1,000 Boone County, School District
Finance Corp., School Building
Revenue, 6.70%, 9/1/07, Callable
9/1/01 @ 103...................... 1,112
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 395 Boone County, School District
Finance Corp., School Building
Revenue, 7.10%, 8/1/08, Callable
8/1/00 @ 103...................... $ 434
230 Bowling Green, Key Municipal
Projects Corp., Lease Revenue,
7.20%, 10/1/01, Callable 4/1/99 @
102............................... 243
280 Bowling Green, Key Municipal
Projects Corp., Lease Revenue,
7.40%, 10/1/04, Callable 4/1/99 @
102............................... 296
280 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 6.38%, 8/1/03,
ETM............................... 301
580 Campbell & Kenton Counties,
Sanitation District #1, Sanitation
District Revenue, 7.13%, 8/1/05,
ETM............................... 639
415 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/09, Callable
6/1/02 @ 102...................... 449
445 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/10, Callable
6/1/02 @ 102...................... 481
325 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/11, Callable
6/1/02 @ 102...................... 351
510 Clinton County, School District
Finance Corp., School Building
Revenue, 6.10%, 6/1/12, Callable
6/1/02 @ 102...................... 550
345 Danville, Hospital Revenue, Hospital
Revenue, Esphraim McDowell Region,
6.40%, 4/1/00, FGIC............... 363
100 Danville, Multi-City Lease Revenue,
Metro Sewer District, 6.35%,
2/1/02, Prerefunded 2/1/01 @ 102,
MBIA.............................. 108
225 Danville, Multi-City Lease Revenue,
Metro Sewer District, 6.50%,
2/1/04, Prerefunded 2/1/01 @ 102,
MBIA.............................. 245
500 Daviess County, Hospital Revenue,
Owensboro-Daviess County, 6.00%,
8/1/04, Callable 8/1/02 @ 102,
MBIA.............................. 542
4,500 Development Finance Authority,
Hospital Revenue, Elizabeth,
Med-A, 6.00%, 11/1/10, Callable
11/1/01 @ 100, FGIC............... 4,763
</TABLE>
Continued
35
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 250 Eastern Kentucky University,
Revenues Construction, Educational
Buildings, Series 0, 6.70%,
5/1/07, Callable 5/1/01 @ 102,
AMBAC............................. $ 274
1,000 Fayette County School District
Financial Corp., School Building
Revenue, 5.38%, 1/1/17, Callable
1/1/07 @ 102...................... 1,021
655 Fayette County, School District
Finance Corp., School Building
Refunding Revenue, 6.00%, 5/1/02,
Callable 5/1/00 @ 102............. 694
1,255 Fayette County, School District
Finance Corp., School Building
Revenue, Series A, 5.35%, 1/1/13,
Callable 1/1/07 @ 102............. 1,302
200 Hardin County, Water District #1,
Waterworks Revenue, 6.70%, 9/1/05,
Callable 3/1/01 @ 102............. 218
170 Henderson Electric Light & Power
Revenue, 5.70%, 3/1/03, Callable
1/17/98 @ 100..................... 170
1,025 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series C, 6.50%, 6/1/02, GSL...... 1,114
1,500 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series C, AMT, 5.45%, 6/1/03,
GSL............................... 1,559
1,705 Higher Education Student Loan Corp.,
Insured Student Loan Revenue,
Series D, AMT, 7.00%, 12/1/06,
Callable 12/1/01 @ 102, GSL....... 1,882
760 Housing Corp. Revenue, 7.40%,
1/1/10, Callable 7/1/00 @ 102..... 815
500 Housing Corp. Revenue, Series A,
5.40%, 1/1/05, Callable 7/1/03 @
102, FHA, FHMA, VA................ 529
500 Housing Corp. Revenue, Series A,
5.50%, 1/1/06, Callable 7/1/03 @
102, FHA, FNMA, VA................ 530
500 Housing Corp. Revenue, Series A,
5.60%, 1/1/07, Callable 7/1/03 @
102, FHA, FMHA, VA................ 528
400 Housing Corp. Revenue, Series B,
5.85%, 7/1/00, FHA, FHMA, VA...... 415
275 Housing Corp. Revenue, Series B,
6.20%, 7/1/03, Callable 7/1/02 @
102, FHA, FHMA, VA................ 292
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$1,745 Housing Corp. Revenue, Series D,
5.80%, 7/1/13, Callable 7/1/06 @
102............................... $ 1,833
410 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 5.25%, 8/1/04, Callable
8/1/03 @ 102...................... 431
110 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 6.00%, 8/1/11, Callable
8/1/01 @ 100...................... 115
500 Infrastructure Authority Revenue,
Governmental Agencies Program
Revenue, 5.75%, 8/1/13, Callable
8/1/03 @ 102...................... 529
500 Infrastructure Authority Revenue,
Governmental Agencies Program,
Refunding Revenue, 5.40%, 8/1/06,
Callable 8/1/03 @ 102............. 531
1,000 Infrastructure Authority Revenue,
Revolving Fund Program, Series E,
6.40%, 6/1/04, Callable 6/1/01 @
102............................... 1,084
710 Infrastructure Authority Revenue,
Revolving Fund Program, Series E,
6.50%, 6/1/05, Callable 6/1/01 @
102............................... 771
250 Infrastructure Authority Revenue,
Series G, 6.10%, 6/1/02........... 269
250 Interlocal School Transportation
Assoc., Equipment Lease Revenue,
6.00%, 3/1/01..................... 264
405 Interlocal School Transportation
Assoc., Equipment Lease Revenue,
6.00%, 3/1/02..................... 433
135 Jefferson County, Capital Projects,
Revenue, 7.70%, 6/1/01, ETM....... 150
500 Jefferson County, Capital Projects,
Revenue, First Mortgage Revenue,
6.38%, 12/1/07, ETM............... 568
725 Jefferson County, Capital Projects,
Revenue, Series A, 6.10%, 8/15/07,
Callable 2/15/03 @ 102............ 790
1,000 Jefferson County, Capital Projects,
Revenue, Series A, 5.50%, 4/1/10,
Callable 4/1/06 @ 102, AMBAC...... 1,069
1,000 Jefferson County, Capital Projects,
Revenue, Series A, 5.50%, 4/1/11,
Callable 4/1/06 @ 102, AMBAC...... 1,063
</TABLE>
Continued
36
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$1,500 Jefferson County, Health Facilities
Revenue, Alliant Hospital, 5.00%,
10/1/13, Callable 10/1/07 @ 101,
MBIA.............................. $ 1,500
500 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.05%,
5/1/02, AMBAC..................... 538
1,000 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.10%,
5/1/03, Callable 5/1/02 @ 102,
AMBAC............................. 1,090
300 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.20%,
5/1/04, Callable 5/1/02 @ 102,
AMBAC............................. 327
500 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 6.38%,
5/1/08, Callable 5/1/02 @ 102,
AMBAC............................. 549
930 Jefferson County, Health Facilities
Revenue, Jewish Hospital
Healthcare Services, Inc., 5.65%,
1/1/10, Callable 1/1/07 @ 102..... 991
1,500 Jefferson County, Health Facilities
Revenues, University Medical
Center, 5.50%, 7/1/17, Callable
7/1/07 @ 101, MBIA................ 1,558
2,000 Jefferson County, Hospital Revenue,
Alliant Hospital Systems, 6.20%,
10/1/04, Callable 10/1/02 @ 102,
MBIA.............................. 2,192
550 Jefferson County, Pollution Control
Revenue, Louisville Gas & Electric
Co., 7.45%, 6/15/15, Callable
6/15/00 @ 102..................... 600
1,000 Jefferson County, School District
Finance Corp., School Building
Revenue, 6.00%, 1/1/04, Callable
7/1/02 @102, MBIA................. 1,084
625 Jefferson County, School District
Finance Corp., School Building
Revenue, 7.15%, 9/1/04,
Prerefunded 9/1/00 @ 103.......... 691
675 Jefferson County, School District
Finance Corp., School Building
Revenue, 7.20%, 9/1/05,
Prerefunded 9/1/00 @ 103.......... 747
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$1,430 Jefferson County, School District
Finance Corp., School Building
Revenue, 5.25%, 7/1/07, Callable
7/1/05 @ 102, MBIA................ $ 1,521
2,315 Junction City, College Revenue,
Centre College Project, 5.70%,
4/1/12, Callable 4/1/07 @ 102..... 2,518
500 Kenton County, Airport Revenue,
International, Series AR-A, AMT,
6.10%, 3/1/04, Callable 3/1/02 @
101, FSA.......................... 538
1,000 Kenton County, Airport Revenue,
International, Series AR-A, AMT,
6.20%, 3/1/05, Callable 3/1/02 @
101, FSA.......................... 1,077
500 Kenton County, Airport Revenue,
International, Series B, AMT,
5.75%, 3/1/07, Callable 3/1/03 @
102, FSA.......................... 537
500 Kenton County, Airport Revenue,
International, Series B, AMT,
5.75%, 3/1/08, Callable 3/1/03 @
102, FSA.......................... 535
380 Kenton County, Public Properties
Corp. Revenue, Community Health
Care Facilities Project, 7.00%,
10/1/06, Prerefunded 10/1/99 @
102............................... 407
200 Kenton County, School District
Finance Corp., School Building
Revenue, 6.30%, 12/1/00........... 212
100 Kenton County, School District
Finance Corp., School Building
Revenue, 6.50%, 12/1/02, Callable
12/1/01 @ 102..................... 110
325 Kenton County, School District
Finance Corp., School Building
Revenue Refunding, 5.25%, 7/1/07,
Callable 7/1/03 @ 102............. 342
495 Kenton County, Water District,
Waterworks Revenue, District #001,
6.30%, 2/1/02, FGIC............... 535
1,015 Kenton County, Water District,
Waterworks Revenue, District #001,
6.38%, 2/1/04, Callable 2/1/02 @
103, FGIC......................... 1,120
1,245 Kentucky Economic Development
Finance Authority Revenue
Mortgage, Southern Central
Nursing, 6.00%, 7/1/27, Callable
1/1/08 @105,...................... 1,325
</TABLE>
Continued
37
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 240 Lexington-Fayette Urban County
Government, Economic Development
Revenue, 7.54%, 12/1/03........... $ 245
300 Lexington-Fayette Urban County
Government, Educational Facilities
Revenue, Transylvania University,
7.15%, 2/1/00, Callable 2/1/99 @
102, MBIA......................... 316
250 Lexington-Fayette Urban County
Government, Educational Facilities
Revenue, Transylvania University,
7.25%, 2/1/02, Callable 2/1/99 @
102, MBIA......................... 264
335 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.20%, 4/1/05,
Prerefunded 4/1/02 @ 102.......... 367
355 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.30%, 4/1/06,
Prerefunded 4/1/02 @ 102.......... 391
380 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/07,
Prerefunded 4/1/02 @ 102.......... 420
405 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/08,
Prerefunded 4/1/02 @ 102.......... 447
425 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Capital Projects Mortgage
Revenue, 6.40%, 4/1/09,
Prerefunded 4/1/02 @ 102.......... 469
425 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Greenspace Project Revenue,
6.75%, 12/1/05, Prerefunded
12/1/00 @ 102..................... 464
240 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Greenspace Project Revenue,
6.75%, 12/1/07, Prerefunded
12/1/00 @ 102..................... 262
350 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.70%,
2/1/02, Callable 2/1/00 @ 102..... 374
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 210 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.88%,
2/1/06, Callable 2/1/00 @ 102..... $ 225
430 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Mortgage Revenue, 6.75%,
7/1/07, Prerefunded 7/1/00 @
102............................... 466
500 Lexington-Fayette Urban County
Government, Public Facilities
Corp., Sewer System Revenue,
6.35%, 7/1/07, Callable 7/1/02 @
102, MBIA......................... 549
935 Lexington-Fayette Urban County
Government, Revenue, University of
Kentucky Alumni Assoc., Inc.,
6.50%, 11/1/07, Callable 11/1/04 @
102, MBIA......................... 1,065
250 Lexington-Fayette Urban County
Government, School Building
Revenue, 6.85%, 6/1/01, Callable
12/1/99 @ 103..................... 270
625 Lexington-Fayette Urban County
Government, School Building
Revenue, 7.00%, 6/1/04, Callable
12/1/99 @ 103..................... 678
1,930 Lexington-Fayette Urban County
Government, Sewer System Revenue,
6.35%, 7/1/09, Callable 7/1/02 @
102, MBIA......................... 2,120
1,420 Louisville & Jefferson County,
Airport Authority Revenue, AMT,
6.00%, 7/1/10, Callable 7/1/07 @
102, MBIA......................... 1,584
200 Louisville & Jefferson County,
Metropolitan Sewer District, Sewer
Revenue, 6.25%, 6/1/99, ETM....... 207
300 Louisville & Jefferson County,
Metropolitan Sewer District, Sewer
Revenue, 6.90%, 5/1/01,
Prerefunded 5/1/99 @ 102, MBIA.... 318
825 Louisville & Jefferson County, Sewer
& Drain System Revenue, 6.40%,
5/15/08, Callable 11/15/04 @ 102,
AMBAC............................. 941
</TABLE>
Continued
38
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 205 Louisville Parking Authority
Revenue, 6.60%, 12/1/03, Callable
6/1/01 @ 103...................... $ 226
300 Louisville Public Properties Corp.
Revenue, 6.00%, 4/1/04, Callable
4/1/99 @ 102...................... 312
300 Louisville Public Properties Corp.
Revenue, 6.00%, 4/1/05, Callable
4/1/99 @ 102...................... 313
295 Louisville Public Properties Corp.,
First Mortgage Revenue, 6.15%,
12/1/05, Callable 12/1/02 @ 102... 322
200 Louisville Public Properties Corp.,
First Mortgage Revenue, 6.40%,
12/1/07, Callable 12/1/02 @ 102... 220
1,000 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.40%, 11/15/04, Callable
11/15/00 @ 102.................... 1,049
500 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.63%, 11/15/07, Callable
11/15/00 @ 102.................... 530
1,540 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.75%, 11/15/09, Callable
11/15/00 @ 102.................... 1,636
1,530 Louisville Water Works Board, Water
System Revenue, Louisville Water
Co., 5.75%, 11/15/10, Callable
11/15/00 @ 102.................... 1,624
2,090 McCracken County, Hospital Revenue,
Mercy Health System, 6.40%,
11/1/07, Callable 11/1/04 @ 102,
MBIA.............................. 2,361
1,000 McCracken County, Hospital Revenue,
Mercy Health System, Series A,
6.20%, 11/1/05, Callable 11/1/04 @
102, MBIA......................... 1,124
505 McCreary County, School District
Finance Corp., School Building
Revenue, 6.60%, 10/1/08, Callable
10/1/01 @ 103..................... 561
215 Mercer County, School District
Finance Corp., School Building
Revenue, 6.38%, 12/1/07, Callable
12/1/01 @ 103..................... 234
300 Morehead State University, Housing &
Dining System Revenue, 6.10%,
11/1/05, Callable 11/1/01 @ 102,
AMBAC............................. 324
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 200 Morehead State University, Housing &
Dining System Revenue, Series M,
6.30%, 11/1/08, Callable 11/1/01 @
102, AMBAC........................ $ 218
215 Muhlenberg County, School District
Finance Corp., School Building
Revenue, 5.85%, 8/1/09, Callable
8/1/02 @ 102...................... 230
750 Muhlenberg County, School District
Finance Corp., School Building
Revenue, 5.85%, 8/1/10, Callable
8/1/02 @ 102...................... 804
460 Murray State University Revenues,
Series G, Second Series, 5.60%,
5/1/07, Callable 5/1/03 @ 102..... 491
240 Murray State University, Educational
Buildings Revenue, 5.60%, 5/1/06,
Callable 5/1/03 @ 102............. 257
530 Northern Kentucky University,
Educational Buildings Revenue,
6.10%, 5/1/06, Callable 5/1/02 @
102, AMBAC........................ 576
300 Owensboro, Electric Light & Power
Revenue, 6.75%, 1/1/03, ETM....... 320
205 Paducah Electric Plant Board
Revenue, 6.30%, 1/1/08, Callable
1/1/01 @ 102, AMBAC............... 221
300 Paducah Waterworks Revenue, 6.10%,
7/1/00, MBIA...................... 315
300 Paducah Waterworks Revenue, 6.60%,
7/1/05, Callable 7/1/01 @ 102,
MBIA.............................. 330
1,085 Perry County, School District,
Financial Corp. School Building
Revenue, 6.25%, 7/1/09, Callable
7/1/02 @ 102...................... 1,180
330 Scott County, School District
Financial Corp., School Building
Revenue, 7.10%, 12/1/02, Callable
12/1/98 @ 103..................... 349
545 Shelby County, School District
Financial Corp., School Building
Revenue, 6.10%, 9/1/02, Callable
9/1/01 @103....................... 588
100 Shelby County, School District
Financial Corp., School Building
Revenue, 6.25%, 9/1/03, Callable
9/1/01 @ 103...................... 109
</TABLE>
Continued
39
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 500 Shelby County, School District
Financial Corp., School Building
Revenue, 6.50%, 9/1/05, Callable
9/1/01 @ 103...................... $ 554
200 Shelby County, School District
Financial Corp., School Building
Revenue, 6.50%, 9/1/07, Callable
9/1/01 @ 103...................... 220
1,000 State Economic Development Finance
Authority, Hospital Revenue,
Appalachian Regulatory Hospital,
5.50%, 10/1/07.................... 1,029
1,000 State Property & Buildings
Commission Revenues, Project #26,
7.40%, 6/1/00, Callable 12/1/98
@102.............................. 1,052
2,300 State Property & Buildings
Commission Revenues, Project #50,
6.00%, 2/1/10, Prerefunded 2/1/01
@ 100............................. 2,430
1,475 State Property & Buildings
Commission Revenues, Project #53,
6.25%, 10/1/02, Callable 10/1/01
@102.............................. 1,606
1,000 State Property & Buildings
Commission Revenues, Project #54,
5.90%, 9/1/07, Callable 9/1/02 @
102............................... 1,078
1,000 State Property & Buildings
Commission Revenues, Project #56,
5.70%, 9/1/06, Callable 9/1/04 @
102............................... 1,089
1,000 State Property & Buildings
Commission Revenues, Project #56,
5.80%, 9/1/07, Callable 9/1/04 @
102............................... 1,091
1,000 State Property & Buildings
Commission Revenues, Project #59,
5.30%, 5/1/07, Callable 11/1/05
@102.............................. 1,063
1,000 State Property & Buildings
Commission Revenues, Project #59,
5.38%, 11/1/09, Callable 11/1/05 @
102............................... 1,058
275 State Property & Buildings
Commission Revenues, Project
Toyota Corp., 6.40%, 11/1/01...... 298
235 State Turnpike Authority, Economic
Development, Recovery Road
Revenue, 6.13%, 7/1/07, ETM....... 253
500 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 7.13%,
5/15/01, Prerefunded 5/15/00
@101.5............................ 542
750 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.70%,
1/1/03............................ 799
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.20%,
7/1/03, AMBAC..................... $ 1,049
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.40%,
7/1/05, AMBAC..................... 1,071
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 7.38%,
5/15/07, Prerefunded 5/15/00 @
101.5............................. 1,090
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 6.50%,
7/1/08, AMBAC..................... 1,174
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.50%,
7/1/09, AMBAC..................... 1,089
1,000 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 0.00%,
1/1/10, FGIC...................... 567
2,600 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.63%,
7/1/10, Callable 7/1/05 @ 102,
AMBAC............................. 2,810
500 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project, 5.75%,
7/1/11, Callable 7/1/05 @ 102,
AMBAC............................. 544
2,750 State Turnpike Authority, Economic
Development, Road Revenue,
Revitalization Project S, 5.50%,
7/1/08, AMBAC..................... 2,999
500 State Turnpike Authority, Resource
Recovery Revenue, 6.63%, 7/1/08,
ETM............................... 559
1,000 State Turnpike Authority, Resource
Recovery Revenue, 1985 Series A,
6.00%, 7/1/09, Callable 1/24/98 @
100............................... 1,002
215 State Turnpike Authority, Toll Road
Revenue, 6.13%, 7/1/08, ETM....... 232
535 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue, 6.30%, 5/1/02,
Callable 11/1/01 @102............. 579
</TABLE>
Continued
40
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Kentucky Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$1,000 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue Bonds, 6.60%,
5/1/01............................ $ 1,079
475 University of Kentucky Revenues,
Community Colleges, Educational
Buildings Revenue, Southeast,
6.30%, 5/1/05, Callable 11/1/01
@102.............................. 518
500 University of Louisville Revenues,
Construction of Educational
Buildings Revenue, Series I,
5.40%, 5/1/07, Callable 5/1/03 @
102............................... 530
500 University of Louisville Revenues,
Construction of Educational
Buildings Revenue, Series I,
5.40%, 5/1/08, Callable 5/1/03 @
102............................... 528
500 University of Louisville Revenues,
Construction of Educational
Buildings Revenue, Series I,
5.40%, 5/1/09, Callable 5/1/03 @
102............................... 525
1,000 University of Louisville,
Educational Buildings Revenue,
5.38%, 5/1/06, Callable 5/1/03
@102.............................. 1,063
330 Versailles County, Water & Sewer,
Revenue, 6.30%, 12/1/09, Callable
12/1/01 @103...................... 361
305 Warren County, Water District
Revenue, 7.13%, 1/1/03, Callable
7/1/99 @ 103, MBIA................ 328
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------ --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Kentucky, continued:
$ 950 Winchester Utilities Revenue, 5.30%,
7/1/09, Callable 7/1/03 @ 102..... $ 993
--------
121,760
--------
Louisiana (1.0%):
3,000 Public Facilities Authority Revenue,
Multi-Family, Series A, 0.00%,
2/1/20, ETM....................... 933
1,000 Public Facilities Authority Revenue,
Series B, 0.00%, 12/1/19, ETM..... 313
--------
1,246
--------
Mississippi (0.6%):
2,500 Home Corp., Residual Revenue, 0.00%,
9/15/16, Callable 3/15/04 @ 41.6,
ETM............................... 830
--------
Texas (0.3%):
1,000 Central Housing Finance Corp.,
Single Family Mortgage Revenue,
Series A, 0.00%, 9/1/16, ETM...... 379
--------
Total Municipal Bonds 127,787
--------
INVESTMENT COMPANIES (1.5%):
1,937 The One Group Municipal Money Market
Fund, Fiduciary Class............. 1,937
--------
Total Investment Companies 1,937
--------
Total (Cost $121,005) (a) $129,724
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $131,149.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $8,719
Unrealized depreciation..................................... --
------
Net unrealized appreciation................................. $8,719
======
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Administration
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GSL Guaranteed Student Loans
MBIA Insured by Municipal Bond Insurance Association
VA Veterans Administration
</TABLE>
See notes to financial statements.
41
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS (99.3%):
California (0.6%):
$ 1,000 Escondido Multifamily Housing
Revenue, 5.40%, 1/1/27, Callable
7/1/05 @ 101.5, FNMA............. $ 1,052
--------
Colorado (1.2%):
2,810 El Paso County, Single Family
Mortgage Revenue, Series A,
0.00%, 5/1/15, ETM............... 1,132
2,335 Housing Finance Authority, Single
Family Mortgage Revenue, 0.00%,
9/1/14, ETM...................... 982
--------
2,114
--------
Kansas (0.5%):
1,000 Kansas City, Single Family Mortgage
Revenue, Series 1983 A, 0.00%,
12/1/14, ETM..................... 422
1,390 Saline County, Single Family
Mortgage Revenue, Series 1983 A,
0.00%, 12/1/15, ETM.............. 553
--------
975
--------
Massachusetts (0.6%):
1,000 State GO, 6.75, 8/1/09, Callable
8/1/01@ 102, AMBAC............... 1,098
--------
Mississippi (0.6%):
3,000 Home Corp., Residual Revenue,
0.00%, 9/15/16, Callable 3/15/04
@ 41.6, ETM...................... 996
--------
Missouri (0.7%):
1,000 State Health, Revenue, 6.40%,
6/1/10, MBIA..................... 1,169
--------
Ohio (94.0%):
1,000 Adams County, GO, School District,
5.45%, 12/1/08, Callable 12/1/05
@ 102, MBIA...................... 1,079
1,000 Air Quality Development Authority,
Pollution Control Revenue, Ohio
Edison, 7.45%, 3/1/16, Callable
3/1/00 @ 102, FGIC............... 1,081
1,045 Akron Sewer Systems, Revenue,
5.30%, 12/1/05, MBIA............. 1,117
1,000 Akron Sewer Systems, Revenue,
5.65%, 12/1/08, Callable 12/1/06
@ 102, MBIA...................... 1,094
1,000 Akron, Bath, Copley Ohio Hospital
Revenue, 7.45%, 11/15/20,
Prerefunded 11/15/00 @ 102,
AMBAC............................ 1,109
1,000 Allen County, Justice Center, GO,
7.00%, 12/1/15, Prerefunded
12/1/01 @ 101, AMBAC............. 1,113
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 3,000 Bexley School District, GO, 6.50%,
12/1/16, Prerefunded 12/1/01
@102............................. $ 3,307
1,000 Big Walnut Ohio School District,
GO, 7.30%, 6/1/15, Prerefunded
6/1/01 @ 102, AMBAC.............. 1,120
250 Big Walnut Ohio School District,
GO, 5.10%, 12/1/15, Callable
12/01/07 @ 101, AMBAC............ 251
725 Bowling Green State University,
Revenue, 5.65%, 6/1/11, Callable
6/1/06 @ 101, AMBAC.............. 782
1,000 Butler County, Hospital Facilities,
6.75%, 11/15/10, Callable
11/15/01 @ 102, FGIC............. 1,100
750 Cincinnati, GO, 6.75%, 12/1/00..... 808
2,775 Clermont County, Waterworks,
Revenue, 6.63%, 12/1/15,
Prerefunded 12/1/01 @102, AMBAC.. 3,076
1,000 Cleveland Airport Systems Revenue,
Series A, AMT, 5.13%, 1/1/13,
Callable 1/1/08 @ 101............ 999
4,500 Cleveland Public Power System,
Revenue, 6.40%, 11/15/06,
Callable 11/15/04 @ 102, MBIA.... 5,075
3,000 Cleveland Public Power System,
Revenue, 0.00%, 11/15/11, MBIA... 1,535
1,000 Cleveland Stadium Project, 5.25%,
11/15/12, Callable 11/15/07 @
102, AMBAC....................... 1,030
2,000 Cleveland Waterworks, Revenue,
5.50%, 1/1/13, MBIA.............. 2,144
1,850 Cleveland Waterworks, Revenue,
Series F-92B, 6.25%, 1/1/06,
Callable 1/1/02 @ 102, AMBAC..... 2,015
3,750 Cleveland Waterworks, Revenue,
Series F-92B, 6.50%, 1/1/11,
Callable 1/1/02 @ 102, AMBAC..... 4,095
50 Cleveland Waterworks, Revenue,
Series F-92B, 6.50%, 1/1/11,
Prerefunded 1/1/02 @102, AMBAC... 55
500 Cleveland, GO, 7.50%, 8/1/07,
Prerefunded 2/1/03 @ 100, AMBAC.. 575
1,000 Cleveland, GO, 6.88%, 7/1/09,
Prerefunded 7/1/99 @102, MBIA.... 1,062
1,000 Cleveland, GO, 6.38%, 7/1/12,
Callable 7/1/02 @ 102, MBIA...... 1,106
</TABLE>
Continued
42
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,225 Columbus Municipal Airport No.
30-E-U, GO, 6.20%, 4/15/04,
Callable 4/15/01 @ 100........... $ 1,305
1,000 Columbus Sewer Improvements, GO,
6.75%, 9/15/06, Callable 9/15/01
@ 100............................ 1,094
2,285 Columbus Waterworks Enlargement No.
44, GO, 6.00%, 5/1/11, Callable
5/1/03 @ 102..................... 2,501
1,000 Columbus Waterworks Enlargement No.
44, GO, 6.00%, 5/1/12, Callable
5/1/03 @ 102..................... 1,094
1,000 Columbus, GO, 6.40%, 1/1/07,
Callable 1/1/02 @ 102............ 1,096
1,000 Columbus, GO, 5.00%, 06/15/12,
Callable 6/15/08 @ 101........... 1,021
1,000 Cuyahoga County, Hospital Revenues,
5.13%, 2/15/13, Callable 2/15/07
@ 102, MBIA...................... 1,008
1,000 Cuyahoga County, Hospital Revenues,
Series A, 5.50%, 1/15/10,
Callable 1/15/06 @ 102, MBIA..... 1,063
1,000 Cuyahoga County, Jail Facilities,
GO, 7.00%, 10/1/13, Prerefunded
10/1/01 @ 102.................... 1,114
1,500 Cuyahoga County, Public
Improvements, GO, 6.70%, 10/1/10,
Prerefunded 10/1/99 @102......... 1,597
1,000 Delaware County, Library District,
GO, 7.25%, 11/1/10, Prerefunded
11/1/00 @102..................... 1,106
1,000 Delaware County, Sewer, GO, 5.60%,
12/1/10, Callable 12/1/05 @
101.............................. 1,068
2,165 Dublin City School District, GO,
0.00%, 12/1/09, MBIA............. 1,253
2,150 Dublin City School District, GO,
0.00%, 12/1/10, MBIA............. 1,174
1,650 Dublin City School District, GO,
0.00%, 12/1/11, MBIA............. 848
1,185 Dublin City School District, GO,
5.00%, 12/1/12, Callable 12/1/07
@ 101, MBIA...................... 1,197
1,000 Fairfield County, Hospital
Improvement Revenue,
Lancaster-Fairfield Community
Hospital, 7.10%, 6/15/21,
Prerefunded 6/15/01 @102, MBIA... 1,113
500 Fairfield County, School District,
GO, 7.75%, 12/1/09, Callable
12/1/98 @ 102, AMBAC............. 528
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,500 Franklin County, Health Care
Facilities Revenue, 5.50%,
11/1/16, Callable 11/1/02 @
102.............................. $ 1,510
1,000 Franklin County, Health Care
Facilities Revenue, 5.50%,
7/1/17, Callable 07/01/08 @
101.............................. 989
1,290 Franklin County, Hospital Revenue,
Children's Hospital, 5.65%,
11/1/08, Callable 11/1/06 @
101.............................. 1,401
1,065 Franklin County, Hospital Revenue,
Children's Hospital, 5.75%,
11/1/09, Callable 11/1/06 @
101.............................. 1,157
800 Franklin County, Hospital Revenue,
Children's Hospital, 5.80%,
11/1/10, Callable 11/1/06 @
101.............................. 869
2,000 Franklin County, Hospital Revenue,
Children's Hospital Project,
Series A, 6.50%, 5/1/07, Callable
11/1/02 @ 102.................... 2,215
1,000 Franklin County, Hospital Revenue,
Children's Hospital Project,
Series A, 6.60%, 11/1/11,
Callable 11/1/01 @ 102........... 1,103
1,000 Franklin County, Hospital Revenue,
Holy Cross Health, 7.65%, 6/1/10,
Prerefunded 6/1/00 @ 102, AMBAC.. 1,101
1,000 Franklin County, Hospital Revenue,
Riverside United, Series B,
7.60%, 5/15/20, Prerefunded
5/15/00 @ 102.................... 1,098
1,000 Greater Cleveland Regional
Transportation Authority, GO,
5.60%, 12/1/11, Callable 12/1/06
@ 101, FGIC...................... 1,073
1,600 Greene County, GO, 6.25%, 12/1/09,
Callable 12/1/02 @ 102, AMBAC.... 1,761
1,000 Greene County, Water System,
Revenue, 6.85%, 12/1/11, Callable
12/1/01 @ 102, AMBAC............. 1,107
1,500 Hamilton County, Building
Improvement, Museum Center, GO,
6.50%, 12/1/09, Callable 12/1/01
@ 102............................ 1,649
1,500 Hamilton County, Economic
Development, Housing Revenue,
AMT, 5.50%, 1/1/12, Callable
1/1/07 @ 102, FNMA............... 1,544
1,500 Hamilton County, Electric Systems,
Revenue, 6.13%, 10/15/08,
Callable 10/15/02 @ 102, FGIC.... 1,637
</TABLE>
Continued
43
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,500 Hamilton County, Hospital
Facilities, Bethesda Hospital,
Series A, 6.25%, 1/1/12, Callable
1/1/03 @ 102..................... $ 1,618
1,265 Hamilton County, Hospital
Facilities, Christ Hospital,
Series B, 6.63%, 1/1/06, Callable
1/1/01 @ 100, FGIC............... 1,355
380 Hamilton County, Sewer System,
Revenue, 6.30%, 12/1/01,
Prerefunded 6/1/01 @102.......... 413
1,000 Hamilton Waterworks, Revenue, Water
Utility Improvement, 6.40%,
10/15/07, Callable 10/15/01 @
102, MBIA........................ 1,094
1,250 Housing Finance Agency, Revenue,
Mortgage, Series A-1, 6.20%,
9/1/14, Callable 3/1/05 @ 102,
GNMA............................. 1,338
1,000 Huron County, Correctional
Facility, Issue I, GO, 5.70%,
12/1/11, Callable 12/1/07 @ 102,
MBIA............................. 1,100
1,000 Kent State University, General
Receipts Revenue, 6.45%, 5/1/12,
Callable 5/1/02 @ 102, AMBAC..... 1,095
3,000 Lakewood Sanitation Sewer System,
Revenue, Special Obligation,
6.40%, 12/1/11, Callable 12/1/01
@ 102............................ 3,263
1,000 Logan County School District, GO,
7.10%, 12/1/12, Prerefunded
12/1/01 @ 101, AMBAC............. 1,117
1,000 Lorain County, Hospital Revenue,
6.00%, 9/1/05, MBIA.............. 1,108
1,000 Lorain County, Hospital Revenue,
5.63%, 9/1/12, Callable 9/1/07 @
102, MBIA........................ 1,078
1,000 Marysville School District, GO,
7.20%, 12/1/10, Prerefunded
12/1/00 @ 102, AMBAC............. 1,104
1,000 Miami County, GO, 5.25%, 12/1/17,
Callable 12/1/7 @ 102............ 1,006
2,500 Middleburg Heights Hospital, 5.70%,
8/15/10, Callable 8/15/08 @ 102,
FSA.............................. 2,756
1,000 Montgomery County Hospital, 5.35%,
12/1/08, Callable 12/1/07 @
101.............................. 1,025
325 Montgomery County Hospital, 5.65%,
12/1/12, Callable 12/1/07 @
101.............................. 335
2,000 Montgomery County, Sisters of
Charity, Series A, 6.50%,
5/15/08, Callable 5/15/01 @ 102,
MBIA............................. 2,180
1,000 North Royalton, GO, 7.50%, 12/1/11,
Callable 12/1/00 @ 102........... 1,110
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Northeast Ohio Regional Sewer
District Wastewater, Revenue,
6.50%, 11/15/08, Prerefunded
11/15/01 @101, AMBAC............. $ 1,095
940 Ohio Capital Corp. for Housing,
5.60%, 1/1/07, Callable 7/1/03 @
102, MBIA........................ 980
665 Ohio Housing Finance, Revenue,
7.50%, 9/1/10, Callable 9/1/00 @
102, GNMA........................ 708
1,000 Ohio State University, University &
College Improvements, Revenue,
5.50%, 12/1/03, Callable 12/1/02
@ 102............................ 1,067
500 Olentangy Local School District,
GO, 7.75%, 12/1/11, BIG.......... 655
565 Olmstead Falls Ohio School
District, GO, 6.85%, 12/15/11,
Prerefunded 12/15/04 @ 102,
FGIC............................. 660
1,250 Olmstead Falls, Local School
District, Revenue, 0.00%,
12/15/10, AMBAC.................. 677
500 Orrville Electric Revenue, 7.50%,
12/1/10, Callable 12/1/98 @ 102,
AMBAC............................ 527
1,000 Ottawa County, GO, 7.00%, 9/1/11,
Callable 9/1/01 @ 102, AMBAC..... 1,107
1,000 Pickerington Local School District,
GO, 7.00%, 12/1/13, Prerefunded
12/1/00 @102, AMBAC.............. 1,099
1,000 Piqua City School District, GO,
5.20%, 12/01/15, Callable 12/1/7
@ 102, FGIC...................... 1,014
2,600 Portage County, Robinson Memorial
Hospital Project, 5.63%,
11/15/07, Callable 11/15/04 @102,
MBIA............................. 2,816
2,220 Rocky River City School District,
School Improvements, GO, 6.90%,
12/1/11, Callable 2/1/00 @ 102... 2,431
1,000 Saint Mary's Electric Systems
Mortgage, Revenue, 7.15%,
12/1/10, Callable 2/1/00 @ 102,
AMBAC............................ 1,103
1,000 Sandusky City School District, GO,
7.30%, 12/1/10, Callable 12/1/00
@ 102............................ 1,106
1,000 Shaker Heights City Schools, GO,
7.10%, 12/15/10.................. 1,218
1,710 Springfield County, School
District, GO, 0.00%, 12/1/12,
AMBAC............................ 826
</TABLE>
Continued
44
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 Springfield, GO, 6.88%, 9/1/06,
Callable 9/1/01 @ 102, AMBAC..... $ 1,110
1,000 State Building Authority, 7.35%,
4/1/09, Prerefunded 4/1/00 @ 102,
MBIA............................. 1,090
2,000 State Building Authority, Adult
Correctional Building, Series A,
6.13%, 10/1/09, Callable 10/1/03
@ 102............................ 2,206
1,000 State Building Authority, Adult
Correctional Building, Series A,
5.50%, 4/1/13, Callable 4/1/07 @
101, AMBAC....................... 1,056
1,000 State Building Authority, Highway
Safety Building, 5.38%, 10/1/09,
AMBAC............................ 1,065
1,000 State Building Authority, State
Correctional Facilities, Series
A, 6.50%, 10/1/01................ 1,085
1,165 State Building Authority, State
Facilities Transportation
Building Fund, Series A, 6.50%,
9/1/09, Callable 9/1/04 @ 102,
AMBAC............................ 1,317
1,000 State Building Authority, State
Facilities, Administration
Building Funds, Series A, 5.75%,
10/1/06, Callable 10/1/04 @ 102,
MBIA............................. 1,097
2,000 State Building Authority, State
Facilities, J. Rhodes, Series A,
6.38%, 6/1/07, Callable 6/1/01 @
102.............................. 2,174
1,000 State Educational Loan Revenue,
Series A-1, AMT, 5.40%, 12/1/09,
Callable 6/1/07 @ 102, AMBAC..... 1,053
1,750 State Elementary & Secondary
Education, Revenue, 5.63%,
12/1/06.......................... 1,911
2,510 State Fresh Water Development, GO,
5.80%, 6/1/11, Callable 6/1/05 @
102, AMBAC....................... 2,734
1,150 State Higher Educational Facilities
Revenue, 0.00%, 7/1/10........... 1,124
1,200 State Higher Educational Facilities
Revenue, 5.25%, 10/1/12, Callable
10/1/07 @ 101.................... 1,231
200 State Higher Educational Facilities
Revenue, 7.25%, 12/1/12, Callable
12/1/00 @ 102, FGIC.............. 220
800 State Higher Educational Facilities
Revenue, 7.25%, 12/1/12, Callable
12/01/00 @ 102, FGIC............. 885
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,000 State Higher Educational
Facilities, Revenue, Case
Western, 7.13%, 10/1/14, Callable
10/1/00 @ 102.................... $ 1,098
1,545 State Housing Finance, Mortgage
Revenue, Series B-3, AMT, 5.25%,
9/1/10, Callable 9/1/07 @ 102,
GNMA............................. 1,579
1,000 State Liquor Profits Revenue,
6.85%, 9/1/00.................... 1,072
1,000 Strongsville, GO, 6.70%, 12/1/11,
Callable 12/1/06 @ 102........... 1,159
1,335 Strongsville, GO, 5.05%, 12/01/14,
Callable 12/01/07 @ 101.......... 1,349
800 Toledo Sewer Revenue, 6.20%,
11/15/02, AMBAC.................. 874
1,000 Toledo Sewer System Revenue, 7.38%,
11/15/10, Callable 11/15/98 @
102, MBIA........................ 1,050
1,000 Toledo, GO, 5.63%, 12/1/11,
Callable 12/1/06 @ 102, AMBAC.... 1,085
1,000 Toledo, GO, Series B, 0.00%,
12/1/11, FGIC.................... 507
1,000 University of Cincinnati, Revenue,
7.30%, 6/1/09, Prerefunded 6/1/99
@ 100............................ 1,047
1,000 University of Cincinnati, Revenue,
General Receipts, University &
College Improvements, 7.00%,
6/1/11, Prerefunded 6/1/01 @
102.............................. 1,106
1,000 University of Cincinnati, Revenue,
Certificates of Participation,
University & College
Improvements, 6.75%, 12/1/09,
Callable 12/1/01 @ 102, MBIA..... 1,101
1,000 University of Cincinnati, Revenue,
General Receipts, 5.75%, 6/1/13,
Callable 6/1/06 @ 101............ 1,070
1,000 University of Cincinnati, Revenue,
General Receipts, Health &
Hospital Improvements, 7.10%,
6/1/10, Callable 6/1/99 @ 102.... 1,063
1,000 University of Cincinnati, Revenue,
Series R2, 6.25%, 6/1/09,
Callable 12/1/02 @ 102........... 1,106
1,000 Water Development Authority,
Pollution Control Facilities,
5.50%, 12/1/09, Callable 6/1/05 @
101, MBIA........................ 1,065
</TABLE>
Continued
45
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ohio Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Ohio, continued:
$ 1,500 Water Development Authority, Water
Development Revenue, 7.00%,
12/1/09, Callable 6/1/00 @ 102,
ETM, AMBAC....................... $ 1,771
1,000 Westerville, Minerva Park & Blendon
Joint Township, Saint Ann's
Hospital, Series B, 6.80%,
9/15/06, Callable 9/15/01 @ 102,
AMBAC............................ 1,140
2,750 Westerville, Minerva Park & Blendon
Joint Township, Saint Ann's
Hospital, Series B, 7.00%,
9/15/12, Callable 9/15/01 @ 102,
AMBAC............................ 3,230
500 Westlake Ohio Safety, GO, 7.65%,
12/1/08, Callable 12/1/98 @
102.............................. 528
1,000 Worthington City School District,
GO, 7.45%, 12/1/12, Prerefunded
12/1/99 @102, MBIA............... 1,083
--------
167,747
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Texas (0.5%):
$ 2,500 Southeast Texas Housing Financial
Corp., Revenue, 0.00%, 9/1/17,
ETM, MBIA........................ $ 900
--------
Washington (0.6%):
1,000 State, Series A & AT-6, GO, 6.25%,
2/1/11........................... 1,151
--------
Total Municipal Bonds........................ 177,202
--------
INVESTMENT COMPANIES (0.2%):
273 Fidelity Ohio Tax Free Money Market
Fund............................. 273
0 The One Group Ohio Municipal Money
Market Fiduciary Class (b)....... 0
--------
Total Investment Companies 273
--------
Total (Cost $164,591) (a) $177,475
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $178,334.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $12,884
Unrealized depreciation..................................... --
-------
Net unrealized appreciation................................. $12,884
=======
</TABLE>
(b) Rounds to less than 1,000.
* Variable rate securities having liquidity sources through bank letters of
credit or other cards and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at December 31, 1997.
<TABLE>
<S> <C>
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FNMA Insured by Federal National Mortgage Association
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
46
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS (100.4%):
Louisiana (100.4%):
$ 1,165 Ascension Parish, Gravity Drain,
Sales & Use Tax, 5.40%, 12/1/07,
Callable 12/1/06 @ 100, FGIC....... $ 1,248
1,230 Ascension Parish, Gravity Drain,
Sales & Use Tax, 5.50%, 12/1/08,
Callable 12/1/06 @ 100, FGIC....... 1,320
2,500 Bastrop, Industrial Development
Board, Pollution Control Revenue,
International Paper Co. Project,
6.90%, 3/1/07, Callable 3/1/02 @
102................................ 2,764
700 Baton Rouge, Public Improvements
Sales & Use Tax, 6.85%, 8/1/00,
Callable 8/1/99 @ 102, AMBAC....... 743
800 Baton Rouge, Public Improvements
Sales & Use Tax, 6.90%, 8/1/01,
Callable 8/1/99 @ 102, AMBAC....... 851
765 Baton Rouge, Public Improvements
Sales & Use Tax, 6.38%, 8/1/09,
Callable 8/1/01 @ 101.5, FSA....... 830
2,000 Baton Rouge, Public Improvements
Sales & Use Tax, Series A, 6.00%,
8/1/04, Callable 8/1/01 @ 101.5,
FSA................................ 2,146
700 Bossier City, Public Improvements
Sales & Use Tax Revenue, 5.05%,
11/1/11, Callable 11/1/07 @ 100,
FGIC............................... 715
805 Bossier City, Public Improvements
Sales & Use Tax Revenue, Series ST,
6.20%, 11/1/07, Callable 11/1/01 @
102, AMBAC......................... 876
400 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/06, Callable 11/1/99 @
101.5, FGIC........................ 427
400 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/07, Callable 11/1/99 @
101.5, FGIC........................ 427
550 Bossier City, Public Improvements
Sales & Use Tax, Series ST-1989,
6.88%, 11/1/08, Callable 11/1/99 @
101.5, FGIC........................ 586
1,415 Caddo Parish, GO, 5.25%, 2/1/06,
Callable 2/1/05 @ 100, MBIA........ 1,492
750 Caddo Parish, GO, 5.25%, 2/1/08,
Callable 2/1/05 @ 100, MBIA........ 783
470 Caddo Parish, Industrial Development
Board, Wal-Mart Stores, Inc.
Project, 5.95%, 11/1/07, Callable
5/1/98 @ 101.5..................... 479
500 Calcasieu Parish, School District
#22, Ward 3, Series A, GO, 7.10%,
2/1/01, Callable 2/1/99 @ 100,
BIG................................ 517
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,500 De Soto Parish, Pollution Control
Revenue, International Paper Co.
Project--Series A, 5.05%,
12/1/02............................ $ 1,570
910 East Baton Rouge Parish, Sales & Use
Tax, 5.80%, 2/1/09, Callable 2/1/05
@ 101.5, FGIC...................... 990
2,280 East Baton Rouge Parish, Sales & Use
Tax, Series A, 8.00%, 2/1/02,
FGIC............................... 2,608
1,085 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.15%, 2/1/05,
Callable 2/1/03 @ 101.5............ 1,133
500 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.80%, 2/1/07,
Callable 2/1/05 @ 101.5, FGIC...... 547
1,000 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.10%, 2/1/07,
Callable 2/1/06 @ 101.5, FGIC...... 1,050
845 East Baton Rouge Parish, Sales & Use
Tax, Series ST, 5.80%, 2/1/08,
Callable 2/1/05 @ 101.5, FGIC...... 921
1,280 East Baton Rouge, Mortgage Finance
Authority, Single Family Mortgage,
Series B, 5.45%, 10/1/03, GNMA..... 1,323
500 East Baton Rouge, Parish Sales & Use
Tax, 7.10%, 2/1/00, Callable 2/1/99
@ 101.5, MBIA...................... 525
1,560 Houma Utilities Revenue, 6.13%,
1/1/07, Callable 1/1/02 @ 102,
FGIC............................... 1,692
490 Housing Finance Agency, Mortgage
Revenue, Series D-2, AMT, 6.10%,
12/1/11, Callable 12/1/06 @ 102.... 524
575 Housing Finance Agency, Mortgage
Revenue, Single Family A-1, 5.70%,
6/1/15, Callable 6/1/05 @ 102...... 595
1,185 Iberia Home Mortgage Authority,
Single Family Mortgage Revenue,
7.38%, 1/1/11, Callable 7/1/03 @
103................................ 1,288
400 Jefferson Parish, Construction
Waterworks, Revenue, District #2,
7.25%, 1/15/00, Callable 1/15/98
@ 100.............................. 407
1,680 Jefferson Parish, Drain Sales Tax
Revenue, 6.50%, 11/1/06, Callable
11/1/01 @ 100, AMBAC............... 1,822
290 Jefferson Parish, Home Mortgage
Authority, Single Family Mortgage
Revenue, Sub-Series B, 4.50%,
6/1/13, Callable 12/1/03 @ 102..... 293
500 Jefferson Parish, School Board Sales
& Use Tax Revenue, 6.05%, 2/1/02,
MBIA............................... 537
</TABLE>
Continued
47
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,100 Jefferson Parish, School Board Sales
& Use Tax Revenue, 6.15%, 2/1/03,
Callable 2/1/02 @ 102, MBIA........ $ 1,200
5,760 Jefferson Parish, School Board Sales
& Use Tax Revenue, 6.25%, 2/1/08,
Callable 2/1/02 @ 102, MBIA........ 6,277
4,670 Jefferson, Sales Tax District
Special, Tax Revenue, Series A,
6.75%, 12/1/06, Callable 12/1/02 @
100, FGIC.......................... 5,176
755 Kenner, Sales & Use Tax Revenue,
5.75%, 6/1/06, Callable 6/1/02 @
103, FGIC.......................... 813
1,525 La Foursche Parish Louisiana School
District #1 Parish Wide, GO, 5.00%,
2/1/13, Callable 2/1/08 @ 100,
FSA................................ 1,536
1,000 Lafayette Parish, GO, 7.80%, 3/1/01,
Callable 3/1/98 @ 102, FGIC........ 1,026
750 Lafourche Parish, Hospital Service,
District #3, Hospital Revenue,
5.50%, 10/1/04, Callable 10/1/03 @
102................................ 784
650 Lafourche Parish, Water District #1,
Water Revenue, 5.63%, 1/1/01....... 676
500 Lincoln Parish, School District #1,
GO, Ruston, 6.20%, 3/1/03, Callable
3/1/01 @ 100, MBIA................. 530
1,465 Lincoln Parish, School District #1,
GO, Ruston, 6.40%, 3/1/05, Callable
3/1/01 @ 100, MBIA................. 1,562
1,000 Louisiana State University &
Agriculture & Mechanical College,
University Revenues, 6.00%, 7/1/07,
Callable 7/1/06 @ 102, MBIA........ 1,121
1,120 Louisiana State University &
Agriculture & Mechanical College,
University Revenues, 5.50%, 7/1/13,
Callable 7/1/06 @ 102, MBIA........ 1,182
1,220 Monroe Parish, Special School
District, GO, 8.00%, 3/1/01,
MBIA............................... 1,363
1,300 Monroe Parish, Special School
District, GO, 7.00%, 3/1/02,
MBIA............................... 1,442
1,390 Monroe Parish, Special School
District, GO, 7.00%, 3/1/03,
MBIA............................... 1,570
1,230 Monroe Parish, Special School
District, GO, 5.35%, 3/1/05,
FGIC............................... 1,309
1,320 Monroe Parish, Special School
District, GO, 5.35%, 3/1/06,
Callable 3/1/05 @ 100, FGIC........ 1,400
1,000 New Orleans Audubon Park, Revenue,
5.00%, 4/1/12, Callable 4/1/07 @
101, MBIA.......................... 1,004
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,000 New Orleans, GO, 5.88%, 10/1/11,
Callable 10/1/05 @ 101, AMBAC...... $ 1,090
3,250 New Orleans, GO, 0.00%, 9/1/17,
AMBAC.............................. 1,200
550 New Orleans, GO, Public Improvement,
Revenue, 5.85%, 11/1/07, Callable
11/1/05 @ 100, FGIC................ 599
1,235 New Orleans, GO, Public Improvement,
Series A, 5.00%, 12/1/13, Callable
12/1/07 @ 100, AMBAC............... 1,238
1,000 Orleans Parish School District, GO,
5.13%, 9/1/13, Callable 3/1/08 @
100, MBIA.......................... 1,016
1,000 Ouachita Parish, Hospital Service
District #1, Glenwood Regional
Medical Center, 5.70%, 5/15/16,
Callable 5/15/10 @ 100, FSA........ 1,066
2,525 Ouachita Parish, Hospital Service
District #1, Glenwood Regional
Medical Center, Health Care
Revenue, 7.50%, 7/1/06, Callable
7/1/01 @ 102....................... 2,839
1,655 Ouachita Parish, West School
District, Series A, GO, 6.70%,
3/1/06, Callable 3/1/01 @ 102,
FSA................................ 1,811
2,000 Ouachita Parish, West School
District, Series A, Revenue, 6.50%,
3/1/03, Callable 3/1/01 @ 102,
FSA................................ 2,177
1,440 Plaquemines Parish, GO, 6.40%,
8/1/04, Callable 8/1/01 @ 102,
AMBAC.............................. 1,570
420 Plaquemines Parish, Sales & Use Tax,
6.70%, 12/1/08, Callable 12/1/01 @
102................................ 457
410 Plaquemines Parish, Sales & Use Tax,
6.70%, 12/1/09, Callable 12/1/01 @
102................................ 446
605 Plaquemines Parish, School Board,
Sales & Use Tax, 6.65%, 3/1/05,
Callable 3/1/02 @ 102.............. 667
2,180 Public Facilities Authority Revenue,
Alton Ochsner Medical Foundation,
Series A, 6.30%, 5/15/04, Callable
5/15/02 @102, MBIA................. 2,388
1,000 Public Facilities Authority Revenue,
Alton Ochsner Medical Project,
Series B, 5.75%, 5/15/11, Callable:
5/15/02 @ 100, MBIA................ 1,048
1,000 Public Facilities Authority Revenue,
Indexed Caps, 5.88%, 2/15/11,
Callable 2/15/03 @ 102, FGIC....... 1,071
1,000 Public Facilities Authority Revenue,
Lafayette General Medical Center
Project, Hospital Revenue, 6.05%,
10/1/04, Callable 10/1/02 @ 102,
FSA................................ 1,089
</TABLE>
Continued
48
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,960 Public Facilities Authority Revenue,
Loyola University, 6.60%, 4/1/05,
Callable 4/1/02 @ 102.............. $ 2,164
2,525 Public Facilities Authority Revenue,
Loyola University Project, 5.63%,
10/1/10, Callable 10/1/07 @ 102,
MBIA............................... 2,749
500 Public Facilities Authority Revenue,
Loyola University Project, Series
A, 7.20%, 10/1/00, Callable 10/1/99
@ 102.............................. 537
1,135 Public Facilities Authority Revenue,
Mary Bird Perkins Cancer Center,
5.50%, 1/1/04, FSA................. 1,206
5,000 Public Facilities Authority Revenue,
Multi-Family, Series A, 0.00%,
2/1/20, ETM........................ 1,553
500 Public Facilities Authority Revenue,
Our Lady of Lake Regional, Series
C, Healthcare Revenue, 5.70%,
12/1/04, Callable 12/1/01 @ 102,
MBIA............................... 532
7,500 Public Facilities Authority Revenue,
Series B, 0.00%, 12/1/19, ETM...... 2,350
110 Public Facilities Authority Revenue,
Sisters of Mercy, 7.38%, 6/1/09,
Callable 6/1/99 @ 102.............. 117
2,145 Public Facilities Authority Revenue,
Tulane University, 6.25%, 7/15/06,
Callable 7/15/01 @ 102............. 2,316
735 Public Facilities Authority Revenue,
Tulane University, 5.55%, 10/1/07,
Callable 10/1/06 @ 102, AMBAC...... 800
1,605 Public Facilities Authority Revenue,
Tulane University, 5.75%, 10/1/09,
Callable 10/1/06 @ 102, AMBAC...... 1,767
300 Public Facilities Authority Revenue,
Tulane University, Series A, 7.50%,
5/15/00, Callable 5/15/98 @ 102.... 310
225 Public Facilities Authority Revenue,
Tulane University, Series A1,
5.80%, 2/15/04, Callable 2/15/03 @
102, FGIC.......................... 243
1,235 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 6.85%, 10/1/05,
Callable 10/1/02 @ 102............. 1,390
730 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 5.40%, 10/1/05,
Callable 10/1/04 @ 102, FGIC....... 776
1,715 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 5.50%, 10/1/06,
Callable 10/1/04 @ 102, FGIC....... 1,840
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 500 Public Facilities Authority Revenue,
Womens Hospital Foundation,
Healthcare Revenue, 6.00%, 10/1/10,
FSA................................ $ 567
2,000 Public Facilities Authority Revenue,
Xavier University, 5.13%, 9/1/12,
Callable 9/1/07 @ 102, MBIA........ 2,051
500 Rapides Parish, Consolidated School
District #62, GO, 7.25%, 4/1/00,
Callable 4/1/99 @ 100, MBIA........ 521
1,475 Rapides Parish, School District #11,
Rigolette--Series 1990, GO, 6.95%,
2/1/02, Callable 2/1/00 @ 100,
FGIC............................... 1,559
2,350 Saint Charles Parish, School District
#1, GO, 6.45%, 3/1/06, Callable
3/1/02 @ 100, AMBAC................ 2,543
480 Shreveport, GO, 6.20%, 3/1/02,
Callable 3/1/01 @ 100, AMBAC....... 509
500 Shreveport, GO, 6.70%, 2/1/03,
Prerefunded 2/1/00 @ 100, AMBAC.... 527
480 Shreveport, GO, 5.90%, 2/1/07,
Callable 2/1/03 @ 100.............. 511
930 Shreveport, Water & Sewer Revenue,
Series A, 7.75%, 12/1/02, FGIC..... 1,078
500 Shreveport, Water & Sewer Revenue,
Series A, 6.25%, 12/1/03, FGIC..... 553
1,000 South Port Community, Port Revenue,
Cargill, Inc. Project, 5.85%,
4/1/17, Callable 4/1/07 @ 102...... 1,056
750 St. Charles Parish, Public
Improvements Sales Tax,, 6.60%,
11/1/07, Callable 11/1/99 @ 102.... 795
870 St. John Baptist Parish, School
District #1, GO, 6.25%, 3/1/05,
Callable 3/1/02 @ 100.............. 928
1,815 St. Tammany Parish, Hospital Service,
District #1, Hospital Revenue,
6.30%, 7/1/07, Callable 7/1/02 @
102................................ 1,958
1,000 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/02, Callable 12/1/99 @ 102,
FGIC............................... 1,064
750 St. Tammany Parish, Sales & Use Tax,
District #3, Series A, 6.50%,
12/1/05, Callable 12/1/99 @ 102,
FGIC............................... 798
400 St. Tammany Parish, School District
#12, GO, 6.50%, 3/1/04, Callable
3/1/01 @ 100, FGIC................. 428
</TABLE>
Continued
49
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Louisiana Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,665 Stadium & Exposition District, Hotel
Occupancy, Tax & Stadium Revenue,
5.65%, 7/1/07, Callable 7/1/04 @
102, FGIC.......................... $ 1,805
2,600 State Energy & Power Authority, Power
Project Revenue, Rodemacher Unit
#2, 6.75%, 1/1/08, Callable 1/1/01
@ 102, FGIC........................ 2,836
1,500 State Gas & Fuels Tax Revenue, Series
A, 7.25%, 11/15/04, Callable
11/15/99 @ 102..................... 1,607
2,750 State GO, 7.10%, 9/1/03, Callable
9/1/00 @ 102, FSA.................. 3,007
4,000 State GO, Series A, 6.00%, 8/1/04,
FGIC............................... 4,388
3,000 State GO, Series A, 6.50%, 4/15/06,
FGIC............................... 3,432
430 State GO, Series A, 6.00%, 5/1/08,
Callable 5/1/04 @ 102, AMBAC....... 473
2,875 State GO, Series A, 5.80%, 08/1/10,
MBIA............................... 3,203
500 State GO, Series A, 6.10%, 5/1/11,
Callable 5/1/04 @ 102, AMBAC....... 551
3,000 State GO, Series B, 5.63%, 8/1/13,
MBIA............................... 3,262
500 State Offshore Terminal Authority,
Deepwater Port Revenue, 1st Stage,
Series B, 6.10%, 9/1/02............ 534
1,325 State Offshore Terminal Authority,
Deepwater Port Revenue, 1st Stage,
Series B, 6.25%, 9/1/04............ 1,445
1,435 Tangipahoa Parish, Consolidated
School District #1, GO, 6.15%,
12/1/07, Callable 12/1/02 @ 100.... 1,544
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ------------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana, continued:
$ 1,250 Tangipahoa Parish, Hospital Service
District #1, Hospital Revenue,
6.13%, 2/1/14, Callable 2/1/04 @
102, AMBAC......................... $ 1,362
1,285 Terrebonne Parish, Hospital Service
District #1, Hospital Revenue,
Terrebonne General Medical Center
Project, 7.40%, 4/1/03, Callable
4/1/98 @ 102, BIG.................. 1,322
690 Terrebonne Parish, Waterworks
District #1, Water Revenue, 5.70%,
11/1/06, Callable 11/1/03 @ 102,
FGIC............................... 746
500 Terrebonne Parish, Waterworks
District #1, Water Revenue, 5.75%,
11/1/08, Callable 11/1/03 @ 102,
FGIC............................... 539
555 Vermilion Parish, Hospital Service,
District #2, Health Care Revenue,
Series A, 6.35%, 5/1/00, MBIA...... 584
--------
Total Municipal Bonds 156,508
--------
INVESTMENT COMPANIES (0.1%):
224 The One Group Municipal Money Market
Fund, Fiduciary Class.............. 224
--------
Total Investment Companies 224
--------
Total (Cost $147,591) (a) $156,732
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $155,950.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $9,141
Unrealized depreciation..................................... --
------
Net unrealized appreciation................................. $9,141
======
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
50
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS (99.0%):
Arizona (0.4%):
$ 1,000 Maricopa County, Individual
Development Single Family
Mortgage, Revenue, 0.00%,
12/31/14, ETM.................... $ 424
--------
Hawaii (0.4%):
400 State GO, Series B, 8.13%,
2/1/00........................... 433
--------
Ohio (0.8%):
500 Columbus, GO, 8.13%, 5/1/04........ 608
250 Public Community Facilities, Higher
Education Cap, Revenue, Series
II-B, 5.38%, 11/1/00, AMBAC...... 259
--------
867
--------
Puerto Rico (1.1%):
1,000 Puerto Rico Industrial Tourist
Educational, Medical and
Environmental Control Facilities,
Auxilio Mutuo Hospital Obligation
Group, Revenue, 5.80%, 7/1/06,
Callable 1/1/05 @ 102, MBIA...... 1,105
--------
Rhode Island (0.2%):
200 State Construction Capital
Development, GO, Series B, 6.00%,
5/15/98.......................... 202
--------
Virginia (0.2%):
200 State Public School Authority
Revenue, Series A, 6.30%,
8/1/01........................... 214
--------
West Virginia (95.9%):
170 Bath & Waterworks Revenue, 5.80%,
9/1/19, Callable 9/1/07 @ 102.... 173
200 Berkeley County, Building
Community, Hospital Revenue, City
Hospital Project, 5.40%,
11/1/98.......................... 202
1,000 Berkeley County, Building
Community, Hospital Revenue, City
Hospital Project, 6.50%, 11/1/09,
Callable 11/1/02 @ 102........... 1,077
1,000 Berkeley County, Education Board,
GO, 5.50%, 4/1/01................ 1,043
800 Berkeley County, Education Board,
GO, 5.55%, 4/1/02................ 842
900 Berkeley County, Education Board,
GO, 5.60%, 4/1/03................ 957
500 Berkeley County, Education Board,
GO, 5.00%, 6/1/08, Callable
6/1/05 @ 100, FGIC............... 516
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,525 Brooke Pleasants Tyler Wetzed
Counties, Single Family Mortgage
Revenue, 7.40%, 8/15/10, ETM..... $ 1,906
225 Cabell County, Education Board, GO,
6.10%, 5/1/99, MBIA.............. 232
150 Cabell County, Education Board, GO,
6.20%, 5/1/00, MBIA.............. 157
1,670 Cabell County, Education Board, GO,
6.60%, 5/1/04, MBIA.............. 1,883
1,500 Cabell County, Education Board, GO,
6.00%, 5/1/06, MBIA.............. 1,668
85 Charles Town Residential Mortgage,
Revenue, Series A, 5.40%,
9/1/02........................... 89
85 Charles Town Residential Mortgage,
Revenue, Series A, 5.55%,
3/1/03........................... 89
85 Charles Town Residential Mortgage,
Revenue, Series A, 5.70%, 9/1/04,
Callable 3/1/03 @ 102............ 90
1,555 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/17..... 486
1,570 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/18..... 458
1,570 Charleston Building Community,
Parking Facility Revenue, Capital
Appreciation, 0.00%, 12/1/19..... 427
1,010 Charleston Parking Revenue, Series
B, 6.75%, 6/1/08, Callable
12/1/04 @ 102.................... 1,159
790 Fairmont Waterworks, Revenue,
5.30%, 7/1/09, Callable 7/1/07 @
102, MBIA........................ 840
925 Fairmont Waterworks, Revenue,
5.50%, 7/1/12, Callable 7/1/07 @
102, MBIA........................ 985
2,500 Harrison County, Board of
Education, GO, 6.40%, 5/1/07,
FGIC............................. 2,880
2,000 Harrison County, Community Special
Obligation, Revenue, Series A,
6.25%, 5/15/10, ETM.............. 2,310
1,500 Harrison County, Education Board,
GO, 6.30%, 5/1/05, FGIC.......... 1,691
95 Huntington Residential Mortgage
Revenue, 6.30%, 9/1/98........... 97
735 Jackson County, Residential
Mortgage Revenue, 7.38%, 6/1/10,
FGIC, ETM........................ 915
</TABLE>
Continued
51
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,000 Kanawha County, Community Building
Revenue, Charleston Hospital,
7.50%, 11/1/08, Prerefunded
11/1/99 @ 102, AMBAC............. $ 1,080
3,910 Kanawha Mercer Nicholas Counties,
Single Family Mortgage Revenue,
0.00%, 2/1/15, Prerefunded 2/1/14
@ 89.8........................... 1,547
4,435 Kanawha-Putnam County, Single
Family Mortgage Revenue, Series
A, 0.00%, 12/1/16, AMBAC, ETM.... 1,675
1,682 Keyser Housing Corp. Mortgage
Revenue, 7.25%, 4/1/21, Callable
1/17/98 @ 101.5, FHA............. 1,701
265 Marion County, Single Family
Mortgage Revenue, 7.05%, 8/1/98,
FGIC, ETM........................ 270
1,065 Marion County, Single Family
Mortgage Revenue, 7.38%, 8/1/11,
FGIC, ETM........................ 1,304
500 Marshall County, Special
Obligation, Revenue, 6.50%,
5/15/10, ETM..................... 580
1,000 Monongalia County, Board of
Education, GO, 7.00%, 4/1/03,
MBIA............................. 1,133
440 Monongalia County, Board of
Education, GO, 7.00%, 4/1/04,
MBIA............................. 507
300 Monongalia County, Board of
Education, GO, 7.00%, 4/1/05,
MBIA............................. 351
1,000 Monongalia County, Building
Community, Healthcare Revenue,
5.75%, 11/15/14, Callable
11/15/02 @ 102................... 1,003
1,000 Ohio County Board of Education, GO,
5.00%, 6/1/13, Callable 6/1/08 @
102.............................. 995
900 Parkersburg Waterworks & Sewer
Revenue Bond, 5.70%, 9/1/13,
Callable 9/1/06 @ 102, FSA....... 975
1,295 Parkersburg Waterworks & Sewer
System Revenue, 5.50%, 3/1/10,
Callable 9/1/06 @ 102, FSA....... 1,393
1,335 Parkersburg Waterworks & Sewer
System Revenue, 5.50%, 9/1/10,
Callable 9/1/06 @ 102, FSA....... 1,436
2,610 Pleasants County, Pollution Control
Revenue, Monongahela Power,
6.38%, 11/1/07, Callable 1/17/98
@ 100............................ 2,613
1,000 Pleasants County, Pollution Control
Revenue, Potomac Power, 6.15%,
5/1/15, Callable 5/1/05 @ 102,
MBIA............................. 1,098
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,000 Pleasants County, Pollution Control
Revenue, Potomac Power, 6.15%,
5/1/15, Callable 5/1/05 @ 102,
AMBAC............................ $ 1,098
1,750 Pleasants County, Pollution Control
Revenue, West Penn Power, 6.15%,
5/1/15, Callable 5/1/05 @ 102,
AMBAC............................ 1,921
1,015 Putnam County Pollution Control
Revenue, FMC Corp., 5.625%,
10/1/13, Callable 10/1/07 @
102.............................. 1,037
1,500 School Building Authority Revenue
Capital Improvement, 5.25%,
7/1/99, MBIA..................... 1,530
1,750 School Building Authority Revenue
Capital Improvement, 6.25%,
7/1/01, MBIA..................... 1,879
1,000 School Building Authority Revenue
Capital Improvement, 5.50%,
7/1/11, Callable 7/1/07 @ 102,
AMBAC............................ 1,068
800 School Building Authority Revenue
Capital Improvement, Series B,
6.80%, 7/1/00, MBIA.............. 854
1,000 School Building Authority Revenue
Capital Improvement, Series B,
6.90%, 7/1/02, Callable 7/1/00 @
102, MBIA........................ 1,086
500 School Building Authority Revenue
Capital Improvement, Series B,
6.95%, 7/1/03, Prerefunded 7/1/00
@ 102, MBIA...................... 544
200 School Building Authority Revenue
Capital Improvement, Series B,
6.75%, 7/1/06, MBIA.............. 234
1,000 School Building Authority Revenue
Capital Improvement, Series B,
6.00%, 7/1/12, Callable 7/1/02 @
100, MBIA........................ 1,066
500 State Building Common Lease
Revenue, 6.70%, 7/1/02, Callable
7/1/00 @ 102, MBIA............... 540
1,000 State Building, Lottery Commission
Revenue, Series A, 5.25%, 7/1/08,
Callable 7/1/07 @ 102, MBIA...... 1,057
</TABLE>
Continued
52
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,000 State Building, Lottery Commission
Revenue, Series A, 5.25%, 7/1/09,
Callable 7/1/07 @ 102, MBIA...... $ 1,053
250 State GO, 5.25%, 3/1/01, Callable
1/17/98 @ 100.................... 250
200 State GO, 5.70%, 6/1/01, Callable
6/1/98 @ 100..................... 201
1,200 State GO, 6.10%, 6/1/03, Callable
1/17/98 @ 101.................... 1,214
250 State GO, Series A, 5.20%,
2/1/99........................... 254
300 State GO, Series A, 5.30%,
2/1/00........................... 308
600 State GO, Series A, 5.40%,
2/1/01........................... 624
2,500 State GO, Series A, 5.50%,
2/1/02........................... 2,631
1,000 State GO, Series B, AMT, 5.80%,
11/1/11, Callable 11/1/06 @ 102,
FGIC............................. 1,103
1,000 State GO, Series B, AMT, 5.85%,
11/1/12, Callable 11/1/06 @ 102,
FGIC............................. 1,102
1,075 State Hospital Finance Authority,
4.50%, 8/1/05, FSA............... 1,083
1,250 State Hospital Finance Authority,
5.00%, 8/1/09,, Callable 8/1/07 @
100, FSA......................... 1,279
1,000 State Hospital Finance Authority,
5.75%, 9/1/13, Callable 9/1/05 @
102, MBIA........................ 1,080
100 State Hospital Finance Authority,
Hospital Revenue, 6.80%, 8/1/98,
FSA.............................. 102
625 State Hospital Finance Authority,
Hospital Revenue, 5.50%, 1/1/02,
MBIA............................. 656
500 State Hospital Finance Authority,
Hospital Revenue, 5.70%, 1/1/04,
Callable 1/1/02 @ 102, MBIA...... 534
500 State Hospital Finance Authority,
Hospital Revenue, 7.00%, 8/1/04,
Callable 8/1/99 @ 102, FSA....... 533
2,350 State Hospital Finance Authority,
Hospital Revenue, 5.10%, 6/1/06,
Callable 6/1/03 @ 102, MBIA...... 2,452
1,000 State Hospital Finance Authority,
Hospital Revenue, 5.13%, 9/1/06,
Callable 9/1/05 @102, MBIA....... 1,051
1,000 State Hospital Finance Authority,
Hospital Revenue, 7.00%, 8/1/09,
Callable 8/1/99 @ 102, FSA....... 1,065
140 State Housing Development, 5.50%,
11/1/98, FHA..................... 142
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 450 State Housing Development, 7.00%,
5/1/99, Callable 1/3/98 @ 102,
FHA.............................. $ 460
190 State Housing Development, 6.30%,
11/1/03, Callable 5/1/02 @ 103,
FHA.............................. 204
195 State Housing Development, 6.40%,
5/1/04, Callable 5/1/02 @ 103,
FHA.............................. 211
205 State Housing Development, 6.40%,
11/1/04, Callable 5/1/02 @ 103,
FHA.............................. 222
500 State Housing Development, 7.38%,
11/1/05, Callable 1/3/98 @ 102,
FHA.............................. 511
245 State Housing Development, 6.75%,
11/1/10, Callable 5/1/02 @ 103,
FHA.............................. 267
315 State Housing Development, 6.75%,
5/1/11, Callable 5/1/02 @ 103,
FHA.............................. 343
1,000 State Housing Development, 7.40%,
11/1/11, Callable 1/3/98 @ 102,
FHA.............................. 1,022
320 State Housing Development, 6.75%,
11/1/11, Callable 5/1/02 @ 103,
FHA.............................. 348
1,000 State Housing Development, 7.40%,
11/1/13, Callable 1/3/98 @ 102,
FHA.............................. 1,022
500 State Housing Development, 7.40%,
11/1/13, Callable 1/3/98 @ 102,
FHA, AMBAC....................... 511
1,000 State Housing Development, 5.80%,
5/1/17, Callable 5/1/07 @ 102.... 1,043
1,500 State University Revenue, 5.75%,
4/1/03, AMBAC.................... 1,612
1,500 State University Revenue, 5.75%,
4/1/04, Callable 4/1/03 @ 102,
AMBAC............................ 1,626
1,000 State University Revenue, 6.00%,
4/1/07, Callable 4/1/03 @ 102,
AMBAC............................ 1,089
1,000 State University Revenue, 6.00%,
4/1/12, Callable 4/1/03 @ 102,
AMBAC............................ 1,085
130 State Water Development Authority
Revenue, Loan Program II, Series
A, 6.90%, 11/1/01................ 142
</TABLE>
Continued
53
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
West Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 160 State Water Development Authority
Revenue, Loan Program II, Series
A, 7.10%, 11/1/04, Callable
11/1/01 @ 102.................... $ 177
2,000 State Water Development Authority
Revenue, Loan Program, Series A,
7.00%, 11/1/11, Callable 11/1/01
@ 102, FSA....................... 2,221
100 State Water Development Authority
Revenue, Series A, 7.30%,
11/1/99.......................... 106
100 State Water Development Authority
Revenue, Series A, 7.40%,
11/1/00.......................... 109
225 University Dormitory Revenue,
Series A, 5.60%, 5/1/99, MBIA.... 230
750 University Revenues, State
University System, Marshall
University Library, 5.60%,
4/1/11, Callable 4/1/06 @ 101,
AMBAC............................ 804
1,000 Weirton Municipal Hospital Building
Community Revenue, 5.10%,
12/1/98, AMBAC................... 1,013
1,270 West Virginia Fairmont General
Hospital, Revenue, 5.15%,
11/1/07.......................... 1,285
655 West Virginia Housing Development,
Series D, AMT, 5.65%, 11/01/15,
Callable 11/01/07 @ 102.......... 673
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
West Virginia, continued:
$ 1,520 West Virginia Single Family
Mortgage Revenue, 5.30%, 8/1/13,
Callable 8/1/07 @ 102,
GNMA/FNMA........................ $ 1,561
1,715 West Virginia University, Revenue,
Series A, 5.30%, 5/1/12, Callable
11/1/07 @ 101, AMBAC............. 1,784
1,125 West Virginia University, Revenue,
Series A, 5.25%, 4/1/13, Callable
4/1/08 @ 102, AMBAC.............. 1,159
1,000 Wheeling Waterworks & Sewer System
Revenue, 5.40%, 6/1/11, Callable
6/1/07 @ 100, FGIC............... 1,048
1,200 Wheeling Waterworks & Sewer System
Revenue, Series C, 6.60%, 6/1/12,
Prerefunded 6/1/02 @ 100, FGIC... 1,317
--------
100,669
--------
Total Municipal Bonds 103,914
--------
INVESTMENT COMPANIES (0.1%):
59 The One Group Municipal Money
Market Fund, Fiduciary Class..... 59
--------
Total Investment Companies 59
--------
Total (Cost $97,190) (a) $103,973
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $104,931.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $6,783
Unrealized depreciation..................................... --
------
Net unrealized appreciation................................. $6,783
======
AMBAC Insured by AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FHA Insured by Federal Housing Authority
FSA Insured by Federal Security Assurance
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
54
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS (98.4%):
Arizona (98.4%):
$ 1,175 Apache County, Public Finance
Corp., Certificates of
Participation, 5.25%, 5/1/04,
Callable 5/1/00 @ 102............ $ 1,198
500 Apache County, Public Finance
Corp., Certificates of
Participation, 5.50%, 5/1/10,
Callable 5/1/00 @ 102............ 516
1,000 Arizona State University Revenues
Refunding System, Series A,
5.60%, 7/1/05, Callable 7/1/02 @
101.............................. 1,064
1,000 Arizona State University Revenues
System, 6.90%, 7/1/04, Callable
7/1/02 @ 101, AMBAC.............. 1,112
1,950 Arizona State University Revenues,
Series A, 5.85%, 7/1/08, Callable
7/1/02 @ 101..................... 2,080
1,820 Arizona State University Revenues,
Series A, 5.90%, 7/1/09, Callable
7/1/02 @ 101..................... 1,943
650 Bullhead City, Municipal Property
Corp., Municipal Facilities
Revenue, 7.20%, 7/1/10,
Prerefunded 7/1/00 @ 101, FGIC... 705
725 Casa Grande, Excise Tax Revenue,
5.90%, 4/1/09, Callable 4/1/04 @
100, FGIC........................ 783
750 Central Arizona Water Conservation
District, Contract Revenue,
7.15%, 11/1/99................... 792
4,290 Central Arizona Water Conservation
District, Contract Revenue,
7.00%, 11/1/03, Prerefunded
11/1/00 @ 102.................... 4,702
1,000 Central Arizona Water Conservation
District, Contract Revenue,
7.65%, 11/1/09, Prerefunded
11/1/00 @ 102.................... 1,113
3,300 Central Arizona Water Conservation
District, Contract Revenue,
7.13%, 11/1/11, Prerefunded
11/1/00 @ 102.................... 3,628
2,875 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project, 4.75%,
11/1/07, Callable 5/1/04 @ 102,
MBIA............................. 2,954
1,460 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project--Series
A, 5.20%, 11/1/03................ 1,532
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 4,000 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project--Series
A, 5.40%, 11/1/05................ $ 4,271
4,750 Central Arizona Water Conservation
District, Contract Revenue,
Central Arizona Project--Series
A, 5.40%, 11/1/06................ 5,099
3,000 Central Arizona Water Conservation
District, Contract Revenue,
Series B, Power Sales Co., 6.50%,
11/1/11, Prerefunded 5/1/01 @
102.............................. 3,276
625 Coconino & Yavapai Counties
Arizona, School District #9,
Sedona Oak Creek Project of
1992-C, GO, 5.60%, 7/1/06,
Callable 7/1/02 @ 101, FGIC...... 664
905 Coconino County, Arizona
University, School District #001,
Flagstaff, GO, 5.70%, 7/1/01,
Callable 7/1/00 @ 101, AMBAC..... 950
2,400 Coconino County, Arizona
University, School District #001,
Flagstaff, GO, 5.50%, 7/1/08,
Callable 7/1/05 @ 101, AMBAC..... 2,581
2,500 East Valley Institute of
Technology, District #401,
Project of 1994, Series B, GO,
6.00%, 7/1/05, AMBAC............. 2,767
1,000 East Valley Institute of
Technology, District #401, Series
A, GO, 6.00%, 7/1/04, Callable
7/1/00 @ 101, AMBAC.............. 1,053
2,000 Gila County Arizona Industrial
Development Authority Revenue,
Asarco Inc., 5.55%, 1/1/27,
Callable 1/1/08, @102............ 2,040
1,000 Gilbert Improvement District #011,
GO, 7.60%, 1/1/04, Callable
7/1/98 @ 102.5, FGIC............. 1,044
1,000 Glendale Municipal Property Corp.,
7.00%, 7/1/05, Callable 7/1/99 @
101, MBIA........................ 1,053
1,000 Glendale Municipal Property Corp.,
7.00%, 7/1/09, Callable 7/1/99 @
101, MBIA........................ 1,052
4,000 Glendale University High School,
District #205, Projects of 1993 -
Series A, GO, 5.30%, 7/1/07,
Callable 7/1/03 @ 101............ 4,198
</TABLE>
Continued
55
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 2,900 Glendale University High School,
District #205, Projects of 1993 -
Series B, GO, 5.45%, 7/1/09,
Callable 7/1/05 @ 101, FGIC...... $ 3,094
2,000 Glendale, GO, 5.05%, 7/1/02,
FGIC............................. 2,081
2,000 Maricopa County, Community College
District, 5.00%, 7/1/13, Callable
7/1/06 @ 101..................... 2,023
1,570 Maricopa County, Community College
District, Building Revenue,
5.10%, 7/15/05, MBIA............. 1,657
1,000 Maricopa County, Community College
District, Series A, 6.00%,
7/1/07, Callable 7/1/03 @ 101.... 1,086
500 Maricopa County, Industrial
Development Authority, Hospital
Facility Revenue, St. Joseph's
Hospital & Medical Centers
Project, 6.20%, 11/1/11, Putable
11/1/98 @ 100, ETM............... 501
1,000 Maricopa County, School District
#001, Phoenix Elementary, GO,
5.50%, 7/1/10, Callable 7/1/07 @
101, MBIA........................ 1,077
850 Maricopa County, School District
#006, Washington Elementary,
Series A, GO, 5.75%, 7/1/05,
Callable 7/1/02 @ 101, AMBAC..... 909
900 Maricopa County, School District
#006, Washington Elementary,
Series A, GO, 5.75%, 7/1/06,
Callable 7/1/02 @ 101, AMBAC..... 961
2,000 Maricopa County, School District
#038, Madison Elementary Project
of 1995--Series B, GO, 5.80%,
7/1/15, Callable 7/1/06 @ 101,
MBIA............................. 2,159
1,015 Maricopa County, School District
#038, Madison Elementary, GO,
5.30%, 7/1/08, Callable 7/1/03 @
101, AMBAC....................... 1,065
1,000 Maricopa County, School District
#097, Deer Valley Project of
1986--Series F, GO, 5.90%,
7/1/03, Callable 7/1/02 @ 101,
FGIC............................. 1,080
750 Maricopa County, School District
#097, Deer Valley Project of
1996--Series C, GO, 5.35%,
7/1/09, Callable 7/1/07 @ 100,
FSA.............................. 795
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 2,000 Maricopa County, School District
#11, 5.00%, 7/1/09, Callable
7/1/07 @ 101, AMBAC.............. $ 2,074
2,000 Maricopa County, School District
#210, Phoenix, GO, 5.25%, 7/1/04,
Callable 7/1/03 @ 101............ 2,120
2,000 Maricopa County, School District
#210, Project of 1995--Series B,
GO, 5.38%, 7/1/13................ 2,075
1,200 Maricopa County, School District
#210, Series A, GO, 5.60%,
7/1/13, Callable 7/1/05 @ 101.... 1,276
2,250 Maricopa County, School District
#210, Series D, GO, 6.70%,
7/1/03, Prerefunded 7/1/01 @
101.............................. 2,458
1,000 Maricopa County, School District
#210, Series E, GO, 7.10%,
7/1/03........................... 1,144
1,250 Maricopa County, School District
#4, GO, 5.25%, 7/1/03, FGIC...... 1,318
2,000 Maricopa County, School District
#4, GO, 5.50%, 7/1/09, Callable
7/1/05 @ 102, FGIC............... 2,154
2,500 Maricopa County, School District
#4, GO, 5.00%, 7/1/10, Callable
7/1/06 @ 101, FGIC............... 2,573
750 Maricopa County, School District
#4, GO, 5.65%, 7/1/11, Callable
7/1/05 @ 102, FGIC............... 811
2,500 Maricopa County, School District
#48, Scottsdale School
Improvements, GO, 5.00%, 7/1/14,
Callable 7/1/04 @ 101............ 2,516
1,000 Maricopa County, School District
#48, Scottsdale, GO, 5.20%,
7/1/06, Callable 7/1/03 @ 101.... 1,052
1,475 Maricopa County, School District
#48, Scottsdale, GO, 4.90%,
7/1/06, Callable 7/1/02 @ 101.... 1,523
1,000 Maricopa County, School District
#48, Scottsdale, GO, 5.25%,
7/1/08, Callable 7/1/03 @ 101.... 1,048
1,500 Maricopa County, School District
#48, Scottsdale, GO, 6.75%,
7/1/09, Prerefunded 7/1/01 @
101.............................. 1,641
2,000 Maricopa County, School District
#48, Scottsdale, Series B, GO,
6.10%, 7/1/02.................... 2,165
1,000 Maricopa County, School District
#48, Scottsdale, Series B, GO,
6.30%, 7/1/04.................... 1,119
</TABLE>
Continued
56
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 3,100 Maricopa County, School District
#69, Paradise Valley, GO, 5.80%,
7/1/09, AMBAC.................... $ 3,466
2,400 Maricopa County, School District
#69, Paradise Valley, GO, 5.00%,
7/1/09, Callable 7/1/03 @ 102,
AMBAC............................ 2,469
1,000 Maricopa County, School District
#69, Paradise Valley, GO, 6.35%,
7/1/10, MBIA..................... 1,171
2,000 Maricopa County, School District
#69, Paradise Valley, Series B,
GO, 6.50%, 7/1/08, Prerefunded
7/1/01 @100...................... 2,155
1,000 Maricopa County, School District
#80, Chandler Projects of 1995 -
Series C, GO, 5.10%, 7/1/08,
FGIC............................. 1,059
1,000 Maricopa County, School District
#80, Chandler, GO, 5.80%, 7/1/08,
Callable 7/1/05 @ 101, FGIC...... 1,095
920 Maricopa County, School District
#9, Wickenburg, GO, 5.50%,
7/1/13, Callable 7/1/07 @ 100,
AMBAC............................ 965
2,345 Mesa Arizona Street & Highway,
5.00%, 7/1/15, Callable 7/1/07 @
100, FGIC........................ 2,355
1,625 Mesa, GO, 6.00%, 7/1/02, AMBAC..... 1,753
1,000 Mesa, GO, 5.70%, 7/1/03, FGIC...... 1,076
725 Mesa, GO, 5.00%, 7/1/03, MBIA...... 755
2,040 Mesa, Project of 1987, GO, 9.00%,
7/1/01, ETM, MBIA................ 2,365
2,000 Mesa, Project of 1987, GO, 5.70%,
7/1/08, Callable 7/1/03 @ 101.5,
MBIA............................. 2,144
2,000 Mesa, Utility System Revenue,
5.38%, 7/1/12, Callable 7/1/05 @
101, FGIC........................ 2,089
1,205 Mojave County, Elementary School
District #16, GO, 5.25%, 7/1/09,
Callable 7/1/07 @ 100, MBIA...... 1,272
1,200 Mojave County, School District # 1,
Lake Havasu, GO, 5.20%, 7/1/09,
Callable 7/1/03 @ 101, AMBAC..... 1,248
2,050 Navajo County School District #10,
5.125%, 7/1/12,, CALLABLE 7/1/07
@ 101, FGIC...................... 2,068
1,000 Northern Arizona University,
Revenues, 7.50%, 6/1/03,
Prerefunded 6/1/99 @ 100......... 1,050
2,750 Northern Arizona University,
Revenues, 6.40%, 6/1/07, Callable
6/1/02 @ 101, FGIC............... 3,001
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,215 Northern Arizona University,
Revenues, Series A, 5.60%,
6/1/05, Callable 6/1/02 @ 102,
AMBAC............................ $ 1,299
1,000 Oro Valley Municipal Property
Corp., Municipal Water System
Revenue, Canada Hills, 5.45%,
7/1/14, Callable 7/1/08 @ 101,
MBIA............................. 1,055
2,000 Phoenix Arizona Civic Improvement
Corp. Series B, 6%, 7/1/08,
Callable 7/1/04 @ 102............ 2,205
2,000 Phoenix Civic Improvement Corp.,
Water System Revenue, 5.63%,
7/1/09, Callable 7/1/06 @ 100.... 2,155
725 Phoenix Street & Highway User
Revenue, 6.25%, 7/1/06, Callable
7/1/02 @ 102..................... 793
2,000 Phoenix Street & Highway User
Revenue, 6.50%, 7/1/09, ETM...... 2,256
1,255 Phoenix Street & Highway User
Revenue, Series A, 5.80%, 7/1/05,
Callable 7/1/02 @ 102, FGIC...... 1,353
2,450 Phoenix, GO, 6.38%, 7/1/13,
Callable 7/1/02 @ 102............ 2,698
1,125 Phoenix, GO, Series A, 5.10%,
7/1/04........................... 1,184
2,500 Phoenix, GO, Series A, 5.20%,
7/1/05........................... 2,655
1,000 Phoenix, GO, Series A, 5.40%,
7/1/07........................... 1,083
1,000 Pima County, Arizona College
District, Certificates of
Participation, Series B, 6.00%,
7/1/07, Callable 7/1/01 @ 101,
AMBAC............................ 1,067
725 Pima County, GO, 5.60%, 7/1/07,
Callable 7/1/03 @ 101............ 774
555 Pima County, GO, 6.20%, 7/1/08,
Callable 7/1/02 @ 101............ 602
1,500 Pima County, Industrial Development
Authority, HealthPartners -
Series A, 5.30%, 4/1/07, MBIA.... 1,597
1,000 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue Refunding, Series B, AMT,
6.15%, 11/1/23, Callable 5/1/07 @
102, GNMA........................ 1,090
1,135 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue, Series A, 6.40%, 8/1/11,
Callable 8/1/05 @ 102............ 1,210
270 Pima County, Industrial Development
Authority, Single Family Mortgage
Revenue, Series A, 7.63%, 2/1/12,
Callable 2/1/01 @ 101............ 284
</TABLE>
Continued
57
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 1,585 Pima County, Sewer Revenue, Series
A, 4.90%, 7/1/08, Callable 7/1/04
@ 102, FGIC...................... $ 1,631
1,000 Pima County, Union School District
#1, Project of 1989--Series G,
GO, 5.00%, 7/1/06, Callable
7/1/05 @ 101, MBIA............... 1,047
2,205 Pima County, Union School District
#1, Project of 1989--Series G,
GO, 5.00%, 7/1/07, Callable
7/1/05 @ 101, MBIA............... 2,312
1,000 Pima County, Union School District
#1, Series B, GO, 7.20%, 7/1/09,
Prerefunded 7/1/00 @ 101......... 1,084
1,500 Pima County, Union School District
#1, Series C, GO, 6.88%, 7/1/10,
Prerefunded 7/1/01 @ 101, MBIA... 1,649
2,000 Pima County, Union School District
#1, Tucson School Improvements,
Series D, GO, 6.10%, 7/1/11,
Callable 7/1/02 @ 102, FGIC...... 2,192
2,000 Pima County, United School
District, 5.375%, 7/1/09, FGIC... 2,160
1,200 Pinal County, School District #004,
Casa Grande Elementary School
Improvement, GO, 6.00%, 7/1/04,
Callable 7/1/01 @ 101, AMBAC..... 1,291
1,000 Prescott Arizona Property Corp.
Facilities, 5.125%, 1/1/18,
Callable 1/1/08 @ 101, FGIC...... 1,001
2,015 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, 6.00%, 1/1/07........... 2,259
1,270 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series A, 5.40%,
1/1/04........................... 1,351
2,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series A, 5.63%,
1/1/06........................... 2,181
1,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series A, 6.50%, 1/1/07,
Callable 1/1/01 @ 102............ 1,083
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 2,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series A, 5.00%, 1/1/20,
Callable 1/1/08 @ 101............ $ 1,974
5,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series B, 5.05%,
1/1/06........................... 5,265
3,250 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series B, 5.20%,
1/1/08........................... 3,463
2,500 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series B, 5.38%, 1/1/09,
Callable 1/1/03 @ 102............ 2,627
3,000 Salt River Project, Arizona
Agriculture, Improvement & Power
District, Electric Systems
Revenue, Series D, 6.00%, 1/1/13,
Callable 1/1/02 @ 102............ 3,202
2,815 Santa Cruz County Industrial
Development, Citizens Utility
Co., 4.75%, 8/1/20............... 2,856
2,085 Scottsdale Municipal Property
Corp., Excise Tax Revenue, 5.38%,
7/1/05........................... 2,233
1,000 Scottsdale Municipal Property
Corp., Lease Revenue, Excise Tax
Revenue, 6.38%, 5/1/05, Callable
11/1/02 @ 100.................... 1,088
1,900 Scottsdale Project of 1989, Series
E, GO, 5.50%, 7/1/14, Callable
7/1/02 @ 101..................... 1,967
1,065 Scottsdale Street & Highway User
Revenue, 5.50%, 7/1/07........... 1,156
2,000 Scottsdale Water & Sewer, A989-
Series D, 5.0%, 7/1/19, Callable
7/1/08 @ 101, FSA................ 1,977
1,700 Scottsdale, GO, 5.25%, 7/1/06...... 1,817
500 Scottsdale, GO, 5.50%, 7/1/09...... 546
850 Scottsdale, GO, 5.00%, 7/1/09,
Callable 7/1/03 @ 101............ 876
1,615 Scottsdale, GO, Series A, 4.80%,
7/1/08, Callable 7/1/03 @ 101.... 1,654
750 Scottsdale, GO, Series B, 6.00%,
7/1/09, Prerefunded 7/1/01 @
101.............................. 802
</TABLE>
Continued
58
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 2,500 State Certificates of
Participation, 6.63%, 9/1/08,
Callable 9/1/01 @ 102, FSA....... $ 2,748
1,000 State Municipal Financing Program,
Certificates of Participation,
Series 20, 7.70%, 8/1/10, ETM,
BIG.............................. 1,262
1,000 State Municipal Financing Program,
Certificates of Participation,
Series 27, 7.00%, 8/1/04,
Callable 8/1/98 @ 101, BIG....... 1,028
1,250 State Power Authority Resource
Revenue, Hoover Uprating Project,
4.80%, 10/1/01, MBIA............. 1,285
2,035 State Power Authority Resource
Revenue, Hoover Uprating Project,
5.40%, 10/1/07, Callable 10/1/03
@ 102, MBIA...................... 2,174
2,000 State Transportation Board Highway
Revenue, 7.00%, 7/1/06,
Prerefunded 7/1/00 @ 101......... 2,160
3,000 State Transportation Board Highway
Revenue, 5.25%, 7/1/07, Callable
7/1/03 @ 102..................... 3,171
1,000 State Transportation Board Highway
Revenue, Sub-Series B, 6.50%,
7/1/08, Prerefunded 7/1/02 @
101.5............................ 1,108
1,635 Tempe, GO, 5.00%, 7/1/10, Callable
7/1/06 @ 101..................... 1,679
1,000 Tempe, GO, Series A, 5.10%,
7/1/05........................... 1,055
580 Tempe, GO, Series B, 6.00%, 7/1/06,
Callable 7/1/02 @ 101............ 624
2,235 Tempe, Union High School District
#213, Project of 1989--Series B,
GO, 5.90%, 7/1/04, Callable
7/1/01 @ 101..................... 2,371
1,000 Tucson Arizona Water System,
5.125%, 7/1/20, Callable 7/1/07 @
100.............................. 999
1,000 Tucson Street & Highway User
Revenue, 5.30%, 7/1/05, Callable
7/1/03 @ 102, MBIA............... 1,065
2,000 Tucson Water Revenue Refunding,
Series A, 5.75%, 7/1/12, Callable
7/1/02 @ 102, MBIA--IBC.......... 2,123
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Arizona, continued:
$ 2,500 Tucson, Arizona, 5.00%, 7/1/19,
Callable 7/1/07 @ 100............ $ 2,485
700 University of Arizona, Foundation
Certificates of Participation,
Series 8, 4.90%, 8/1/09, MBIA.... 727
1,000 University of Arizona, University
Revenues, 6.25%, 6/1/11, Callable
6/1/02 @ 102..................... 1,090
2,215 University of Arizona, University
Revenues, Series A, 7.00%,
6/1/10, Prerefunded 6/1/00 @
102.............................. 2,406
1,100 Yavapai County, Industrial
Development Authority, Hospital
Facility Revenue, Yavapai
Regional Medical Center--Series
A, 5.13%, 12/1/13, Callable
6/1/07 @ 102, FSA................ 1,117
1,750 Yuma County, GO, 6.13%, 7/1/12,
Callable 7/1/03 @ 101, AMBAC..... 1,927
1,305 Yuma County, GO, Elementary School
District #1, 5.25%, 7/1/10,
Callable 7/1/07 @ 101, MBIA...... 1,366
1,000 Yuma County, Industrial Development
Authority, Hospital Revenue
Refunding, Yuma Regional Medical
Center, 5.50%, 8/1/09, Callable
8/1/07 @ 102, MBIA............... 1,072
1,000 Yuma County, Municipal Property
Corp. Revenue, Series A, 5.20%,
7/1/09, Callable 7/1/03 @ 101,
AMBAC............................ 1,038
1,575 Yuma County, Union High School,
District #70, GO, 5.00%, 7/1/06,
Callable 7/1/02 @ 101, FGIC...... 1,634
--------
Total Municipal Bonds 255,099
--------
INVESTMENT COMPANIES (0.6%):
1,436 The One Group Municipal Money
Market Fund, Fiduciary Class..... 1,436
--------
Total Investment Companies 1,436
--------
Total (Cost $240,102) (a) $256,535
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $259,014.
Continued
59
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Arizona Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $16,433
Unrealized depreciation..................................... 0
-------
Net unrealized appreciation................................. $16,433
=======
AMBAC Insured by AMBAC Indemnity Corp.
BIG Insured by Bond Insurance Guarantee
ETM Escrowed to Maturity
FGIC Insured by Federal Guarantee Insurance Corp.
FSA Insured by Federal Security Assurance
GNMA Insured by Government National Mortgage Association
GO General Obligation
MBIA Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
60
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
INTERMEDIATE MUNICIPAL KENTUCKY OHIO
TAX-FREE BOND INCOME MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND FUND
--------------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $486,031; $619,344;
$121,005; $164,591; respectively).............. $512,074 $642,464 $129,724 $177,475
Cash............................................. 548 -- 1 --
Interest receivable.............................. 7,196 9,464 2,025 1,889
Receivable for capital shares issued............. 42 836 6 49
Prepaid expenses and other assets................ 88 61 11 47
-------- -------- -------- --------
TOTAL ASSETS..................................... 519,948 652,825 131,767 179,460
-------- -------- -------- --------
LIABILITIES:
Cash overdraft................................... -- -- -- 208
Dividends payable................................ 1,916 2,549 535 749
Payable to brokers for investments purchased..... 29,293 11,171 -- --
Payable for capital shares redeemed.............. 6 216 -- --
Accrued expenses and other payables:
Investment advisory fees..................... 245 229 50 91
Administration fees.......................... 71 87 19 26
12b-1 fees................................... 7 58 5 20
Other........................................ 57 71 9 32
-------- -------- -------- --------
TOTAL LIABILITIES................................ 31,595 14,381 618 1,126
-------- -------- -------- --------
NET ASSETS:
Capital.......................................... 460,863 622,480 124,123 169,497
Undistributed net investment income.............. 234 18 -- 5
Accumulated undistributed net realized gains
(losses) from investment transactions.......... 1,213 (7,174) (1,693) (4,052)
Net unrealized appreciation from investments..... 26,043 23,120 8,719 12,884
-------- -------- -------- --------
NET ASSETS....................................... $488,353 $638,444 $131,149 $178,334
======== ======== ======== ========
NET ASSETS:
Fiduciary.................................... $473,776 $522,135 $122,026 $143,757
Class A...................................... 9,958 70,372 5,890 16,355
Class B...................................... 4,619 45,110 3,233 18,222
Class C...................................... -- 827 -- --
-------- -------- -------- --------
Total........................................ $488,353 $638,444 $131,149 $178,334
======== ======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST
(SHARES):
Fiduciary.................................... 42,536 51,788 11,708 12,956
Class A...................................... 895 6,959 565 1,470
Class B...................................... 415 4,477 312 1,626
Class C...................................... -- 82 -- --
-------- -------- -------- --------
Total........................................ 43,846 63,306 12,585 16,052
======== ======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per
share.................................. $ 11.14 $ 10.09 $ 10.42 $ 11.10
======== ======== ======== ========
Class A
Redemption price per share............... $ 11.13 $ 10.11 $ 10.43 $ 11.13
======== ======== ======== ========
Maximum sales charge..................... 4.50% 4.50% 4.50% 4.50%
======== ======== ======== ========
Maximum offering price per share
(100%/(100%-maximum sales charge) of
net asset value adjusted to nearest
cent).................................. $ 11.65 $ 10.59 $ 10.92 $ 11.65
======== ======== ======== ========
Class B
Offering price per share (a)............. $ 11.15 $ 10.08 $ 10.37 $ 11.20
======== ======== ======== ========
Class C
Offering price per share................. $ -- $ 10.09 $ -- $ --
======== ======== ======== ========
</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.
61
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
LOUISIANA WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $147,591; $97,190; $240,102;
respectively)............................................. $156,732 $103,973 $256,535
Interest receivable......................................... 2,683 1,466 5,733
Receivable for capital shares issued........................ 1 -- --
Prepaid expenses and other assets........................... 35 10 18
-------- -------- --------
TOTAL ASSETS................................................ 159,451 105,449 262,286
-------- -------- --------
LIABILITIES:
Dividends payable........................................... 624 435 1,044
Payable to brokers for investments purchased................ 2,734 -- 2,000
Accrued expenses and other payables:
Investment advisory fees................................ 80 40 99
Administration fees..................................... 23 16 41
12b-1 fees.............................................. 18 1 --
Other................................................... 22 26 88
-------- -------- --------
TOTAL LIABILITIES........................................... 3,501 518 3,272
-------- -------- --------
NET ASSETS:
Capital..................................................... 147,152 98,148 241,879
Accumulated undistributed net realized gains (losses) from
investment transactions................................... (343) -- 702
Net unrealized appreciation from investments................ 9,141 6,783 16,433
-------- -------- --------
NET ASSETS.................................................. $155,950 $104,931 $259,014
======== ======== ========
NET ASSETS:
Fiduciary............................................... $102,802 $103,016 $258,078
Class A................................................. 49,075 849 936
Class B................................................. 4,073 1,066 --(b)
-------- -------- --------
Total................................................... $155,950 $104,931 $259,014
======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES):
Fiduciary............................................... 9,982 10,007 25,308
Class A................................................. 4,767 82 92
Class B................................................. 395 103 --(b)
-------- -------- --------
Total................................................... 15,144 10,192 25,400
======== ======== ========
Net Asset Value:
Fiduciary
Offering and redemption price per share............. $ 10.30 $ 10.29 $ 10.20
======== ======== ========
Class A
Redemption price per share.......................... $ 10.29 $ 10.38 $ 10.12
======== ======== ========
Maximum sales charge................................ 4.50% 4.50% 4.50%
======== ======== ========
Maximum offering price per share (100%/(100%-maximum
sales charge) of net asset value adjusted to
nearest cent)..................................... $ 10.77 $ 10.87 $ 10.60
======== ======== ========
Class B
Offering price per share (a)........................ $ 10.30 $ 10.35 $ 10.21
======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B share varies based on length of time shares are
held.
(b) Amount is less than $1,000.
See notes to financial statements.
62
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
INTERMEDIATE MUNICIPAL KENTUCKY OHIO
TAX-FREE BOND INCOME MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND FUND
-------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................ $12,785 $15,435 $3,559 $4,826
Dividend income........................ 60 62 26 43
------- ------- ------ ------
Total Income........................... 12,845 15,497 3,585 4,869
------- ------- ------ ------
EXPENSES:
Investment advisory fees............... 1,445 1,223 289 516
Administration fees.................... 396 447 105 141
12b-1 fees (Class A)................... 17 97 10 28
12b-1 fees (Class B)................... 21 205 14 81
12b-1 fees (Class C)................... -- 1 -- --
Custodian and accounting fees.......... 30 39 13 11
Legal and audit fees................... 6 8 -- 2
Trustees' fees and expenses............ 3 5 1 1
Transfer agent fees.................... 23 27 15 23
Registration and filing fees........... 46 47 16 17
Printing costs......................... 5 14 1 3
Other.................................. 1 1 1 1
------- ------- ------ ------
Total expenses before waivers.......... 1,993 2,114 465 824
Less waivers........................... (513) (320) (62) (270)
------- ------- ------ ------
Net Expenses........................... 1,480 1,794 403 554
------- ------- ------ ------
Net Investment Income.................. 11,365 13,703 3,182 4,315
------- ------- ------ ------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from
investment transactions.............. 2,810 1,435 106 89
Net change in unrealized appreciation
(depreciation) from investments...... 9,935 11,621 2,607 3,389
------- ------- ------ ------
Net realized/unrealized gains from
investments.......................... 12,745 13,056 2,713 3,478
------- ------- ------ ------
Change in net assets resulting from
operations........................... $24,110 $26,759 $5,895 $7,793
======= ======= ====== ======
</TABLE>
See notes to financial statements.
63
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
LOUISIANA WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND MUNICIPAL BOND
FUND FUND FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................ $4,357 $2,792 $ 7,058
Dividend income................................ 5 22 31
------ ------ -------
Total Income................................... 4,362 2,814 7,089
------ ------ -------
EXPENSES:
Investment advisory fees....................... 480 229 587
Administration fees............................ 131 83 214
12b-1 fees (Class A)........................... 87 1 2
12b-1 fees (Class B)........................... 20 4 --
Custodian and accounting fees.................. 6 16 28
Legal and audit fees........................... 3 1 5
Trustees' fees and expenses.................... 1 -- 2
Transfer agent fees............................ 19 27 36
Registration and filing fees................... 9 16 24
Printing costs................................. 12 1 5
Other.......................................... -- 2 6
------ ------ -------
Total expenses before waivers.................. 768 380 909
Less waivers................................... (211) (73) (132)
------ ------ -------
Net Expenses................................... 557 307 777
------ ------ -------
Net Investment Income.......................... 3,805 2,507 6,312
------ ------ -------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment
transactions................................. 332 61 1,540
Net change in unrealized appreciation
(depreciation) from investments.............. 2,791 2,270 3,804
------ ------ -------
Net realized/unrealized gains from
investments.................................. 3,123 2,331 5,344
------ ------ -------
Change in net assets resulting from
operations................................... $6,928 $4,838 $11,656
====== ====== =======
</TABLE>
See notes to financial statements.
64
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
INTERMEDIATE MUNICIPAL KENTUCKY
TAX-FREE BOND INCOME MUNICIPAL BOND
FUND FUND FUND
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997 1997 1997
-------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income....................... $ 11,365 $16,901 $ 13,703 $20,002 $ 3,182 $ 3,914
Net realized gains (losses) from investment
transactions.............................. 2,810 1,738 1,435 (530) 106 16
Net change in unrealized appreciation
(depreciation) from investments........... 9,935 5,870 11,621 7,608 2,607 1,197
-------- -------- -------- -------- -------- --------
Change in net assets resulting from
operations.................................... 24,110 24,509 26,759 27,080 5,895 5,127
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.................. (11,068) (16,473) (11,473) (17,054) (2,988) (3,488)
From net realized gains from investment
transactions.............................. (3,217) (414) -- -- -- --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.................. (217) (322) (1,357) (1,627) (135) (346)
From net realized gains from investment
transactions.............................. (68) (11) -- -- -- --
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.................. (79) (106) (869) (1,321) (59) (80)
From net realized gains from investment
transactions.............................. (31) (4) -- -- -- --
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income.................. -- -- (4) -- -- --
-------- -------- -------- -------- -------- --------
Change in net assets from shareholder
distributions................................. (14,680) (17,330) (13,703) (20,002) (3,182) (3,914)
-------- -------- -------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................. 57,109 103,061 137,310 194,651 14,061 19,089
Proceeds from shares issued in conversion... -- 182,568 46,179 55,269 -- 78,683
Dividends reinvested........................ 2,483 603 1,566 2,256 140 244
Cost of shares redeemed..................... (43,522) (56,820) (46,331) (62,696) (10,548) (14,381)
-------- -------- -------- -------- -------- --------
Change in net assets from share transactions.... 16,070 229,412 138,724 189,480 3,653 83,635
-------- -------- -------- -------- -------- --------
Change in net assets............................ 25,500 236,591 151,780 196,558 6,366 84,848
NET ASSETS:
Beginning of period......................... 462,853 226,262 486,664 290,106 124,783 39,935
-------- -------- -------- -------- -------- --------
End of period............................... $488,353 $462,853 $638,444 $486,664 $131,149 $124,783
======== ======== ======== ======== ======== ========
SHARE TRANSACTIONS:
Issued...................................... 5,167 9,528 13,772 19,945 1,366 1,892
Issued in conversion........................ -- 16,858 4,581 5,680 -- 7,752
Reinvested.................................. 223 56 157 231 13 24
Redeemed.................................... (3,937) (5,252) (4,645) (6,436) (1,024) (1,415)
-------- -------- -------- -------- -------- --------
Change in shares................................ 1,453 21,190 13,865 19,420 355 8,253
======== ======== ======== ======== ======== ========
Undistributed net investment income included in
net assets:
End of period............................... $ 234 $ 233 $ 18 $ 18 $ -- $ --
======== ======== ======== ======== ======== ========
</TABLE>
See notes to financial statements.
65
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
OHIO LOUISIANA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
----------------------- -----------------------
<S> <C> <C> <C> <C>
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income................................... $ 4,315 $ 6,661 $ 3,805 $ 8,667
Net realized gains (losses) from investment
transactions.......................................... 89 (175) 332 (79)
Net change in unrealized appreciation (depreciation)
from investments...................................... 3,389 2,389 2,791 3,224
-------- -------- -------- --------
Change in net assets resulting from operations.............. 7,793 8,875 6,928 11,812
-------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income.............................. (3,582) (5,336) (2,571) (6,174)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.............................. (389) (810) (1,154) (2,349)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.............................. (344) (515) (80) (144)
-------- -------- -------- --------
Change in net assets from shareholder distributions......... (4,315) (6,661) (3,805) (8,667)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................. 25,945 39,896 7,525 10,148
Proceeds from shares issued in conversion............... -- 39,137 -- --
Dividends reinvested.................................... 583 1,160 795 1,612
Cost of shares redeemed................................. (15,274) (24,777) (21,164) (41,977)
-------- -------- -------- --------
Change in net assets from share transactions................ 11,254 55,416 (12,844) (30,217)
-------- -------- -------- --------
Change in net assets........................................ 14,732 57,630 (9,721) (27,072)
NET ASSETS:
Beginning of period..................................... 163,602 105,972 165,671 192,743
-------- -------- -------- --------
End of period........................................... $178,334 $163,602 $155,950 $165,671
======== ======== ======== ========
SHARE TRANSACTIONS:
Issued.................................................. 2,361 3,691 740 1,013
Issued in conversion.................................... -- 3,617 -- --
Reinvested.............................................. 52 107 77 161
Redeemed................................................ (1,388) (2,289) (2,076) (4,190)
-------- -------- -------- --------
Change in shares............................................ 1,025 5,126 (1,259) (3,016)
======== ======== ======== ========
Undistributed net investment income included in net assets:
End of period........................................... $ 5 $ 5 $ -- $ --
======== ======== ======== ========
</TABLE>
See notes to financial statements.
66
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
WEST VIRGINIA ARIZONA
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
-------------------------- --------------------------
<S> <C> <C> <C> <C>
SIX MONTHS JANUARY 17, SIX MONTHS JANUARY 17,
1997 1997
ENDED THROUGH ENDED THROUGH
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997(A) 1997 1997 (A)
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............................. $ 2,507 $ 2,113 $ 6,312 $ 5,890
Net realized gains (losses) from investment
transactions.................................... 61 (28) 1,540 982
Net change in unrealized appreciation
(depreciation) from investments................. 2,270 627 3,804 511
-------- -------- -------- --------
Change in net assets resulting from operations........ 4,838 2,712 11,656 7,383
-------- -------- -------- --------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income........................ (2,470) (2,097) (6,285) (5,879)
From net realized gains from investment
transactions.................................... (33) -- (1,813) --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income........................ (20) (11) (27) (11)
From net realized gains from investment
transactions.................................... -- -- (7) --
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income........................ (17) (5) -- --
From net realized gains from investment
transactions.................................... -- -- -- --
-------- -------- -------- --------
Change in net assets from shareholder distributions... (2,540) (2,113) (8,132) (5,890)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued....................... 13,042 10,842 17,620 11,134
Proceeds from shares issued in conversion......... -- 91,179 -- 263,882
Dividends reinvested.............................. 56 9 29 5
Cost of shares redeemed........................... (8,157) (4,937) (19,414) (19,259)
-------- -------- -------- --------
Change in net assets from share transactions.......... 4,941 97,093 (1,765) 255,762
-------- -------- -------- --------
Change in net assets.................................. 7,239 97,692 1,759 257,255
NET ASSETS:
Beginning of period............................... 97,692 -- 257,255 --
-------- -------- -------- --------
End of period..................................... $104,931 $ 97,692 $259,014 $257,255
======== ======== ======== ========
SHARE TRANSACTIONS:
Issued............................................ 1,281 1,081 1,736 1,116
Issued in conversion.............................. -- 9,118 -- 26,388
Reinvested........................................ 6 1 3 1
Redeemed.......................................... (803) (492) (1,914) (1,930)
-------- -------- -------- --------
Change in shares...................................... 484 9,708 (175) 25,575
======== ======== ======== ========
Undistributed net investment income included in net
assets:
End of period..................................... $ -- $ -- $ -- $ --
======== ======== ======== ========
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements.
67
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
(Unaudited)
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Intermediate Tax-Free
Bond Fund, the Municipal Income Fund, the Kentucky Municipal Bond Fund, the
Ohio Municipal Bond Fund, the Louisiana Municipal Bond Fund, the Arizona
Municipal Bond Fund, and the West Virginia Municipal Bond Fund (individually
a "Fund", collectively the "Funds") only. Each Fund is a non-diversified
mutual fund, except for the Intermediate Tax-Free Bond Fund and the Municipal
Income Fund, which are diversified.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Intermediate Tax-Free Bond Fund Current income exempt from Federal income taxes consistent
with prudent investment management and the preservation of
capital.
Municipal Income Fund Current income exempt from Federal income taxes.
Kentucky Municipal Bond Fund Current income exempt from Federal income tax and Kentucky
personal income tax consistent with the preservation of
principal.
Ohio Municipal Bond Fund Current income exempt from Federal income tax and Ohio
personal income tax consistent with the preservation of
principal.
Louisiana Municipal Bond Fund Current income both consistent with the preservation of
principal and exempt from Federal income tax and Louisiana
income tax.
Arizona Municipal Bond Fund Current income exempt from Federal income tax and Arizona
income tax consistent with the preservation of principal.
West Virginia Municipal Bond Fund Current income exempt from Federal income tax and West
Virginia income tax consistent with the preservation of
principal.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Debt securities (other than short-term investments maturing in 60 days or
less), including municipal securities, are valued on the basis of valuations
provided by dealers or by an independent pricing service approved by the
Board of Trustees. Short-term investments maturing in 60 days or less are
valued at amortized cost, which approximates market value. Futures contracts
are valued at the settlement price established each day by the board of trade
or an exchange on which they are traded. Options traded on an exchange are
valued using the last sale price or, in the absence of a sale, the last
offering price. Options traded over-the-counter are valued using
dealer-supplied valuations. Investments for which there are no such
quotations or valuations are valued at fair value as determined in good faith
by the Fair Value Committee, which is comprised of members from Banc One
Investment Advisors Corporation (the "Advisor") and the The One Group
Services Company (the "Administrator"), under the direction of the Board of
Trustees.
Continued
68
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
REPURCHASE AGREEMENTS
The Funds may invest in repurchase agreements with institutions that are
deemed by the Advisor to be of good standing and creditworthy under
guidelines established by the Board of Trustees. Each repurchase agreement is
recorded at cost. The Fund requires that the securities purchased in a
repurchase agreement transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
counterparty default. The seller, under the repurchase agreement, is required
to maintain the value of the securities held at not less than the repurchase
price, including accrued interest. Repurchase agreements are considered to be
loans by a fund under the 1940 Act.
WRITTEN OPTIONS
The Funds may write covered call or secured put options for which premiums
received are recorded as liabilities and are subsequently adjusted to the
current value of the options written. Premiums received from writing options
which expire are treated as realized gains. Premiums received from writing
options, which are either exercised or closed, are offset against the
proceeds received or amount paid on the transaction to determine realized
gains or losses.
FUTURES CONTRACTS
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period. Cash
or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change in
the market value of the position are recorded as unrealized appreciation or
depreciation until the contract is closed out, at which time the appreciation
or depreciation is realized.
INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either
directly or inversely to changes in foreign currencies, interest rates,
commodities, indices or other reference instruments. Indexed securities may
be more volatile than the referenced instrument itself, but any loss is
limited to the amount of the original investment.
MORTGAGE ROLLS
The Funds may enter into mortgage "dollar rolls" in which the Fund sells
mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar securities on a
specified future date. During the roll period, the Fund forgoes principal and
interest paid on the mortgage-backed securities. The Fund is compensated by
fee income or the difference between the current sales price and the lower
forward price for the future purchase.
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgment of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant
Continued
69
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
risks. Loans are subject to termination by the Funds or the borrower at any
time, and are, therefore, not considered to be illiquid investments. As of
December 31, 1997 the Funds had no securities on loan.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net realized
gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Dividends are recorded on the ex-dividend date. Interest
income, including any discount or premium, is accrued as earned using the
effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one fund of the Trust
are allocated among the respective Funds. Each class of shares bears its
pro-rata portion of expenses attributable to its series, except that each
class separately bears expenses related specifically to that class, such as
distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly for
the Funds. Net realized capital gains, if any, are distributed at least
annually. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are due
to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for mortgage-backed securities, expiring capital loss
carryforwards, and deferrals of certain losses. Permanent book and tax basis
differences have been reclassified among the components of net assets.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated investment
company by complying with the provisions available to certain 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. 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. As of December 31,
1997, there were no shareholders in Class C of the Funds except for the
Municipal Income Fund. Shareholders are entitled to one vote for each full
share held and will vote in the aggregate and not by class or series, except
as otherwise expressly required by law or when the Board of Trustees has
determined that the matter to be voted on affects only the interest of
shareholders of a particular class or series. The following is a summary of
transactions in Fund shares for the periods ended December 31, 1997 and June
30, 1997:
Continued
70
<PAGE>
-----------------------------------------------------------------------------
The One Group Family of Mutual Funds
-----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE MUNICIPAL INCOME KENTUCKY MUNICIPAL
BOND FUND FUND BOND FUND
------------------------- ------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997 1997 1997
------------ ---------- ------------ ---------- ------------ ----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued........... $53,215 $ 98,433 $ 92,923 $155,470 $ 12,769 $ 17,564
Proceeds from shares issued in
conversion.......................... -- 182,568 46,179 55,269 -- 78,683
Dividends reinvested.................. 2,177 267 19 198 1 11
Cost of shares redeemed............... (41,870) (54,356) (36,291) (49,425) (10,106) (10,777)
------- -------- -------- -------- -------- --------
Change in net assets from Fiduciary
Share transactions.................. $13,522 $226,912 $102,830 $161,512 $ 2,664 $ 85,481
======= ======== ======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued........... $ 2,559 $ 2,964 $ 34,091 $ 24,091 $ 460 $ 425
Dividends reinvested.................. 215 245 957 1,160 106 191
Cost of shares redeemed............... (1,459) (1,518) (7,839) (9,801) (351) (3,370)
------- -------- -------- -------- -------- --------
Change in net assets from Class A
Share transactions.................. $ 1,315 $ 1,691 $ 27,209 $ 15,450 $ 215 $ (2,754)
======= ======== ======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued........... $ 1,335 $ 1,664 $ 9,477 $ 15,090 $ 832 $ 1,100
Dividends reinvested.................. 91 91 589 898 33 42
Cost of shares redeemed............... (193) (946) (2,201) (3,470) (91) (234)
------- -------- -------- -------- -------- --------
Change in net assets from Class B
Share transactions.................. $ 1,233 $ 809 $ 7,865 $ 12,518 $ 774 $ 908
======= ======== ======== ======== ======== ========
CLASS C SHARES:
Proceeds from shares issued........... $ 819
Dividends reinvested.................. 1
Cost of shares redeemed............... --
========
Change in net assets from Class C
Shares transactions................. $ 820
========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued................................ 4,813 9,103 9,326 15,939 1,239 1,740
Issued in conversion.................. -- 16,858 4,581 5,680 -- 7,752
Reinvested............................ 196 25 2 20 -- 1
Redeemed.............................. (3,788) (5,024) (3,639) (5,078) (981) (1,061)
------- -------- -------- -------- -------- --------
Change in Fiduciary Shares............ 1,221 20,962 10,270 16,561 258 8,432
======= ======== ======== ======== ======== ========
CLASS A SHARES:
Issued................................ 233 272 3,411 2,459 45 42
Reinvested............................ 19 23 96 119 10 19
Redeemed.............................. (132) (141) (785) (1,002) (34) (331)
------- -------- -------- -------- -------- --------
Change in Class A Shares.............. 120 154 2,722 1,576 21 (270)
======= ======== ======== ======== ======== ========
CLASS B SHARES:
Issued................................ 121 153 953 1,547 82 110
Reinvested............................ 8 8 59 92 3 4
Redeemed.............................. (17) (87) (221) (356) (9) (23)
------- -------- -------- -------- -------- --------
Change in Class B Shares.............. 112 74 791 1,283 76 91
======= ======== ======== ======== ======== ========
CLASS C SHARES:
Issued................................ 82
Reinvested............................ --(a)
Redeemed.............................. --
========
Change in Class C Shares.............. 82
========
</TABLE>
- ------------
(a) Amount less than $1,000.
Continued
71
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
OHIO MUNICIPAL LOUISIANA MUNICIPAL
BOND FUND BOND FUND
----------------------- -----------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ -------- ------------ --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $ 18,926 $28,385 $ 3,255 $ 5,386
Proceeds issued in conversion............................. -- 39,137 -- --
Dividends reinvested...................................... 22 93 2 --
Cost of shares redeemed................................... (11,179) (16,829) (15,899) (30,290)
-------- -------- -------- --------
Change in net assets from Fiduciary Share transactions.... $ 7,769 $50,786 $(12,642) $(24,904)
======== ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued............................... $ 2,119 $ 5,044 $ 3,711 $ 4,042
Dividends reinvested...................................... 311 675 740 1,510
Cost of shares redeemed................................... (2,516) (6,371) (4,813) (11,414)
-------- -------- -------- --------
Change in net assets from Class A Share transactions...... $ (86) $ (652) $ (362) $ (5,862)
======== ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued............................... $ 4,900 $ 6,467 $ 559 $ 720
Dividends reinvested...................................... 250 392 53 102
Cost of shares redeemed................................... (1,579) (1,577) (452) (273)
-------- -------- -------- --------
Change in net assets from Class B Share transactions...... $ 3,571 $ 5,282 $ 160 $ 549
======== ======== ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 1,726 2,635 320 538
Issued in conversion...................................... -- 3,617 -- --
Reinvested................................................ 2 9 -- --
Redeemed.................................................. (1,017) (1,556) (1,559) (3,023)
-------- -------- -------- --------
Change in Fiduciary Shares................................ 711 4,705 (1,239) (2,485)
======== ======== ======== ========
CLASS A SHARES:
Issued.................................................... 193 464 365 403
Reinvested................................................ 28 62 72 151
Redeemed.................................................. (229) (588) (472) (1,140)
-------- -------- -------- --------
Change in Class A Shares.................................. (8) (62) (35) (586)
======== ======== ======== ========
CLASS B SHARES:
Issued.................................................... 442 592 55 72
Reinvested................................................ 22 36 5 10
Redeemed.................................................. (142) (145) (45) (27)
-------- -------- -------- --------
Change in Class B Shares.................................. 322 483 15 55
======== ======== ======== ========
</TABLE>
Continued
72
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
WEST VIRGINIA MUNICIPAL BOND FUND ARIZONA MUNICIPAL BOND FUND
------------------------------------- -------------------------------------
JANUARY 17, 1997 JANUARY 17, 1997
SIX MONTHS ENDED THROUGH SIX MONTHS ENDED THROUGH
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997(A) 1997 1997(A)
----------------- ----------------- ----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued...... $12,615 $ 9,442 $ 16,928 $ 9,187
Proceeds from shares issued in
conversion..................... -- 91,179 -- 263,882
Dividends reinvested............. 27 --(b) -- --
Cost of shares redeemed.......... (8,156) (4,937) (18,110) (18,791)
------- ------- -------- --------
Change in net assets from
Fiduciary Share transactions... $ 4,486 $95,684 (1,182) $254,278
======= ======= ======== ========
CLASS A SHARES:
Proceeds from shares issued...... $ 2 $ 795 $ 692 $ 1,947
Dividends reinvested............. 20 7 29 5
Cost of shares redeemed.......... -- -- (1,304) (468)
------- ------- -------- --------
Change in net assets from Class A
Share transactions............. $ 22 $ 802 $ (583) $ 1,484
======= ======= ======== ========
CLASS B SHARES:
Proceeds from shares issued...... $ 425 $ 605 $ -- $ --(b)
Dividends reinvested............. 9 2 -- --
Cost of shares redeemed.......... (1) -- -- --
------- ------- -------- --------
Change in net assets from Class B
Share transactions............. $ 433 $ 607 $ -- $ --(b)
======= ======= ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued........................... 1,240 941 1,667 920
Issued in conversion............. -- 9,118 -- 26,388
Reinvested....................... 3 1 -- --
Redeemed......................... (803) (492) (1,784) (1,883)
------- ------- -------- --------
Change in Fiduciary Shares....... 440 9,568 (117) 25,425
======= ======= ======== ========
CLASS A SHARES:
Issued........................... --(b) 79 69 196
Reinvested....................... 2 -- 3 1
Redeemed......................... -- -- (130) (47)
------- ------- -------- --------
Change in Class A Shares......... 2 79 (58) 150
======= ======= ======== ========
CLASS B SHARES:
Issued........................... 41 61 -- --(b)
Reinvested....................... 1 -- -- --
Redeemed......................... --(b) -- -- --
------- ------- -------- --------
Change in Class B Shares......... 42 61 -- --(b)
======= ======= ======== ========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Amount is less than 1,000.
Continued
73
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to the following percentages of the Funds' average
net assets: 0.60% of the Intermediate Tax-Free Bond Fund, the Ohio Municipal
Bond Fund and the Louisiana Municipal Bond Fund; and 0.45% of the Municipal
Income Fund, the Kentucky Municipal Bond Fund, the Arizona Municipal Bond
Fund and the West Virginia Municipal Bond Fund.
The Trust and the Administrator, a wholly-owned subsidiary of The BISYS
Group, Inc., are parties to an administrative agreement under which the
Administrator provides services for a fee that is computed daily and paid
monthly, at an annual rate of 0.20% on the first $1.5 billion of Trust net
assets (excluding the Investor Growth Fund, the Investor Growth & Income
Fund, the Investor Conservative Fund , and the Investor Balanced Fund, the
"Investor Funds" and the Treasury Only Money Market Fund and the Government
Money Market Fund, the "Institutional Money Market Funds"); 0.18% on the next
$0.5 billion of Trust net assets (excluding the Investor Funds and the
Institutional Money Market Funds); and 0.16% of Trust net assets (excluding
the Investor Funds and the Institutional Money Market Funds) over $2 billion.
The Advisor also serves as Sub-Administrator to each fund of the Trust,
pursuant to an agreement between the Administrator and the Advisor. Pursuant
to this agreement, the Advisor performs many of the Administrator's duties,
for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A, Class B, and Class C Shares are subject to
distribution and shareholder services plans (the "Plans") pursuant to Rule
12b-1 under the 1940 Act. As provided in the Plans, the Trust will pay the
Distributor a fee of 0.35% of the average daily net assets of Class A Shares
of each of the Funds and 1.00% of the average daily net assets of the Class B
and Class C Shares of each of the Funds. Currently, the Distributor has
voluntarily agreed to limit payments under the Plans to 0.25%, 0.90% and
0.90% of average daily net assets of the Class A, Class B and Class C
Shares, respectively, of each Fund. Up to 0.25% of the fees payable under the
Plans may be used as compensation for shareholder services by the Distributor
and/or financial institutions and intermediaries. Fees paid under the Plans
may be applied by the Distributor toward (i) compensation for its services in
connection with distribution assistance or provision of shareholder services;
or (ii) payments to financial institutions and intermediaries such as banks
(including affiliates of the Advisor), brokers, dealers and other
institutions, including the Distributor's affiliates and subsidiaries as
compensation for services or reimbursement of expenses incurred in connection
with distribution assistance or provision of shareholder services. Fiduciary
Class Shares of each Fund are offered without distribution fees. For the six
months ended December 31, 1997, the Distributor received $684,478 from
commissions earned on sales of Class A Shares and redemptions of Class B and
Class C Shares, of which the Distributor reallowed $684,217 to affiliated
broker/dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
74
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the six months ended December 31, 1997,
fees in the following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
12B-1 FEES
INVESTMENT WAIVED
ADVISORY FEES ADMINISTRATION -------------------
WAIVED FEES WAIVED CLASS A CLASS B
------------- --------------- -------- --------
<S> <C> <C> <C> <C>
Intermediate Tax-Free Bond Fund............. $506 $-- $ 5 $ 2
Municipal Income Fund....................... 272 -- 28 20
Kentucky Municipal Bond Fund................ 58 -- 3 1
Ohio Municipal Bond Fund.................... 254 -- 8 8
Louisiana Municipal Bond Fund............... 184 -- 25 2
West Virginia Municipal Bond Fund........... 61 12 -- --
Arizona Municipal Bond Fund................. 103 28 1 --
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the six months
ended December 31, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- --------
<S> <C> <C>
Intermediate Tax-Free Bond Fund....................... $306,729 $273,836
Municipal Income Fund................................. 306,790 201,514
Kentucky Municipal Bond Fund.......................... 8,955 6,307
Ohio Municipal Bond Fund.............................. 25,364 10,936
Louisiana Municipal Bond Fund......................... 6,682 17,007
West Virginia Municipal Bond Fund..................... 15,110 8,613
Arizona Municipal Bond Fund........................... 23,439 29,041
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risks in excess of the
amounts reflected in the Statement of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in the
particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates, an
illiquid secondary market for the instruments or inability of counterparties
to perform under the terms of the contract. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuation in
securities.
7. CONCENTRATION OF CREDIT RISK:
The Kentucky, Ohio, Louisiana, Arizona and West Virginia Municipal Bond Funds
invest primarily in debt obligations issued by the respective States and
their political subdivisions, agencies and public authorities to obtain funds
for various public purposes. The Funds are more susceptible to economic and
political factors adversely affecting issuers of the state's specific
municipal securities than are municipal bond funds that are not concentrated
in these issuers to the same extent.
8. CONVERSION OF COMMON TRUST FUNDS:
On December 19, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares
Continued
75
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31, 1997
(Unaudited)
issued, net assets converted, net asset value per share issued and unrealized
appreciation of assets acquired as of the conversion date (amounts in
thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
NET ASSETS VALUE PER UNREALIZED
SHARES ACQUIRED SHARE ISSUED APPRECIATION
------ ---------- ------------- ------------
<S> <C> <C> <C> <C>
Municipal Income Fund.......................... 4,581 $ 46,179 $10.08 $ 1,820
</TABLE>
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
NET ASSETS VALUE PER UNREALIZED
SHARES ACQUIRED SHARE ISSUED APPRECIATION
------ ---------- ------------- ------------
<S> <C> <C> <C> <C>
Intermediate Tax-Free Bond Fund..................... 16,858 $182,568 $10.83 $ 7,412
Municipal Income Fund............................... 5,680 55,269 9.73 1,784
Kentucky Municipal Bond Fund........................ 7,752 78,683 10.15 4,545
Ohio Municipal Bond Fund............................ 3,617 39,137 10.82 2,826
West Virginia Municipal Bond Fund................... 9,118 91,179 10.00 3,886
Arizona Municipal Bond Fund......................... 26,388 263,882 10.00 12,118
</TABLE>
Continued
76
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
------------------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $ 10.92 $ 10.67 $ 10.64 $ 10.49 $ 11.15 $ 10.69
-------- -------- -------- -------- -------- --------
Investment Activities:
Net investment income............. 0.26 0.54 0.52 0.54 0.52 0.53
Net realized and unrealized gains
(losses) from investments....... 0.30 0.27 0.04 0.15 (0.52) 0.49
-------- -------- -------- -------- -------- --------
Total from Investment
Activities................... 0.56 0.81 0.56 0.69 0.00 1.02
-------- -------- -------- -------- -------- --------
Distributions:
Net investment income............. (0.26) (0.54) (0.51) (0.54) (0.53) (0.52)
In excess of net investment
income.......................... -- -- -- -- (0.01) --
Net realized gains................ (0.08) (0.02) (0.02) -- (0.01) (0.04)
In excess of net realized gains... -- -- -- -- (0.11) --
-------- -------- -------- -------- -------- --------
Total Distributions............. (0.34) (0.56) (0.53) (0.54) (0.66) (0.56)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD...... $ 11.14 $ 10.92 $ 10.67 $ 10.64 $ 10.49 $ 11.15
======== ======== ======== ======== ======== ========
Total Return........................ 5.18%(a) 7.76% 5.39% 6.75% (0.11)% 9.79%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................... $473,776 $451,089 $217,201 $211,229 $182,611 $166,489
Ratio of expenses to average net
assets.......................... 0.60%(b) 0.58% 0.54% 0.53% 0.48% 0.54%
Ratio of net investment income to
average net assets.............. 4.73%(b) 5.05% 4.87% 5.17% 4.78% 4.93%
Ratio of expenses to average net
assets *........................ 0.81%(b) 0.81% 0.87% 0.88% 0.84% 0.94%
Ratio of net investment income to
average net assets *............ 4.52%(b) 4.82% 4.54% 4.82% 4.42% 4.53%
Portfolio turnover (c)............ 57.29% 86.89% 111.58% 199.76% 105.98% 31.99%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
77
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
-------------------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 10.91 $ 10.67 $ 10.63 $ 10.48 $ 11.14 $ 10.69
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income.................. 0.25 0.51 0.50 0.51 0.50 0.55
Net realized and unrealized gains
(losses) from investments............ 0.30 0.26 0.05 0.15 (0.52) 0.44
------- ------- ------- ------- ------- -------
Total from Investment Activities..... 0.55 0.77 0.55 0.66 (0.02) 0.99
------- ------- ------- ------- ------- -------
Distributions:
Net investment income.................. (0.25) (0.51) (0.49) (0.49) (0.52) (0.50)
In excess of net investment income..... -- -- -- (0.02) (0.01) --
Net realized gains..................... (0.08) (0.02) (0.02) -- -- (0.04)
In excess of net realized gains........ -- -- -- -- (0.11) --
------- ------- ------- ------- ------- -------
Total Distributions.................. (0.33) (0.53) (0.51) (0.51) (0.64) (0.54)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........... $ 11.13 $ 10.91 $ 10.67 $ 10.63 $ 10.48 $ 11.14
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)..... 5.06%(a) 7.39% 5.28% 6.49% (0.33)% 9.47%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...... $ 9,958 $ 8,457 $ 6,622 $ 5,614 $ 5,556 $ 5,480
Ratio of expenses to average net
assets............................... 0.85%(b) 0.83% 0.79% 0.78% 0.73% 0.71%
Ratio of net investment income to
average net assets................... 4.48%(b) 4.75% 4.62% 4.91% 4.57% 4.77%
Ratio of expenses to average net assets
*.................................... 1.16%(b) 1.15% 1.22% 1.23% 1.19% 1.27%
Ratio of net investment income to
average net assets *................. 4.17%(b) 4.43% 4.19% 4.46% 4.11% 4.21%
Portfolio turnover (c)................. 57.29% 86.89% 111.58% 199.76% 105.98% 31.99%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
78
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE BOND FUND
-------------------------------------------------------------------
CLASS B
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 10.93 $ 10.68 $ 10.65 $ 10.50 $ 11.18
------- ------- ------- ------- -------
Investment Activities:
Net investment income........................... 0.22 0.45 0.43 0.46 0.17
Net realized and unrealized gains (losses) from
investments................................... 0.30 0.27 0.04 0.14 (0.67)
------- ------- ------- ------- -------
Total from Investment Activities.............. 0.52 0.72 0.47 0.60 (0.50)
------- ------- ------- ------- -------
Distributions:
Net investment income........................... (0.22) (0.45) (0.42) (0.45) (0.17)
Net realized gains.............................. (0.08) (0.02) (0.02) -- --
In excess of net realized gains................. -- -- -- -- (0.01)
------- ------- ------- ------- -------
Total Distributions........................... (0.30) (0.47) (0.44) (0.45) (0.18)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.................... $ 11.15 $ 10.93 $ 10.68 $ 10.65 $ 10.50
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).............. 4.72%(b) 6.82% 4.48% 5.89% (4.48)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............... $ 4,619 $ 3,307 $ 2,439 $ 1,116 $ 549
Ratio of expenses to average net assets......... 1.50%(c) 1.47% 1.44% 1.43% 1.40%(c)
Ratio of net investment income to average net
assets........................................ 3.82%(c) 4.09% 3.97% 4.29% 4.08%(c)
Ratio of expenses to average net assets *....... 1.81%(c) 1.78% 1.87% 1.88% 1.85%(c)
Ratio of net investment income to average net
assets *...................................... 3.51%(c) 3.78% 3.54% 3.84% 3.63%(c)
Portfolio turnover (d).......................... 57.29% 86.89% 111.58% 199.76% 105.98%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
79
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
------------------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------------
1997 1997 1996 1995 1994 1993(A)
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 9.84 $ 9.66 $ 9.69 $ 9.66 $ 10.11 $ 10.00
-------- -------- -------- -------- -------- -------
Investment Activities:
Net investment income.............. 0.26 0.53 0.56 0.57 0.56 0.19
Net realized and unrealized gains
(losses) from investments........ 0.25 0.18 (0.03) 0.03 (0.42) 0.11
-------- -------- -------- -------- -------- -------
Total from Investment
Activities.................... 0.51 0.71 0.53 0.60 0.14 0.30
-------- -------- -------- -------- -------- -------
Distributions:
Net investment income.............. (0.26) (0.53) (0.56) (0.57) (0.56) (0.19)
Net realized gains................. -- -- -- -- (0.03) --
-------- -------- -------- -------- -------- -------
Total Distributions.............. (0.26) (0.53) (0.56) (0.57) (0.59) (0.19)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD....... $ 10.09 $ 9.84 $ 9.66 $ 9.69 $ 9.66 $ 10.11
======== ======== ======== ======== ======== =======
Total Return......................... 5.11%(b) 7.49% 5.54% 6.46% 1.36% 5.18%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)............................ $522,135 $408,577 $241,115 $185,916 $152,763 $40,777
Ratio of expenses to average net
assets........................... 0.57%(c) 0.57% 0.56% 0.56% 0.54% 0.54%(b)
Ratio of net investment income to
average net assets............... 5.13%(c) 5.38% 5.70% 6.02% 5.61% 5.66%(b)
Ratio of expenses to average net
assets *......................... 0.67%(c) 0.68% 0.76% 0.74% 0.71% 1.01%(b)
Ratio of net investment income to
average net assets *............. 5.03%(c) 5.27% 5.50% 5.84% 5.44% 5.19%(b)
Portfolio turnover (d)............. 39.31% 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 9, 1993.
(b) 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.
80
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
--------------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------------------------------------------
1997 1997 1996 1995 1994 1993(A)
------------- ------- ------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 9.87 $ 9.69 $ 9.72 $ 9.67 $ 10.12 $ 10.06
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income.................. 0.25 0.51 0.55 0.55 0.55 0.19
Net realized and unrealized gains
(losses) from investments............ 0.24 0.18 (0.04) 0.05 (0.43) 0.05
------- ------- ------- ------- ------- -------
Total from Investment Activities..... 0.49 0.69 0.51 0.60 0.12 0.24
------- ------- ------- ------- ------- -------
Distributions:
Net investment income.................. (0.25) (0.51) (0.54) (0.55) (0.54) (0.18)
Net realized gains..................... -- -- -- -- (0.03) --
------- ------- ------- ------- ------- -------
Total Distributions.................. (0.25) (0.51) (0.54) (0.55) (0.57) (0.18)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........... $ 10.11 $ 9.87 $ 9.69 $ 9.72 $ 9.67 $ 10.12
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)..... 4.99%(b) 7.24% 5.35% 6.21% 1.34% 6.86%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...... $70,372 $41,829 $25,787 $11,462 $10,725 $ 4,106
Ratio of expenses to average net
assets............................... 0.82%(c) 0.82% 0.81% 0.81% 0.79% 0.80%(c)
Ratio of net investment income to
average net assets................... 4.88%(c) 5.13% 5.45% 5.76% 5.44% 5.71%(c)
Ratio of expenses to average net assets
*.................................... 1.02%(c) 1.03% 1.11% 1.09% 1.06% 1.36%(c)
Ratio of net investment income to
average net assets *................. 4.68%(c) 4.92% 5.15% 5.48% 5.17% 5.15%(c)
Portfolio turnover (d)................. 39.31% 62.83% 83.17% 66.02% 101.48% 66.12%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on February 23, 1993.
(b) 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.
81
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
-------------------------------------------------------------------
CLASS B
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 9.84 $ 9.66 $ 9.69 $ 9.62 $ 10.10
------- ------- ------- ------- -------
Investment Activities:
Net investment income........................... 0.21 0.44 0.47 0.49 0.24
Net realized and unrealized gains (losses) from
investments................................... 0.24 0.18 (0.03) 0.07 (0.48)
------- ------- ------- ------- -------
Total from Investment Activities.............. 0.45 0.62 0.44 0.56 (0.24)
------- ------- ------- ------- -------
Distributions:
Net investment income........................... (0.21) (0.44) (0.47) (0.49) (0.24)
------- ------- ------- ------- -------
Total Distributions........................... (0.21) (0.44) (0.47) (0.49) (0.24)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.................... $ 10.08 $ 9.84 $ 9.66 $ 9.69 $ 9.62
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).............. 4.65%(b) 6.55% 4.65% 5.58% (1.98)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............... $45,110 $36,258 $23,204 $ 8,326 $ 4,855
Ratio of expenses to average net assets......... 1.46%(c) 1.47% 1.46% 1.46% 1.41%(c)
Ratio of net investment income to average net
assets........................................ 4.23% (c) 4.48% 4.80% 5.14% 4.95%(c)
Ratio of expenses to average net assets *....... 1.66%(c) 1.67% 1.76% 1.74% 1.62%(c)
Ratio of net investment income to average net
assets *...................................... 4.03% (c) 4.28% 4.50% 4.86% 4.74%(c)
Portfolio turnover (d).......................... 39.31% 62.83% 83.17% 66.02% 101.48%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
82
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MUNICIPAL
INCOME FUND
------------
<S> <C>
CLASS C
------------
<CAPTION>
NOVEMBER 4,
1996 TO
DECEMBER 31,
1997(A)
------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.96
-------
Investment Activities:
Net investment income..................................... 0.47
Net realized and unrealized gains (losses) from
investments 0.13
-------
Total from Investment Activities....................... 0.60
-------
Distributions:
Net investment income..................................... (0.47)
-------
Total Distributions.................................... (0.47)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.09
=======
Total Return (Excludes Sales Charge)........................ 5.82%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 827
Ratio of expenses to average net assets................... 1.46%(c)
Ratio of net investment income to average net assets...... 4.23%(c)
Ratio of expenses to average net assets *................. 1.66%(c)
Ratio of net investment income to average net assets *.... 4.03%(c)
Portfolio turnover (d).................................... 39.31%
</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.
83
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
------------------------------------------------------------------------------------
FIDUCIARY
---------------------------------------------------
SIX MONTHS YEAR YEAR JANUARY 20, FEBRUARY 1, MARCH 12,
ENDED ENDED ENDED 1995 TO 1994, TO 1993, TO
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30, JANUARY 19, JANUARY 31,
1997 1997 1996 1995(A) 1995(B) 1994(B)(C)
------------ -------- -------- ----------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 10.20 $ 10.04 $ 9.92 $ 9.49 $ 10.45 $ 10.00
-------- -------- ------- ------- ------- -------
Investment Activities:
Net investment income............ 0.26 0.50 0.50 0.20 0.41 0.36
Net realized and unrealized gains
(losses) from investments...... 0.22 0.16 0.12 0.43 (0.95) 0.43
-------- -------- ------- ------- ------- -------
Total from Investment
Activities................... 0.48 0.66 0.62 0.63 (0.54) 0.79
-------- -------- ------- ------- ------- -------
Distributions:
Net investment income............ (0.26) (0.50) (0.50) (0.20) (0.42) (0.34)
-------- -------- ------- ------- ------- -------
Total Distributions............ (0.26) (0.50) (0.50) (0.20) (0.42) (0.34)
-------- -------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.................... $ 10.42 $ 10.20 $ 10.04 $ 9.92 $ 9.49 $ 10.45
======== ======== ======= ======= ======= =======
Total Return....................... 4.75%(d) 6.74% 6.35% 6.56%(d) (5.17)%(d) 8.05%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).......................... $122,026 $116,830 $30,300 $32,520 $41,953 $64,663
Ratio of expenses to average net
assets......................... 0.60%(e) 0.59% 0.68% 0.65%(e) 1.03% (e) 0.70%(e)
Ratio of net investment income to
average net assets............. 5.00%(e) 5.12% 4.60% 4.70%(e) 4.37% (e) 4.19%(e)
Ratio of expenses to average net
assets *....................... 0.69%(e) 0.72% 1.02% 0.97%(e) 1.05% (e) 0.91%(e)
Ratio of net investment income to
average net assets *........... 4.91%(e) 4.99% 4.26% 4.38%(e) 4.25% (e) 3.98%(e)
Portfolio turnover (f)........... 5.04% 13.30% 16.78% 19.75% 10.00% 5.00%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Prior to reorganizing as a fund of The One Group, the Fund offered only one
class of shares.
(c) Period from commencement of operations.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
See notes to financial statements.
84
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
-------------------------------------------------------------
<C> <C> CLASS A <C> <C>
-------------------------------------------------------------
SIX MONTHS YEAR YEAR JANUARY 20,
ENDED ENDED ENDED 1995 TO
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1997 1997 1996 1995(A)
------- ------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............................. $ 10.21 $10.05 $ 9.93 $ 9.49
------- ------ ------- -------
Investment Activities:
Net investment income............................ 0.25 0.48 0.44 0.19
Net realized and unrealized gains (losses) from
investments.................................... 0.22 0.16 0.12 0.44
------- ------ ------- -------
Total from Investment Activities............... 0.47 0.64 0.56 0.63
------- ------ ------- -------
Distributions:
Net investment income............................ (0.25) (0.48) (0.44) (0.19)
------- ------ ------- -------
Total Distributions............................ (0.25) (0.48) (0.44) (0.19)
------- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD.................................... $ 10.43 $10.21 $ 10.05 $ 9.93
======= ====== ======= =======
Total Return (Excludes Sales Charge)............... 4.62%(b) 6.46% 5.70% 5.66%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................ $ 5,890 $5,554 $ 8,178 $ 8,818
Ratio of expenses to average net assets.......... 0.84%(c) 0.84% 0.93% 0.90%(c)
Ratio of net investment income to average net
assets......................................... 4.75%(c) 4.66% 4.35% 4.44%(c)
Ratio of expenses to average net assets *........ 1.03%(c) 1.04% 1.37% 1.33%(c)
Ratio of net investment income to average net
assets *....................................... 4.56%(c) 4.46% 3.91% 4.01%(c)
Portfolio turnover (d)........................... 5.04% 13.30% 16.78% 19.75%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
85
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KENTUCKY MUNICIPAL BOND FUND
-------------------------------------------------------------
<C> <C> CLASS B <C> <C>
-------------------------------------------------------------
<CAPTION>
SIX MONTHS YEAR YEAR MARCH 16,
ENDED ENDED ENDED 1995 TO
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1997 1997 1996 1995(A)
------- ------- ------- -------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD.............................. $ 10.15 $ 9.99 $ 9.87 $ 9.75
------- ------- ------- -------
Investment Activities:
Net investment income............................ 0.21 0.41 0.38 0.14
Net realized and unrealized gains (losses) from
investments.................................... 0.22 0.16 0.13 0.12
------- ------- ------- -------
Total from Investment Activities............... 0.43 0.57 0.51 0.26
------- ------- ------- -------
Distributions:
Net investment income............................ (0.21) (0.41) (0.39) (0.14)
------- ------- ------- -------
Total Distributions............................ (0.21) (0.41) (0.39) (0.14)
------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.................................... $ 10.37 $ 10.15 $ 9.99 $ 9.87
======= ======= ======= =======
Total Return (Excludes Sales Charge)............... 4.31%(b) 5.81% 5.16% 2.63%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................ $ 3,233 $ 2,399 $ 1,457 $ 79
Ratio of expenses to average net assets.......... 1.50%(c) 1.47% 1.58% 1.58%(c)
Ratio of net investment income to average net
assets......................................... 4.10%(c) 4.05% 3.70% 3.89%(c)
Ratio of expenses to average net assets *........ 1.69%(c) 1.70% 2.02% 2.21%(c)
Ratio of net investment income to average net
assets *....................................... 3.91%(c) 3.82% 3.26% 3.25%(c)
Portfolio turnover (d)........................... 5.04% 13.30% 16.78% 19.75%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on March 16, 1995.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
86
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
--------------------------------------------------------------------------------
FIDUCIARY
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- -------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 10.88 $ 10.69 $ 10.65 $ 10.58 $ 11.11 $ 10.48
-------- -------- ------- ------- ------- -------
Investment Activities:
Net investment income................. 0.28 0.56 0.56 0.55 0.51 0.54
Net realized and unrealized gains
(losses) from investments........... 0.22 0.19 0.04 0.07 (0.50) 0.62
-------- -------- ------- ------- ------- -------
Total from Investment Activities.... 0.50 0.75 0.60 0.62 0.01 1.16
-------- -------- ------- ------- ------- -------
Distributions:
Net investment income................. (0.28) (0.56) (0.56) (0.55) (0.52) (0.53)
In excess of net realized gains....... -- -- -- -- (0.02) --
-------- -------- ------- ------- ------- -------
Total Distributions................. (0.28) (0.56) (0.56) (0.55) (0.54) (0.53)
-------- -------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.......... $ 11.10 $ 10.88 $ 10.69 $ 10.65 $ 10.58 $ 11.11
======== ======== ======= ======= ======= =======
Total Return............................ 4.68%(a) 7.22% 5.69% 6.07% 0.07% 11.43%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $143,757 $133,172 $80,611 $79,993 $93,261 $74,792
Ratio of expenses to average net
assets.............................. 0.53%(b) 0.54% 0.57% 0.58% 0.53% 0.55%
Ratio of net investment income to
average net assets.................. 5.12%(b) 5.24% 5.17% 5.29% 4.76% 5.14%
Ratio of expenses to average net
assets *............................ 0.82%(b) 0.84% 0.95% 0.91% 0.86% 0.94%
Ratio of net investment income to
average net assets *................ 4.83%(b) 4.94% 4.79% 4.96% 4.43% 4.75%
Portfolio turnover (c)................ 10.27% 7.45% 24.61% 77.69% 16.77% 26.67%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
87
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-------------------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 10.91 $ 10.72 $ 10.68 $ 10.61 $ 11.13 $ 10.48
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income.................. 0.27 0.54 0.55 0.53 0.50 0.52
Net realized and unrealized gains
(losses) from investments............ 0.22 0.19 0.03 0.07 (0.48) 0.64
------- ------- ------- ------- ------- -------
Total from Investment Activities..... 0.49 0.73 0.58 0.60 0.02 1.16
------- ------- ------- ------- ------- -------
Distributions:
Net investment income.................. (0.27) (0.54) (0.54) (0.51) (0.50) (0.51)
In excess of net investment income..... -- -- -- (0.02) (0.02) --
In excess of net realized gains........ -- -- -- -- (0.02) --
------- ------- ------- ------- ------- -------
Total Distributions.................. (0.27) (0.54) (0.54) (0.53) (0.54) (0.51)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........... $ 11.13 $ 10.91 $ 10.72 $ 10.68 $ 10.61 $ 11.13
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)..... 4.54%(a) 6.95% 5.44% 5.79% (0.05)% 11.40%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)...... $16,355 $16,114 $16,507 $12,006 $14,883 $13,092
Ratio of expenses to average net
assets............................... 0.79%(b) 0.79% 0.82% 0.82% 0.78% 0.77%
Ratio of net investment income to
average net assets................... 4.87%(b) 4.96% 4.92% 5.01% 4.63% 4.85%
Ratio of expenses to average net assets
*.................................... 1.19%(b) 1.19% 1.30% 1.25% 1.21% 1.25%
Ratio of net investment income to
average net assets *................. 4.47%(b) 4.56% 4.44% 4.58% 4.20% 4.37%
Portfolio turnover (c)................. 10.27% 7.45% 24.61% 77.69% 16.77% 26.67%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
88
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
------------------------------------------------------------------
CLASS B
------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------
1997 1997 1996 1995 1994(A)
------------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 10.98 $ 10.79 $ 10.75 $ 10.68 $ 11.31
------- ------- ------- ------- -------
Investment Activities:
Net investment income........................... 0.24 0.47 0.48 0.43 0.17
Net realized and unrealized gains (losses) from
investments................................... 0.22 0.19 0.03 0.07 (0.62)
------- ------- ------- ------- -------
Total from Investment Activities.............. 0.46 0.66 0.51 0.50 (0.45)
------- ------- ------- ------- -------
Distributions:
Net investment income........................... (0.24) (0.47) (0.47) (0.43) (0.17)
In excess of net investment income.............. -- -- -- -- (0.01)
------- ------- ------- ------- -------
Total Distributions........................... (0.24) (0.47) (0.47) (0.43) (0.18)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.................... $ 11.20 $ 10.98 $ 10.79 $ 10.75 $ 10.68
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).............. 4.20%(b) 6.26% 4.79% 5.17% (4.02)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............... $18,222 $14,316 $ 8,854 $ 3,209 $ 2,043
Ratio of expenses to average net assets......... 1.44%(c) 1.44% 1.47% 1.48% 1.28%(c)
Ratio of net investment income to average net
assets........................................ 4.23%(c) 4.33% 4.27% 4.40% 4.23%(c)
Ratio of expenses to average net assets *....... 1.84%(c) 1.84% 1.95% 1.91% 1.68%(c)
Ratio of net investment income to average net
assets *...................................... 3.83% (c) 3.93% 3.79% 3.97% 3.83%(c)
Portfolio turnover (d).......................... 10.27% 7.45% 24.61% 77.69% 16.77%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
89
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
------------------------------------------------
<S> <C> <C> FIDUCIARY <C>
------------------------------------------------
SIX MONTHS YEAR MARCH 26, 1996
ENDED ENDED THROUGH
DECEMBER 31, JUNE 30, JUNE 30,
1997 1997 1996(A)
-------- -------- --------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD.............................. $ 10.10 $ 9.93 $ 10.00
-------- -------- --------
Investment Activities:
Net investment income............................ 0.25 0.49 0.13
Net realized and unrealized gains (losses) from
investments................................... 0.20 0.17 (0.07)
-------- -------- --------
Total from Investment Activities.............. 0.45 0.66 0.06
-------- -------- --------
Distributions:
Net investment income............................ (0.25) (0.49) (0.13)
-------- -------- --------
Total Distributions........................... (0.25) (0.49) (0.13)
-------- -------- --------
NET ASSET VALUE,
END OF PERIOD.................................... $ 10.30 $ 10.10 $ 9.93
======== ======== ========
Total Return....................................... 4.50%(b) 6.81% 0.90%(b)(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................ $102,802 $113,338 $136,041
Ratio of expenses to average net assets.......... 0.60%(d) 0.62% 0.71%(d)
Ratio of net investment income to average net
assets........................................ 4.86%(d) 4.91% 4.76%(d)
Ratio of expenses to average net assets *........ 0.83%(d) 0.84% 0.86%(d)
Ratio of net investment income to average net
assets *...................................... 4.63%(d) 4.69% 4.61%(d)
Portfolio turnover (e)........................... 4.23% 17.39% 16.72%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from date reorganized as a fund of The One Group.
(b) Not annualized.
(c) Represents total return for Class A Shares from December 1, 1995 through
March 25, 1996 plus total return for Fiduciary Shares for the period March
26, 1996 through June 30, 1996.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
90
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
----------------------------------------------------------------------------
<S> <C> <C> <C> CLASS A <C> <C> <C>
----------------------------------------------------------------------------
SIX MONTHS YEAR SEVEN MONTHS
ENDED ENDED ENDED YEAR ENDED NOVEMBER 30,
--------------------------------
DECEMBER 31, JUNE 30, JUNE 30,
1997 1997 1996(A) 1995 1994 1993
------------ -------- ------------ -------- -------- --------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 10.10 $ 9.93 $ 10.09 $ 9.38 $ 10.27 $ 9.92
------- ------- ------- -------- -------- --------
Investment Activities:
Net investment income................. 0.24 0.47 0.24 0.50 0.49 0.52
Net realized and unrealized gains
(losses) from investments........... 0.19 0.17 (0.16) 0.71 (0.79) 0.42
------- ------- ------- -------- -------- --------
Total from Investment Activities.... 0.43 0.64 0.08 1.21 (0.30) 0.94
------- ------- ------- -------- -------- --------
Distributions:
Net investment income................. (0.24) (0.47) (0.24) (0.50) (0.49) (0.52)
Net realized gains.................... -- -- -- -- (0.10) (0.07)
------- ------- ------- -------- -------- --------
Total Distributions................. (0.24) (0.47) (0.24) (0.50) (0.59) (0.59)
------- ------- ------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD.......... $ 10.29 $ 10.10 $ 9.93 $ 10.09 $ 9.38 $ 10.27
======= ======= ======= ======== ======== ========
Total Return (Excludes Sales Charge).... 4.27%(b) 6.55% 0.84%(b) 13.11% (2.97)% 9.65%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $49,075 $48,498 $53,479 $206,119 $196,820 $196,534
Ratio of expenses to average net
assets.............................. 0.85%(c) 0.87% 0.69%(c) 0.62% 0.65% 0.62%
Ratio of net investment income to
average net assets.................. 4.61%(c) 4.66% 4.71%(c) 5.07% 4.97% 5.07%
Ratio of expenses to average net
assets *............................ 1.18%(c) 1.19% 0.86%(c) 0.77% 0.80% 0.78%
Ratio of net investment income to
average net assets *................ 4.28%(c) 4.34% 4.54%(c) 4.92% 4.82% 4.91%
Portfolio turnover (d)................ 4.23% 17.39% 16.72% 28.00% 24.00% 25.00%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Financial highlights for the
periods prior to March 26, 1996 represents the Paragon Louisiana Tax-Free
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $10.67
to $10.00 effective March 26, 1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
91
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL BOND FUND
-------------------------------------------------------------------------
<S> <C> <C> <C> CLASS B <C> <C>
-------------------------------------------------------------------------
SIX MONTHS YEAR SEVEN MONTHS YEAR SEPTEMBER 16,
ENDED ENDED ENDED ENDED 1994 THROUGH
DECEMBER 31, JUNE 30, JUNE 30, NOVEMBER 30, NOVEMBER 30,
1997 1997 1996(A) 1995 1994(B)
------- ------- ------- ------- -------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD.................. $ 10.10 $ 9.93 $ 10.09 $ 9.36 $ 9.73
------- ------- ------- ------- -------
Investment Activities:
Net investment income................ 0.20 0.40 0.21 0.42 0.08
Net realized and unrealized gains
(losses) from investments.......... 0.20 0.17 (0.16) 0.73 (0.37)
------- ------- ------- ------- -------
Total from Investment Activities... 0.40 0.57 0.05 1.15 (0.29)
------- ------- ------- ------- -------
Distributions:
Net investment income................ (0.20) (0.40) (0.21) (0.42) (0.08)
------- ------- ------- ------- -------
Total Distributions................ (0.20) (0.40) (0.21) (0.42) (0.08)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD......... $ 10.30 $ 10.10 $ 9.93 $ 10.09 $ 9.36
======= ======= ======= ======= =======
Total Return (Excludes Sales Charge)... 4.03%(c) 5.87% 0.48%(c) 12.52% 2.94%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).... $ 4,073 $ 3,835 $ 3,223 $ 2,115 $ 204
Ratio of expenses to average net
assets............................. 1.49%(d) 1.51% 1.50%(d) 1.37% 1.41%(d)
Ratio of net investment income to
average net assets................. 3.96%(d) 4.02% 3.98%(d) 4.27% 4.45%(d)
Ratio of expenses to average net
assets *........................... 1.82%(d) 1.85% 1.70%(d) 1.52% 1.56%(d)
Ratio of net investment income to
average net assets *............... 3.63%(d) 3.68% 3.78%(d) 4.12% 4.30%(d)
Portfolio turnover (e)............. 4.23% 17.39% 16.72% 28.00% 24.00%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Upon reorganizing as a fund of The One Group, the Paragon Louisiana Tax-Free
Fund became the Louisiana Municipal Bond Fund. Financial highlights for the
periods prior to March 26, 1996 represents the Paragon Louisiana Tax-Free
Fund. The per share data for the periods prior to March 26, 1996 have been
restated to reflect the impact of restatement of net asset value from $10.70
to $10.00 effective March 26, 1996.
(b) Class B Shares commenced offering on September 16, 1994.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
92
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
WEST VIRGINIA MUNICIPAL BOND FUND
-----------------------------------
<S> <C> FIDUCIARY <C>
-----------------------------------
SIX MONTHS JANUARY 20, 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(A)
-------- -------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD......................................... $ 10.06 $ 10.00
-------- -------
Investment Activities:
Net investment income..................................... 0.25 0.22
Net realized and unrealized gains (losses) from
investments............................................. 0.23 0.06
-------- -------
Total from Investment Activities........................ 0.48 0.28
-------- -------
Distributions:
Net investment income..................................... (0.25) (0.22)
-------- -------
Total Distributions..................................... (0.25) (0.22)
-------- -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 10.29 $ 10.06
======== =======
Total Return................................................ 4.89%(b) 2.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $103,016 $96,270
Ratio of expenses to average net assets................... 0.59%(c) 0.59%(c)
Ratio of net investment income to average net assets...... 4.94%(c) 5.04%(c)
Ratio of expenses to average net assets *................. 0.73%(c) 0.67%(c)
Ratio of net investment income to average net assets *.... 4.80%(c) 4.96%(c)
Portfolio turnover (d).................................... 8.64% 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
93
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
WEST VIRGINIA MUNICIPAL BOND FUND
-----------------------------------
<S> <C> CLASS A <C>
-----------------------------------
SIX MONTHS JANUARY 20, 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(A)
------- -------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.15 $ 10.00
------- -------
Investment Activities:
Net investment income..................................... 0.24 0.16
Net realized and unrealized gains (losses) from
investments............................................. 0.23 0.15
------- -------
Total from Investment Activities........................ 0.47 0.31
------- -------
Distributions:
Net investment income..................................... (0.24) (0.16)
------- -------
Total Distributions..................................... (0.24) (0.16)
------- -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 10.38 $ 10.15
======= =======
Total Return (Excludes Sales Charge)........................ 4.74%(b) 3.08%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 849 $ 808
Ratio of expenses to average net assets................... 0.84%(c) 0.84%(c)
Ratio of net investment income to average net assets...... 4.69%(c) 4.94%(c)
Ratio of expenses to average net assets *................. 1.08%(c) 0.97%(c)
Ratio of net investment income to average net assets *.... 4.45%(c) 4.81%(c)
Portfolio turnover (d).................................... 8.64% 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
94
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
WEST VIRGINIA MUNICIPAL BOND FUND
-----------------------------------
<S> <C> CLASS B <C>
-----------------------------------
SIX MONTHS JANUARY 20, 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(A)
------- -------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.12 $ 10.00
------- -------
Investment Activities:
Net investment income..................................... 0.21 0.14
Net realized and unrealized gains (losses) from
investments............................................. 0.23 0.12
------- -------
Total from Investment Activities........................ 0.44 0.26
------- -------
Distributions:
Net investment income..................................... (0.21) (0.14)
------- -------
Total Distributions..................................... (0.21) (0.14)
------- -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 10.35 $ 10.12
======= =======
Total Return (Excludes Sales Charge)........................ 4.42%(b) 2.64%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 1,066 $ 614
Ratio of expenses to average net assets................... 1.49%(c) 1.49%(c)
Ratio of net investment income to average net assets...... 4.04%(c) 4.08%(c)
Ratio of expenses to average net assets *................. 1.73%(c) 1.62%(c)
Ratio of net investment income to average net assets *.... 3.80%(c) 3.95%(c)
Portfolio turnover (d).................................... 8.64% 6.21%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
95
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA MUNICIPAL BOND FUND
------------------------------
<S> <C> FIDUCIARY <C>
------------------------------
JANUARY 20,
SIX MONTHS 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(A)
-------- --------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.06 $ 10.00
-------- --------
Investment Activities:
Net investment income..................................... 0.25 0.23
Net realized and unrealized gains (losses) from
investments............................................ 0.21 0.06
-------- --------
Total from Investment Activities....................... 0.46 0.29
-------- --------
Distributions:
Net investment income..................................... (0.25) (0.23)
Net realized gains........................................ (0.07) --
-------- --------
Total Distributions.................................... (0.32) (0.23)
-------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.20 $ 10.06
======== ========
Total Return................................................ 4.62%(b) 2.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $258,078 $255,755
Ratio of expenses to average net assets................... 0.59%(c) 0.59%(c)
Ratio of net investment income to average net assets...... 4.84%(c) 5.09%(c)
Ratio of expenses to average net assets *................. 0.69%(c) 0.66%(c)
Ratio of net investment income to average net assets *.... 4.74%(c) 5.02%(c)
Portfolio turnover (d).................................... 9.17% 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
96
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA MUNICIPAL BOND FUND
------------------------------
<S> <C> CLASS A <C>
------------------------------
JANUARY 20,
SIX MONTHS 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(A)
------- -------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 9.99 $ 10.00
------- -------
Investment Activities:
Net investment income..................................... 0.23 0.15
Net realized and unrealized gains (losses) from
investments............................................ 0.20 (0.01)
------- -------
Total from Investment Activities....................... 0.43 0.14
------- -------
Distributions:
Net investment income..................................... (0.23) (0.15)
Net realized gains........................................ (0.07) --
------- -------
Total Distributions.................................... (0.30) (0.15)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.12 $ 9.99
======= =======
Total Return (Excludes Sales Charge)........................ 4.38%(b) 1.40%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 936 $ 1,500
Ratio of expenses to average net assets................... 0.84%(c) 0.85%(c)
Ratio of net investment income to average net assets...... 4.59%(c) 4.90%(c)
Ratio of expenses to average net assets *................. 1.04%(c) 0.96%(c)
Ratio of net investment income to average net assets *.... 4.39%(c) 4.79%(c)
Portfolio turnover (d).................................... 9.17% 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
97
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ARIZONA MUNICIPAL BOND FUND
------------------------------
<S> <C> CLASS B <C>
------------------------------
JANUARY 20,
SIX MONTHS 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(A)
------- -------
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 10.09 $ 10.00
------- -------
Investment Activities:
Net realized and unrealized gains (losses) from
investments............................................ 0.19 0.09
------- -------
Total from Investment Activities....................... 0.19 0.09
------- -------
Distributions:
Net investment income..................................... 0.00 --
Net realized gains........................................ (0.07) --
------- -------
Total Distributions.................................... (0.07) 0.00
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.21 $ 10.09
======= =======
Total Return (Excludes Sales Charge)........................ 4.42%(b) 0.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ --(c) $ --(c)
Ratio of expenses to average net assets................... --(d) --(d)
Ratio of net investment income to average net assets...... --(d) --(d)
Ratio of expenses to average net assets *................. --(d) --(d)
Ratio of net investment income to average net assets *.... --(d) --(d)
Portfolio turnover (e).................................... 9.17% 5.66%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Amount is less than $1,000.
(d) Since net assets are less than $1,000, ratios have not been presented.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
98
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
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, including
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
[LOGO] TOG-F-043
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Report From Your Investment Advisor........................................ 2
Portfolio Performance Review............................................... 4
Schedules of Portfolio Investments......................................... 7
Statements of Assets and Liabilities....................................... 26
Statements of Operations................................................... 28
Statements of Changes in Net Assets........................................ 30
Notes to Financial Statements.............................................. 32
Financial Highlights....................................................... 42
1
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
We are pleased to present this semiannual report for The One Group(R) Family of
Mutual Funds. On the following pages, you will find an overview of the financial
markets and your fund's performance for the period from July 1, 1997, through
December 31, 1997.
DEAR VALUED SHAREHOLDER:
Thank you for continuing to support The One Group Family of Mutual Funds during
an interesting, challenging and ultimately rewarding year for investors.
Despite strong volatility throughout 1997 and turmoil in Asia, the Dow Jones
Industrial Average was up 24.94% for 1997. Never before had the index returned
more than 20% for three consecutive years. The S&P 500 Index soared even higher,
closing the year up 33.36%.
At the same time, and largely the result of low inflation, a strong U.S. dollar
and the flight to quality spurred by the Asian crisis, U.S. bond yields ended
the year on an impressive note. The 30-year Treasury, for example, ended the
year yielding 5.92%, close to its 20-year low. (As bond yields fall, bond prices
go up.)
ONCE AGAIN, A PHILOSOPHY REINFORCED
While the calendar-year returns for both the stock and bond markets are
impressive, events in the final six months of 1997 may be the most memorable. On
August 6, the Dow closed at 8,259, a record high and its peak for the calendar
year. Shortly thereafter, though, volatility rocked the market, as the effects
of the Asian financial crisis worked their way west. These forces culminated on
Monday, October 27, when the Dow plummeted more than 554 points, its
largest-ever point decline.
This drop may be the defining moment for 1997's financial markets, and it
presented a significant challenge for investors. But, rather than panicking,
shareholders of The One Group demonstrated a clear understanding of market
dynamics and the importance of maintaining a long-term investment philosophy.
I am pleased to report that there were no significant redemptions of One Group
shares after "Black Monday." To us, this implies that our investors understand
the potential dangers of selling their investments based on short-term
volatility. In fact, The One Group experienced a record purchase day on Tuesday,
October 28, indicating that investors realize the benefits of staying focused on
the stock market's long-term potential.
TAX BILL CHANGES FACE OF INVESTING
The second half of 1997 may be remembered as much for the jubilance it brought
investors as for the turmoil. The Taxpayer Relief Act of 1997 became law,
ushering in lower capital gains taxes for investors and new investment
opportunities poised to change the face of investing for years to come.
The cut in the capital gains tax rate may make investing in stocks even more
attractive for many investors. As you are planning for your future financial
needs and taking into consideration your appropriate asset allocation, please do
not overlook the impact of the new tax treatment of capital gains.
And, while you're planning for your financial future, take note that the 1997
tax law makes investing in IRAs even more attractive, particularly with the
introduction of the Roth IRA, a new type of account that offers tax-exempt
distributions in retirement. In addition, the Traditional IRA has been enhanced
with many new features.
The One Group can help you incorporate any of these retirement accounts into
your investment plan. Speak to your investment representative or call
1-800-480-4111 for more information on IRAs.
SEEK ADVICE FOR A YEAR'S WORTH OF EVENTS
With 1997's record volatility and the new investment opportunities introduced by
the tax law, now may be an ideal time to meet with your investment professional
and make sure your investment plan remains on track to meet your financial
needs.
As you probably know, your asset allocation--or the way your investment dollars
are strategically distributed among stock, bond and cash investments according
to your goals, risk tolerance and investing time frame--may be the
single-greatest determinant of your long-term investment success. After a year
full of market ups and downs, your asset allocation probably shifted. For
example, stock market appreciation may have caused your allocation to equities
to swing higher than called for in your plan. Your investment professional can
help you evaluate your plan and, if necessary, get it back on track.
2
<PAGE>
- --------------------------------------------------------------------------------
Report From Your Investment Advisor, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Furthermore, your investment representative can help you make the most of the
Taxpayer Relief Act of 1997. Many of the provisions take effect with the 1998
tax year, so make sure you start off the year with the strategy that's most
appropriate for you.
Thank you for investing with The One Group Family of Mutual Funds and for your
ongoing support of the firm's time-tested investment philosophies. We look
forward to helping you achieve your financial goals in 1998 and beyond.
Sincerely,
/s/ DAVID J. KUNDERT
David J. Kundert
President and CEO,
Banc One Investment Advisors Corporation,
Investment Advisor to The One Group
[DAVID J. KUNDERT PHOTO]
For a prospectus with more complete information on The One Group Investor Funds,
including management fees and expenses, please contact The One Group at
1-800-480-4111. Please read the prospectus carefully before investing.
(2/98)
3
<PAGE>
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
ECONOMIC GROWTH REMAINS STRONG
Despite showing a slight slowdown from the first half of the year, U.S. economic
growth during the second half of 1997 remained robust at a growth rate of 3.7%.
For the entire 12-month period, the U.S. economy grew by a 3.8% growth rate.
Firm employment gains and strong consumer confidence fueled the growth rate. The
unemployment rate headed steadily downward, ending the year at 4.7%. The economy
witnessed an average of 301,500 new non-farm jobs being created per month, when
all that is needed to absorb the growth in the labor force and keep the
unemployment rate steady is 150,000.
LONG-TERM INTEREST RATES DECLINE
Slightly higher inflation in 1996 kept long-term interest rates relatively high
throughout much of 1997. With prices climbing 3.3% on a year-over-year basis in
1996, investors feared that inflation would keep that pace or even climb higher
in 1997.
But, as the year unfolded it became apparent that inflation was, indeed, under
control. For the final six months of the year the inflation rate was 2.0%, and
for the entire year prices were up only 1.7%, the best performance in 11 years.
Low prices helped pave the way for a significant decline in long-term interest
rates by the end of the year. Also significant was the impact of the Asian
financial crisis, which caused currency values to plunge and sent financial
markets into turmoil. As worldwide events unfolded during the second half of the
year, it became clear that the Asian economies would weaken. This caused
investors throughout the world to turn to the safety of U.S. Treasury
securities, which helped drive up prices.
As a result of these events, long-term interest rates showed a significant
decline during the second half of 1997--a decline that was much greater than the
economic fundamentals supported. At the end of the year, the yield on the
30-year U.S. Treasury bond was 5.92%, after starting the year at 6.64% and
climbing to a high of 7.17% in early April.
FED REMAINS IDLE
The Federal Reserve remained on the sidelines during the second half of the
year, after raising interest rates just once in all of 1997--a 0.25% increase of
the federal funds rate in March. This lack of monetary policy action kept
short-term interest rates relatively steady for the remainder of the year.
The impact of the Asian currency crisis and market meltdowns may have
contributed to the Fed's decision to keep rates unchanged in the second half of
1997. While strong economic growth certainly created a valid reason for another
rate hike, the Fed resisted the temptation, figuring that the Asian situation
would contribute to slower growth ahead.
LOOKING AHEAD
In terms of U.S. economic growth, the Asian crisis remains a factor that can't
be ignored. Thirty percent of U.S. exports go to Asia, and with many Asian
countries facing currency devaluations of 35% to 80%, consumers in that region
have significantly less purchasing power. Furthermore, there's the possibility
that this currency crisis could spread to Latin America, where another 20% of
U.S. exports are at risk if there are some currency devaluations.
The United States accounts for 28% of the non-Asian global economy, and,
therefore, should be heavily influenced by the change in trade flows from Asia.
Asian stock markets have dropped nearly 70% over the last several months, which
undoubtedly will be reflected in lower overall consumption, particularly for
foreign imports. And, as prices on goods produced in Asia continue to fall, U.S.
imports from that region should go up.
As a result, cheaper goods coming from Asia, and possibly Latin America, should
force domestic competitors to lower their prices (or face sharply lower sales
prospects). This could push the U.S. inflation rate to as low as 1.5% in 1998,
compared to 1.7% in 1997 and 3.3% in 1996. At the same time, fewer U.S. exports
and greater imports should cause economic growth to slow to a 2% year-over-year
average for 1998.
4
<PAGE>
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
Given all the instability overseas and the impending effects of a slowdown in
the U.S. economy, we believe that the Federal Reserve will lower interest rates
in 1998, probably sometime in the second half of the year. Long-term interest
rates should continue their downward trend, due to lower inflation and lower
economic growth. By the end of the year, we may see the yield on the 30-year
Treasury bond somewhere between 5.5% and 5.75%.
/s/ ANTHONY CHAN
Anthony Chan, Ph.D.
Managing Director and Chief Economist
Banc One Investment Advisors
5
<PAGE>
Portfolio Performance Review
- --------------------------------------------------------------------------------
THE ONE GROUP FAMILY OF MUTUAL FUNDS DECEMBER 31, 1997
AS VOLATILITY HEATS UP, INTEREST RATES DECLINE
Volatility initiated by financial and market distress in Asia was the key factor
at work in the bond market during the second half of 1997. As Asian currencies
fell, the credit quality of Yankee bonds (securities that represent
dollar-denominated, foreign-issued debt) deteriorated rapidly, causing the
Yankee bond market to experience substantial losses in select issues.
Furthermore, because credit ratings in the region have been significantly
downgraded, it has been very difficult for Asian governments and corporations to
issue new bonds to finance their ongoing operations.
Long-term U.S. interest rates fell as a result of the immediate flight to
quality and the longer-run implications for slower domestic growth and lower
inflation. The five-year U.S. Treasury, for example, declined by 67 basis points
(one basis point equals 1/100th of a percent) during the period, from 6.37% to
5.70%.
SMART STRATEGIES LEAD TO SOLID FUND RETURNS
In absolute terms, all of The One Group bond funds enjoyed share price increases
and solid total returns due to the declining interest rate environment in the
second half of the year. Funds with longer durations and strong exposure to U.S.
government securities performed the best. (Duration is a measure of a fund's
sensitivity to interest rate changes. A higher number indicates greater
sensitivity; a lower number indicates less sensitivity.) Funds with exposure to
corporate and Yankee bonds posted gains, but they lagged their competitors.
We attribute the funds' relatively strong performance to the strategies we
implemented early in the year. After the first quarter, when yields on 10-year
Treasury bonds approached 7%, we positioned our portfolios to take advantage of
the added yield available as well as the expected decline in rates. That
cautious stance early in the year allowed our fund managers to take advantage of
the weaker market at that time and position their portfolios for the friendlier
market that was to come later in the year.
Furthermore, as we entered 1997, tight yield spreads (or differences in yield
relative to risk) versus Treasuries and the extended length of the business
cycle caused us to take a very cautious stance toward the corporate sector. In
fact, we limited our corporate exposure during the year to securities in the
short to intermediate maturity range, which proved to be an appropriate
strategy. Overall, the corporate sector underperformed Treasuries, but in the
short to intermediate range, corporate performance matched that of the Treasury
market.
Finally, we remained positive toward mortgage-backed securities, which continued
to perform in line with or better than U.S. Treasuries until December, when
spreads widened due to lower mortgage rates and growing prepayment risks.
Overall, mortgages outperformed Treasuries by 92 basis points during the final
six months of the year.
MUNICIPAL MARKET REMAINS FAVORABLE
Technical supply and demand forces remained positive during the period, which
led to solid returns in the municipal bond market. The One Group municipal bond
funds posted relatively strong returns, reinforcing the continued performance
consistency of the fund family's national and state-specific municipal bond
funds.
Compared to the U.S. Treasury market, though, the municipal bond market was
unable to keep pace during the six-month period, as intermediate-term municipal
securities underperformed comparable Treasuries by about 50 basis points.
FLIGHT TO QUALITY BENEFITS MONEY MARKETS
Short-term interest rates remained relatively stable throughout the period. Late
in the year, though, the money markets benefited from reduced supply and the
strong demand that emerged after the financial crisis in Asia. As uncertainty
reigned, investors throughout the world sought safety in the form of
shorter-term, less volatile U.S. money market instruments.
All of The One Group money market funds maintained their stringent quality and
liquidity standards during the period and generated solid returns.
FOCUS REMAINS ON VOLATILITY
Low inflation and slowing domestic growth should lead to lower interest rates in
1998. At the same time, we expect price volatility to increase, which will cause
us to maintain a fairly cautious stance in terms of duration, credit quality and
overall risk management.
While corporate bonds may remain under pressure in 1998, we still expect them to
offer good performance versus other sectors, as corporate America remains strong
and any weakness will likely be modest. Mortgage-backed securities and municipal
securities also may be under pressure due to rising prepayments and refinancing
concerns. Municipals will be aided to some degree by continued strong supply and
demand influences. In the mortgage-sector we will look for issues offering good
structure, or less prepayment risk.
For individual investors, the key to success in this type of environment is to
diversify. Find a portfolio mix that suits your objectives, and stick with it
for the long haul. And remember, volatility can create attractive opportunities,
particularly for those of us who take the time to apply a long-term process and
orientation to our strategic thinking and to our management of money.
/s/ GARY J. MADICH
Gary J. Madich
Senior Managing Director of Fixed-Income Securities
Banc One Investment Advisors Corporation
Please refer to the prospectus and the accompanying financial statements for
further information about your Fund.
6
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (17.7%):
$ 921 Auto Finance Group, Inc., Series
1997-B, Class B, 6.40%,
2/15/03........................ $ 920
1,843 Auto Finance Group, Inc., Series
1997-B, Class C, 7.00%,
2/15/03........................ 1,813
221 Case Equipment Loan Trust, Series
1996-B, A2, 6.25%,
9/15/03........................ 222
2,000 Countrywide Home Equity, Series
1997-D, Class A, 5.88%,
12/15/23*...................... 2,000
4,753 Greentree Financial Home Equity
Loan, 6.20%, 9/15/28*.......... 4,753
2,000 Loop Funding Master Trust I,
Series 1997-AX, Class C1,
6.75%, 12/26/07*............... 2,000
5,000 MBNA Master Credit Card Trust,
Series 1997-E, Class B, 6.03%,
9/15/04*....................... 5,000
2,496 Merrill Lynch Home Equity Loan,
Series 1997-1, Class A, 5.81%,
9/25/27*....................... 2,496
2,828 NAL, Series 96-4, 6.90%,
12/15/00....................... 2,774
3,000 People's Bank Credit Card Master
Trust, Series 97-2, Class B,
5.96%, 4/15/05*................ 2,999
970 Structured Asset Securities
Corp., Series 97-C1, Class D,
6.26%, 6/25/15................. 970
5,000 Student Loan Marketing Assoc.,
Series 97-3, Class A3, 5.97%,
10/25/12*...................... 5,006
5,242 The Money Store Home Equity
Trust, Series 1993-D, Series
A2, 5.08%, 2/15/18*............ 5,168
347 UCFC Home Equity Loan, Series
1993-B2, Class A2, 6.20%,
7/25/14........................ 344
--------
Total Asset Backed Securities 36,465
--------
COLLATERALIZED MORTGAGE OBLIGATIONS (10.9%):
1,965 American Housing Trust, Series
VII, Class D, 9.25%,
11/25/20....................... 2,219
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- --------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED:
$ 1,315 Chemical Mortgage Acceptance
Corp., 1988-2, Class A, 7.57%,
5/25/18*....................... $ 1,351
3,724 Citicorp Mortgage Securities,
Series 1988-17, Class A1,
7.11%, 11/25/18*............... 3,790
2,982 Glendale Federal Bank, Series
1990-1, Class A, 7.44%,
10/25/29*...................... 3,043
1,902 Nomura Mortgage Capital Corp.,
Series 1990-1 H, 7.00%,
6/17/20*....................... 1,927
679 Prudential Home Mortgage
Securities, Series 1992-45,
Class A4, 6.50%, 1/25/00....... 682
3,224 Salomon Brothers Mortgage
Securities, Series 97-2, Class
A, 7.18%, 12/15/17*............ 3,286
4,857 Salomon Brothers, Series 1988-2
A, 6.56%, 6/25/18*............. 4,844
1,344 Sears Mortgage Securities Corp.
Services, Series 1992-18, Class
A3, 7.69%, 9/25/22*............ 1,367
--------
Total Collateralized Mortgage Obligations 22,509
--------
COMMERCIAL PAPER (2.4%):
5,000 Banner Receivables, 6.20%,
1/12/98........................ 4,991
--------
Total Commercial Paper 4,991
--------
CORPORATE BONDS (1.0%):
Financial Services (1.0%):
2,000 Lehman Brothers Holdings, 6.21%,
6/3/02*........................ 1,986
--------
Total Corporate Bonds 1,986
--------
FOREIGN BONDS (1.4%):
1,402 BHN, Series 1997-1, Class A1,
7.04%, 3/25/11*................ 1,327
1,500 Poland (Discount Brady), 6.69%,
10/27/24, Callable 4/29/98 @
100*........................... 1,455
--------
Total Foreign Bonds 2,782
--------
</TABLE>
Continued
7
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- --------
<C> <S> <C>
OTHER MORTGAGE BACKED SECURITIES (1.6%):
$ 750 Morgan Stanley Capital Issue,
Series 97-C1, Class A2, 6.08%,
8/15/06*....................... $ 750
1,180 Structured Asset Securities
Corp., Series 1996-C1, Class C,
5.97%, 1/25/97 144A............ 1,180
1,283 Structured Asset Securities
Corp., Series 97-1, 6.46%,
2/25/27*....................... 1,295
--------
Total Other Mortgage Backed Securities 3,225
--------
U.S. GOVERNMENT AGENCY MORTGAGES (64.3%):
Federal Home Loan Mortgage Corp. (12.5%):
2,392 6.00%, 10/1/00, Gold Pool
#G50424........................ 2,396
1,050 7.50%, 7/15/16, Series 1106,
Class E, CMO*.................. 1,078
2,000 6.50%, 5/15/09, Series 1628...... 2,041
2,399 7.87%, 5/1/18, Pool #840160, 1
Year CMT ARM*.................. 2,513
428 6.74%, 12/1/21, Pool #645083, 1
Year CMT ARM*.................. 436
4,815 7.91%, 2/1/23, Pool #845297...... 5,077
4,894 6.20%, 12/15/23, Series 1637 LG,
CMO*........................... 4,823
2,734 9.00%, 9/1/25, Gold #C00387...... 2,923
4,542 6.45%, 6/1/26, Pool #785586, 1
Year CMT ARM*.................. 4,551
--------
25,838
--------
Federal National Mortgage Assoc. (38.5%):
245 7.00%, 3/25/98, Series 1993-112
EA, CMO........................ 245
346 6.50%, 11/1/03, Pool #44174...... 351
2,135 6.50%, 4/1/16, Pool #344051...... 2,129
1,080 6.63%, 3/1/17, Pool #47109, 1
Year CMT ARM*.................. 1,101
4,648 6.14%, 4/1/18, Pool #84904....... 4,645
1,688 7.30%, 5/1/18, Pool #075505,
6 Month T-Bill ARM*............ 1,757
494 6.74%, 6/1/18, Pool #70793, 6
Month T-Bill ARM*.............. 516
2,889 7.50%, 1/1/20, Pool #90031, 1
Year CMT ARM*.................. 2,997
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 1,828 6.25%, 1/25/20, Series 1993-102G,
CMO............................ $ 1,833
2,705 7.73%, 5/1/20, ARM*.............. 2,835
5,924 7.27%, 7/1/20, Pool #133558, 1
Year CMT ARM* (b).............. 6,139
2,902 7.18%, 12/1/20, Pool #116590, 1
Year CMT ARM*.................. 3,003
3,051 6.51%, 12/25/20, Series 1990-145,
Class A, CMO*.................. 3,061
1,713 7.13%, 4/1/21, Pool #70983, 1
Year CMT ARM*.................. 1,779
966 9.00%, 8/1/21, Pool #348983...... 1,016
1,023 7.58%, 11/1/21, Pool #124510, 1
Year CMT ARM*.................. 1,076
469 7.50%, 11/1/22, Pool #193013, 1
Year CMT ARM*.................. 486
2,718 7.14%, 3/1/23, Pool #202670, 6
Month CD ARM*.................. 2,846
1,793 7.46%, 11/1/23, Pool #241828,
6 Month CD ARM*................ 1,881
584 8.50%, 7/1/24, Pool #342036...... 610
1,384 8.50%, 10/1/24, Pool #345876..... 1,446
1,469 9.00%, 4/1/25, Pool #370122...... 1,547
1,876 6.22%, 7/1/25, Pool #326092, 1
Year CMT ARM*.................. 1,951
1,546 9.00%, 8/1/25, Pool #361354...... 1,628
6,975 7.70%, 6/1/26, Pool #313555*..... 7,191
2,193 7.51%, 11/1/26, Pool #363030, 1
Year CMT ARM*.................. 2,256
55 6.00%, 2/20/27, Pool #80045...... 56
4,265 6.73%, 3/18/27, Series 1997-7 FB,
CMO*........................... 4,277
4,284 7.17%, 7/1/27, Pool #70179, 1
Year CMT ARM*.................. 4,440
4,451 6.15%, 3/15/27, Pool #67694, COFI
ARM............................ 4,448
4,948 6.17%, 8/1/29, Pool# 303742*..... 4,945
4,592 7.50%, 1/1/31, Pool #124945, 1
Year CMT ARM*.................. 4,816
--------
79,307
--------
</TABLE>
Continued
8
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc. (13.3%):
$ 2,190 9.00%, 11/15/24, Pool #780029.... $ 2,378
4,893 6.50%, 7/20/27, Pool #80095, 1
Year CMT ARM................... 4,966
14,852 6.00%, 7/20/27, Pool #80094, 1
Year CMT ARM................... 15,038
4,989 7.50%, 11/20/27, Pool # 80136*... 5,036
--------
27,418
--------
Total U.S. Government Agency Mortgages 132,563
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- --------------------------------- --------
<C> <S> <C>
REPURCHASE AGREEMENTS (0.8%):
$ 1,601 Prudential Securities, 6.80%,
01/02/98 (Collateralized by
$2,324 U.S. Government Agency
Securities, 6.19%, 10/1/24,
market value $1,649)........... $ 1,601
--------
Total Repurchase Agreements 1,601
--------
Total (Cost $205,155) (a) $206,122
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $206,003.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $1,188
Unrealized depreciation..................................... (273)
------
Net unrealized appreciation................................. $ 915
======
</TABLE>
(b) Serves as collateral for futures contracts.
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
CURRENT
OPENING MARKET
NUMBER OF POSITIONS VALUE
CONTRACTS CONTRACT TYPE (000) (000)
--------- --------------------------------------------- ----- -----
<C> <S> <C> <C>
35 Short U.S. 5 Year Note March 1998 Futures.... (5,413) (5,431)
80 Short U.S. 2 Year Note March 1998 Futures.... (24,894) (24,928)
------- -------
(30,307) (30,359)
======= =======
</TABLE>
* The interest rate for this variable rate note, which will change
periodically, is based upon prime rates or an index of market rates. The rate
reflected on the Schedule of Portfolio of Investments is the rate in effect
at December 31, 1997.
<TABLE>
<S> <C>
ARM Adjustable Rate Mortgage
CD Certificate of Deposit
CMO Collateralized Mortgage Obligation
CMT Collateralized Mortgage Trust
COFI Cost of Funds Index
</TABLE>
See notes to financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (14.2%):
$ 2,481 Bay View Auto Trust, Series 97-RA1,
Class A1, 6.29%, 12/15/01........ $ 2,480
4,954 Case Equipment Loan Trust, 96-A,
Class A2, 5.50%, 2/15/03......... 4,933
200 CIT Group Securitization Corp.,
Series 1995-1, Class A1, 7.70%,
8/15/20.......................... 201
7,750 Citibank, Master Series 97-9, Class
A, 0.00%, 8/15/06................ 5,154
4,525 Consumer Portfolio Services, Series
1997-2 A, 6.65%, 10/15/02........ 4,552
3,313 Countrywide Asset-Backed
Certificate, 6.53%, 2/25/14...... 3,346
5,927 DVI Equipment Receivables Trust,
Series 1997-A, Class A, 6.45%,
1/15/04.......................... 5,983
1,010 EQCC Home Equity Loan Trust,
1996-3, Class A3, 6.20%,
7/15/05.......................... 1,008
5,681 Fifth Third Auto Grantor Trust,
1996-A, Class A, 6.20%,
9/15/01.......................... 5,688
4,750 Fifth Third Auto Grantor Trust,
1996-B, Class A, 6.45% 3/15/02... 4,770
5,000 Ford Motor Credit Auto Loan Master,
1995-1, Class A, 6.50%,
8/15/02.......................... 5,055
6,500 Metris Mastertrust, 7.11%,
10/1/05.......................... 6,702
2,828 NAL, Series 96-4, 6.90%,
12/15/00......................... 2,774
7,000 National Premier Funding, Series
1995-6, 7.00%, 6/1/99............ 7,015
2,062 Navistar Financial Corp. Owner
Trust, 1996-B, Class A2, 5.93%,
11/20/99......................... 2,063
10,623 Newcourt Receivables Trust, 1996-3,
Class A, 6.24%, 12/20/04......... 10,620
6,208 Olympic Automobile Receivables
Trust, 1996-D, Class A2, 5.75%,
4/15/00.......................... 6,198
7,000 Proffitt's Credit Card Master
Trust, Series 1997-2, Class B,
6.69%, 12/15/00.................. 7,122
0 Union Federal Savings Bank Trust,
Series 1993-C, 4.88%, 2/15/00
(c).............................. 0
--------
Total Asset Backed Securities 85,664
--------
COLLATERALIZED MORTGAGE OBLIGATIONS (0.0%):
104 Prudential Home Mortgage, Series
1992-44, 6.00%,
1/25/98, CMO..................... 104
--------
Total Collateralized Mortgage Obligations 104
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS (10.8%):
Banking, Finance & Insurance (9.6%):
$ 3,000 Avco Financial Services, 7.25%,
7/15/99.......................... $ 3,060
1,000 Caterpillar Financial Services,
6.35%, 4/1/99.................... 1,004
1,000 Dean Witter Discover & Co.,
6.25%, 3/15/00................... 1,005
1,850 Ford Motor Credit Corp.,
7.45%, 4/13/00................... 1,906
7,000 Ford Motor Credit Corp.,
8.38%, 1/15/00................... 7,315
2,650 GMAC, 7.13%, 5/10/00............... 2,710
7,000 Goldman Sachs Group, 7.80%,
7/15/02, 144A.................... 7,420
10,000 Greenwich Capital, 7.04%, 12/13/99,
Private Placement................ 9,999
1,400 International Lease Finance, 5.83%,
3/12/98.......................... 1,400
4,500 Lehman Brothers Holdings, Inc.,
8.88%, 11/1/98................... 4,601
5,000 Lehman Brothers Holdings, Inc.,
7.63%, 8/1/98.................... 5,046
3,000 Lehman Brothers Holdings, Inc.,
10.00%, 5/15/99.................. 3,150
4,000 Lehman Brothers Holdings, Inc.,
9.88%, 10/15/00.................. 4,360
5,000 Visa International, 6.72%, 2/4/02,
144A............................. 5,069
--------
58,045
--------
Industrial Goods & Services (1.2%):
2,000 Columbia Pictures Entertainment,
Inc., 9.88%, 2/1/98.............. 2,004
5,000 Sears Roebuck Co., 6.69%,
8/13/01.......................... 5,075
--------
7,079
--------
Total Corporate Bonds 65,124
--------
OTHER MORTGAGE BACKED SECURITIES (1.7%):
5,150 Evans Withycombe Finance Trust,
Series 1, Class A1, 7.98%,
8/1/01........................... 5,406
4,755 Nomura Mortgage Capital Corp.,
Series 90-1, Class H, 7.00%,
6/17/20.......................... 4,818
--------
Total Other Mortgage Backed Securities 10,224
--------
U.S. GOVERNMENT AGENCY MORTGAGES (37.9%):
Federal Home Loan Mortgage Corp. (16.9%):
1,851 6.50%, 1/1/01, Pool #M8038......... 1,857
10,883 7.00%, 1/1/02, Pool #G50415........ 11,032
9,744 6.50%, 5/1/02, Pool #G50444........ 9,796
331 9.00%, 12/1/05, Pool #G00005....... 346
333 9.00%, 1/1/06, Pool #G00012........ 348
654 8.00%, 10/1/06, Pool #G00052....... 676
1,987 7.00%, 3/1/07, Pool #G34594........ 2,018
</TABLE>
Continued
10
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
$ 2,592 7.50%, 4/1/07, Pool #G00084........ $ 2,660
1,942 7.00%, 4/1/07, Pool #G00087........ 1,972
3,169 7.50%, 11/1/07, Pool #E00165....... 3,252
4,300 8.50%, 2/1/08, Gold Pool #10133.... 4,465
2,109 7.00%, 12/1/08, Pool #E20065....... 2,150
2,532 8.00%, 1/1/10, Pool #G00355........ 2,615
7,279 8.00%, 2/1/10, Pool #G10328........ 7,518
9,371 7.00%, 10/1/10, Gold Pool
#E61709.......................... 9,567
12,932 7.00%, 5/1/11, Pool #E20241........ 13,146
10,000 5.25%, 9/15/15, REMIC/CMO, Series
1638, Class BC................... 9,948
13,209 8.25%, 12/15/16, REMIC/CMO, Series
1770, Class PD................... 13,517
4,507 6.68%, 10/1/26, Pool #785652....... 4,597
--------
101,480
--------
Federal National Mortgage Assoc. (14.5%):
10,112 6.50%, 8/1/01, Pool #190976........ 10,134
14,921 7.00%, 7/17/05, Series 97-26 Gd.... 15,234
198 9.00%, 9/1/05, Pool #50340......... 207
21,146 6.60%, 10/18/05, 97-26 B........... 21,298
204 9.00%, 11/1/05, Pool #50361........ 213
242 8.50%, 4/1/06, Pool #116875........ 251
13,863 7.42%, 9/1/06, Pool #73618......... 14,863
7,063 7.00%, 6/1/10, Pool #315928........ 7,207
6,150 6.50%, 9/1/10, Pool #325479........ 6,181
4,859 6.50%, 10/1/10, Pool #250377....... 4,883
3,053 7.00%, 11/1/10, Pool #250387....... 3,115
3,614 7.50%, 2/1/11, Pool #303755........ 3,710
--------
87,296
--------
Government National Mortgage Assoc. (3.0%):
3 8.00%, 2/15/02, Pool #192917....... 3
19 8.00%, 3/15/02, Pool #209172....... 20
3 9.00%, 6/15/02, Pool #229311....... 3
73 9.00%, 10/15/02, Pool #229569...... 77
15 8.00%, 6/15/05, Pool #28827........ 15
11 9.00%, 9/15/05, Pool #292569....... 12
65 9.00%, 10/15/05, Pool #292589...... 69
15 8.00%, 5/15/06, Pool #303851....... 16
6 8.00%, 7/15/06, Pool #307231....... 6
45 8.00%, 8/15/06, Pool #311166....... 46
39 8.00%, 9/15/06, Pool #311301....... 40
325 8.00%, 10/15/06, Pool #316915...... 338
42 8.00%, 11/15/06, Pool #311131...... 44
269 8.00%, 11/15/06, Pool #313528...... 280
87 8.00%, 11/15/06, Pool #315078...... 90
414 8.00%, 11/15/06, Pool #312210...... 431
116 8.00%, 11/15/06, Pool #316671...... 121
151 8.00%, 12/15/06, Pool #311384...... 157
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 102 8.00%, 1/15/07, Pool #317663....... $ 106
283 8.00%, 2/15/07, Pool #316086....... 294
178 8.00%, 3/15/07, Pool #318825....... 185
73 8.00%, 3/15/07, Pool #178684....... 76
173 8.00%, 4/15/07, Pool #316441....... 180
11,148 6.88%, 11/20/25, Pool #8746 ARM.... 11,406
4,029 7.00%, 1/20/26, Pool #8790......... 4,127
--------
18,142
--------
U.S. Government Agencies (3.5%):
20,000 Tennessee Valley Authority, 8.38%,
10/1/99 (b)...................... 20,800
--------
Total U.S. Government Agency Mortgages 227,718
--------
U.S. GOVERNMENT AGENCY SECURITIES (15.8%):
Federal Farm Credit Bank (0.3%):
1,735 5.31%, 5/26/98..................... 1,733
--------
Federal Home Loan Bank (6.8%):
750 5.99%, 8/27/98..................... 749
1,000 5.97%, 8/27/98..................... 1,001
2,000 5.64%, 11/9/98..................... 1,997
4,000 6.60%, 4/13/99 (b)................. 4,043
17,000 5.58%, 2/23/01 (b)................. 16,807
10,000 7.78%, 10/19/01 (b)................ 10,630
5,485 7.02%, 10/1/26, Pool #785674
ARM*............................. 5,632
--------
40,859
--------
Federal National Mortgage Assoc. (8.7%):
3,000 8.20%, 3/10/98 (b)................. 3,014
2,000 5.30%, 3/11/98 (b)................. 1,999
3,600 6.90%, 3/27/98..................... 3,610
4,000 5.35%, 4/1/98...................... 3,997
2,000 5.55%, 3/12/99..................... 1,996
2,000 5.80%, 3/19/99..................... 1,996
4,000 6.35%, 4/8/99...................... 4,023
22,000 5.72%, 3/8/01 (b).................. 21,896
10,000 6.16%, 3/29/01 (b)................. 10,080
--------
52,611
--------
Total U.S. Government Agency Securities 95,203
--------
U.S. TREASURY OBLIGATIONS (17.0%):
U.S. Treasury Notes (9.7%):
2,000 7.88%, 4/15/98..................... 2,014
2,000 6.13%, 5/15/98..................... 2,005
2,000 5.88%, 8/15/98..................... 2,003
2,000 7.13%, 10/15/98.................... 2,023
1,500 6.38%, 1/15/99..................... 1,512
3,000 6.50%, 4/30/99..................... 3,033
1,000 6.38%, 4/30/99..................... 1,009
1,300 5.88%, 11/15/99 (b)................ 1,305
2,500 7.75%, 1/31/00 (b)................. 2,601
</TABLE>
Continued
11
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Limited Volatility Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes, continued:
$ 3,500 8.50%, 2/15/00..................... $ 3,696
3,650 5.88%, 2/15/00 (b)................. 3,665
4,000 8.88%, 5/15/00..................... 4,287
2,400 6.25%, 5/31/00..................... 2,430
1,250 6.13%, 9/30/00..................... 1,263
10,000 6.63%, 6/30/01 (b)................. 10,280
14,500 6.50%, 10/15/06 (b)................ 15,191
--------
58,317
--------
U.S. Treasury STRIPS (7.3%):
7,000 2/15/99 (b)........................ 6,575
17,500 2/15/00 (b)........................ 15,535
15,000 11/15/01 (b)....................... 12,064
15,500 7/15/05............................ 10,044
--------
44,218
--------
Total U.S. Treasury Obligations 102,535
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
YANKEE & EURODOLLAR (1.9%):
$ 5,000 Industrial Bank of Korea, 7.10%,
10/15/01......................... $ 4,000
5,000 Peoples Republic of China, 7.38%,
7/3/01........................... 5,063
5,000 Shinhan Bank, 7.25%, 6/26/02,
144A............................. 2,500
--------
Total Yankee & Eurodollar 11,563
--------
REPURCHASE AGREEMENTS (0.1%):
892 PRUDENTIAL SECURITIES, 6.80%,
1/2/98 (Collateralized by $1,295
U.S. Government Agency
Securities, 6.19%, 10/1/24,
market value $919)............... 892
--------
Total Repurchase Agreements 892
--------
Total (Cost $593,578) (a) $599,027
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $602,440.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $9,089
Unrealized depreciation..................................... (3,640)
------
Net unrealized appreciation................................. $5,449
======
</TABLE>
(b) A portion of this security was loaned as of December 31, 1997.
(c) Rounds to less than $1,000.
* The interest rate, for this variable rate note, which will change
periodically, is based upon prime rates or an index of market rates. The rate
reflected on the Schedule of Portfolio of Investments is the rate in effect
at December 31, 1997.
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
See notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (9.0%):
$ 1,000 Advanta Credit Card Master Trust,
Series 1996-A, 6.00%, 11/15/05... $ 1,012
911 Advanta Mortgage Loan Trust, Series
1994-4, Class A1, 8.55%,
11/25/12......................... 927
5,000 Aesop Funding II, Series 1997-1,
Class A2, 6.40%, 10/20/03........ 5,018
3,497 Aircraft Lease Portfolio
Securitization Ltd., Series 94-1,
Class A2, 7.15%, 9/15/04......... 3,516
823 Chase Manhattan Guarantor Trust,
Series 1996-A, Class A, 5.20%,
2/15/02.......................... 817
1,000 Chemical Master Credit Card Trust,
Series 1995-2, Class A, 6.23%,
6/15/03.......................... 1,005
1,010 EQCC Home Equity Loan Trust,
1996-3, Class A3, 6.20%,
7/15/05.......................... 1,008
6,000 EQCC Home Equity Loan Trust, Series
1996-4, Class A6, 6.88%,
7/15/14.......................... 6,123
1,150 Ford Motor Credit Auto Loan Master,
1995-1, Class A, 6.50%,
8/15/02.......................... 1,163
3,000 Greentree Financial Home
Improvement Corp., Series 1997-D,
Class HIA2, 6.45%, 10/15/23...... 3,017
10,000 Keycorp Auto, Series 1997-2A4,
6.15%, 10/15/01.................. 10,009
4,241 NAL, Series 96-4, 6.90%,
12/15/00......................... 4,162
3,247 NAL, Series 97-2 Class A, 7.75%,
12/15/02......................... 3,245
750 Prime Credit Card Master Trust,
Series 1996-1, 6.70%, 7/15/04.... 762
5,000 Rental Car Finance, Series 97-1,
Class A2, 6.45%, 8/25/04......... 5,021
700 Sears Credit Account Master Trust,
Series 1995-4, Class A, 6.25%,
1/15/03.......................... 701
4,000 Team Fleet Financing Corp., Series
97-1, Class A, 7.35%, 5/15/03.... 4,148
363 UCFC Home Equity Loan, Series
1994-A, Class A2, 5.53%,
5/10/09.......................... 363
550 UFSB, Series 1994-B, Class B,
6.43%, 7/10/00................... 550
2,950 Union Acceptance Corp., Series
1995-D, 6.03%, 1/7/03............ 2,941
6,000 World Financial Network Credit
Card, Series 96-1, Class A,
6.70%, 2/15/04................... 6,110
--------
Total Asset Backed Securities 61,618
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
COMMERCIAL PAPER (1.0%):
Financial Services (1.0%):
$ 7,000 Broadway Capital Corp., 6.20%,
1/20/98.......................... $ 6,976
--------
Total Commercial Paper 6,976
--------
CORPORATE BONDS (17.4%):
Banking, Finance & Insurance (7.6%):
5,000 Bankers' Trust, 7.25%, 1/15/03..... 5,181
4,000 Capital One Bank, 6.61%, 6/22/99... 4,010
3,000 First Hawaiian, Inc., 6.25%,
8/15/00.......................... 2,996
1,000 Ford Motor Credit Corp., 6.63%,
6/30/03.......................... 1,020
10,000 Goldman Sachs Group, 6.38%,
6/15/00.......................... 10,050
5,000 Greenwich Capital, 7.04%, 12/13/99,
Private Placement................ 5,000
3,000 Lehman Brothers Holdings, Inc.,
9.88%, 10/15/00.................. 3,270
5,000 Lehman Brothers Holdings, Inc.,
8.88%, 3/1/02.................... 5,456
3,000 Lehman Brothers Holdings, Inc.,
7.25%, 4/15/03................... 3,109
6,000 Liberty Mutual Insurance, 8.20%,
5/4/07 (b)....................... 6,645
5,000 Metropolitan Life, 7.70%,
11/1/15.......................... 5,350
--------
52,087
--------
Gas & Electric Utility (0.7%):
2,500 Duke Power Co., 7.00%, 6/1/00...... 2,553
2,229 Kern River Fund, 6.42%, 3/31/01
(b).............................. 2,232
--------
4,785
--------
Industrial Goods & Services (2.7%):
2,000 Dayton Hudson Corp., 7.50%,
3/1/99........................... 2,035
5,000 Excel Paralubes Funding, 7.13%,
11/1/11.......................... 5,160
2,000 Limited, Inc., 8.88%, 8/15/99...... 2,080
600 Lockheed Martin Corp., 9.38%,
10/15/99......................... 632
5,000 Sears Roebuck Acceptance, Series
MTN3, 7.07%, 9/18/01............. 5,138
2,500 Union Oil Co., 7.24%, 4/1/99....... 2,538
650 VF Corp., 6.63%, 3/15/03........... 658
--------
18,241
--------
Real Estate (1.3%):
5,000 Meditrust, 7.60%, 7/15/01.......... 5,138
4,000 Prime Properties Funding, 6.80%,
8/15/02.......................... 4,065
--------
9,203
--------
Yankee & Eurodollar (5.1%):
3,000 Avon Energy Partners, 6.73%,
12/11/02......................... 3,015
2,300 China Light & Power, 7.50%,
4/15/06.......................... 2,283
3,000 D.R. Investments, 7.10%, 5/15/02... 3,083
4,000 Dao Heng Bank, 7.75%, 1/24/07...... 3,525
3,000 Industrial Finance Corp.-Thailand,
7.00%, 8/04/07................... 2,850
</TABLE>
Continued
13
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Yankee & Eurodollar, continued:
$ 4,000 Kingdom of Thailand, 7.75%, 4/15/07
(b).............................. $ 2,800
500 Nippon Telephone & Telegraph,
9.50%, 7/27/98................... 510
6,225 Petronas, 6.88%, 7/1/03 (b)........ 5,960
5,000 Pohang Iron & Steel Co., 7.38%,
5/15/05.......................... 3,900
4,500 Poland, 6.69%, 10/27/24, Callable
4/29/98 @ 100*................... 4,365
3,000 Ras Laffan Gas, 7.63%, 9/15/06..... 2,910
--------
35,201
--------
Total Corporate Bonds 119,517
--------
OTHER MORTGAGE BACKED SECURITIES (4.4%):
1,826 BHN, Series 1997-1, Class A2,
7.92%, 7/25/09................... 1,728
4,000 Equitable, Series 174, Class A1,
7.24%, 5/15/06, Private
Placement........................ 4,218
1,856 Independent National Mortgage
Corp., Series 1995-S, Class A1,
7.10%, 1/15/26................... 1,851
2,000 J.P. Morgan & Co., Inc., Series
1997, Class C4, 7.47%,
12/26/28......................... 2,109
5,000 JPMC, Series 1996-C2, Class B,
6.80%, 11/25/27.................. 5,057
5,000 MLMI, Series 97-C2 A2, 6.54%,
12/10/29......................... 5,036
4,000 Mortgage Capital Funding Inc.,
Series 1996-MC2, Class A3, 7.08%,
9/20/06.......................... 4,124
3,013 Prudential Home Mortgage
Securities, 6.50%, 5/25/00....... 3,005
3,022 Wells Fargo Capital Markets, Series
96-1, Class A1, 6.56%,
12/29/05......................... 3,056
--------
Total Other Mortgage Backed Securities ...... 30,184
--------
U.S. GOVERNMENT AGENCY MORTGAGES (37.3%):
Federal Home Loan Mortgage Corp. (13.5%):
9,984 6.50%, 10/1/04, Gold Pool
#M80495.......................... 10,015
2,000 7.00%, 6/15/06, Series #1457-PH,
CMO.............................. 2,031
56 8.00%, 4/1/07, Pool #160022........ 58
942 7.50%, 8/1/08, Gold Pool #G10117... 967
9,338 6.00%, 12/15/08, Series 1624,
CMO.............................. 9,091
1,887 8.50%, 1/1/10, Gold Pool #E00356... 1,960
3,893 8.50%, 1/1/10, Gold Pool #G10305... 4,042
228 7.00%, 8/1/10, Gold Pool #E20187... 233
3,560 7.00%, 9/1/10, Gold Pool #E00393... 3,629
3,424 7.50%, 7/1/11, Gold Pool #E20253... 3,521
9,834 7.00%, 9/1/12, Gold Pool #
E00506........................... 9,985
7,000 6.50%, 12/1/12, 15 Year TBA........ 7,011
8,000 8.00%, 2/15/20, Gold Series
#1770-PE, CMO.................... 8,286
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
$ 3,000 6.00%, 4/15/20, Series #1534-F,
CMO.............................. $ 2,954
614 8.00%, 7/1/20, Gold Pool #A01047... 643
3,000 6.50%, 10/15/21, Series #1590-GA,
CMO.............................. 3,017
27 7.00%, 4/1/22, Pool #D17544........ 27
2,762 8.00%, 8/1/24, Pool #G00245........ 2,868
2,646 8.00%, 11/1/24, Gold Pool
#C00376.......................... 2,748
4,001 7.50%, 8/1/25, Gold Pool #C00414... 4,111
3,652 7.00%, 4/1/26, Pool #C00452........ 3,693
4,005 6.98%, 7/1/26, Pool #785618........ 4,043
7,038 7.50%, 1/15/27, Series 1927, CMO... 7,395
--------
92,328
--------
Federal National Mortgage Assoc. (9.3%):
5 6.50%, 12/1/02, Pool #6345......... 5
1,684 8.00%, 9/25/04, Series 1991-155G... 1,722
2,000 6.75%, 12/25/04, Series 1993-6C,
CMO.............................. 2,010
1,500 7.05%, 6/25/06, Series 1993-11,
Class G.......................... 1,528
730 7.00%, 1/1/07, Pool #145771........ 741
2,500 7.50%, 8/25/07, Series G92-48,
Class H, CMO..................... 2,552
412 7.50%, 11/1/09, Pool #158.......... 424
2,628 7.00%, 6/1/10, Pool #312903........ 2,682
4,252 6.50%, 12/1/10, Pool #322598....... 4,273
1,647 6.50%, 4/1/11, Pool #337903........ 1,655
240 7.50%, 5/1/14, Pool #57930......... 248
591 5.70%, 8/25/16, Series G93-39,
Class A, CMO..................... 582
117 7.00%, 4/1/17, Pool #44696......... 119
588 7.95%, 8/25/19, Series 1990-14,
CMO.............................. 598
500 6.25%, 11/25/19, Series G93-32,
Class PG......................... 484
101 8.00%, 3/1/21, Pool #70825......... 105
2,000 5.00%, 5/25/22, Series G93-10,
Class G, CMO..................... 1,828
3,210 7.50%, 11/1/22, Pool #189190....... 3,297
2,116 8.00%, 5/1/24, Pool #250066........ 2,197
4,217 8.50%, 7/1/24, Pool #250103........ 4,418
2,701 7.50%, 10/1/24, Pool #303031....... 2,774
1,018 8.50%, 5/1/25, Pool #308499........ 1,068
334 7.50%, 5/1/25, Pool #293928........ 343
824 7.50%, 5/1/25, Pool #311810........ 847
1,450 8.50%, 6/1/25, Pool #315277........ 1,520
3,443 7.00%, 7/1/25, Pool #312931........ 3,480
3,486 7.00%, 7/1/25, Pool #290387........ 3,523
4,762 7.13%, 6/1/26, Pool #341503........ 4,840
4,950 7.00%, 9/1/27, Pool #313687........ 4,987
9,000 6.00%, 11/1/27, Series 1997-79,
Class PE......................... 8,703
--------
63,553
--------
Government National Mortgage Assoc. (14.5%):
0 10.50%, 2/15/98, Pool #59539 (c)... 0
2 10.50%, 7/15/98, Pool #069629...... 2
</TABLE>
Continued
14
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 4 11.00%, 9/15/98, Pool #101670...... $ 4
0 10.50%, 9/15/98, Pool #103573
(c).............................. 0
4 11.00%, 6/15/99, Pool #110948...... 5
5 11.00%, 3/15/00, Pool #123750...... 5
6 10.00%, 12/15/00, Pool #136214..... 6
52 10.00%, 1/15/01, Pool #145167...... 55
50 10.00%, 1/15/01, Pool #145328...... 53
11 9.00%, 6/15/01, Pool #166985....... 11
1 9.00%, 6/15/01, Pool #164431....... 1
5 9.00%, 6/15/01, Pool #161443....... 5
5 8.50%, 6/15/01, Pool #162447....... 5
50 8.50%, 6/15/01, Pool #137056....... 52
35 6.50%, 6/15/01, Pool #1305......... 35
37 6.50%, 6/15/01, Pool #1305......... 37
8 9.00%, 7/15/01, Pool #155822....... 9
44 9.00%, 8/15/01, Pool #173460....... 46
59 8.50%, 8/15/01, Pool #164207....... 61
6 9.00%, 9/15/01, Pool #177121....... 6
4 9.00%, 10/15/01, Pool #177634...... 5
62 9.00%, 10/15/01, Pool #179852...... 65
7 9.00%, 10/15/01, Pool #185596...... 8
10 9.00%, 11/15/01, Pool #174365...... 10
89 9.00%, 11/15/01, Pool #191819...... 93
3 8.50%, 11/15/01, Pool #183462...... 3
44 8.50%, 12/15/01, Pool #199837...... 46
12 8.50%, 12/15/01, Pool #182959...... 12
48 8.50%, 12/15/01, Pool #199182...... 50
10 9.00%, 1/15/02, Pool #205001....... 10
69 8.00%, 3/15/02, Pool #205933....... 72
50 8.00%, 3/15/02, Pool #210065....... 52
55 8.50%, 5/15/02, Pool #213776....... 57
33 8.00%, 5/15/02, Pool #203042....... 34
61 8.00%, 5/15/02, Pool #180296....... 64
87 8.50%, 6/15/02, Pool #2297......... 91
41 9.00%, 8/15/02, Pool #232424....... 43
52 9.00%, 10/15/02, Pool #246307...... 54
10 9.00%, 11/15/02, Pool #235553...... 11
3 9.00%, 6/15/03, Pool #247863....... 4
45 8.50%, 9/15/04, Pool #274390....... 47
86 9.00%, 10/15/04, Pool #281655...... 90
63 9.00%, 10/15/04, Pool #229506...... 67
60 8.50%, 10/15/04, Pool #277469...... 63
96 8.50%, 11/15/04, Pool #253471...... 100
81 9.00%, 5/15/05, Pool #288771....... 86
29 9.00%, 6/15/05, Pool #283904....... 30
98 9.00%, 8/15/05, Pool #297031....... 103
53 9.50%, 10/15/05, Pool #291846...... 56
15 9.00%, 10/15/05, Pool #292589...... 15
83 9.00%, 11/15/05, Pool #292610...... 87
39 9.00%, 11/15/05, Pool #299161...... 41
63 9.00%, 12/15/05, Pool #299569...... 66
70 7.50%, 2/15/06, Pool #7855......... 72
82 8.50%, 4/15/06, Pool #307487....... 85
50 7.50%, 6/15/06, Pool #7855......... 52
30 8.00%, 10/15/06, Pool #11503....... 31
72 8.00%, 1/15/07, Pool #14709........ 76
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 27 7.50%, 4/15/07, Pool #16991........ $ 28
239 7.50%, 5/15/07, Pool #329528....... 246
71 7.50%, 7/15/07, Pool #17316........ 74
125 7.50%, 8/15/07, Pool #19015........ 128
22 9.00%, 1/15/09, Pool #26076........ 23
125 9.00%, 4/15/09, Pool #30352........ 135
82 8.00%, 5/15/09, Pool #385676....... 86
4,400 6.50%, 7/15/09, Pool #780316....... 4,449
24 8.00%, 8/15/09, Pool #372143....... 25
38 9.50%, 10/15/09, Pool #36582....... 42
578 8.00%, 10/15/09, Pool #380639...... 601
12 11.00%, 2/15/10, Pool #38993....... 14
1,390 7.50%, 2/15/12, Pool #393363....... 1,431
1,915 7.50%, 3/15/12, Pool #399163....... 1,973
1,443 7.50%, 3/15/12, Pool #441145....... 1,486
40 10.50%, 2/15/13, Pool #6507........ 44
2 12.00%, 1/15/15, Pool #112920...... 2
71 9.00%, 8/15/16, Pool #164502....... 77
40 9.50%, 9/15/16, Pool #158201....... 43
20 9.00%, 9/15/16, Pool #168987....... 21
46 9.00%, 9/15/16, Pool #179044....... 50
19 9.00%, 9/15/16, Pool #175362....... 21
64 9.00%, 12/15/16, Pool #198652...... 70
57 9.50%, 1/15/17, Pool #185619....... 62
129 8.50%, 1/15/17, Pool #203625....... 138
38 9.00%, 3/15/17, Pool #180330....... 42
9 8.50%, 3/15/17, Pool #196700....... 10
212 8.50%, 5/15/17, Pool #217536....... 226
10 8.50%, 6/15/17, Pool #188545....... 11
2,560 8.50%, 11/15/17, Pool #780086...... 2,738
193 9.00%, 7/15/18, Pool #226769....... 210
8 9.50%, 9/15/18, Pool #258627....... 9
40 9.50%, 12/15/18, Pool #229531...... 44
37 9.50%, 10/15/19, Pool # 279630..... 40
61 9.00%, 11/15/19, Pool #279649...... 66
130 9.50%, 2/15/20, Pool #281655....... 141
45 9.00%, 2/15/20, Pool #286315....... 48
12 7.50%, 7/20/20, Series 1996-25..... 12
55 9.50%, 9/15/20, Pool #292918....... 60
70 9.00%, 7/15/21, Pool #311256....... 76
185 8.00%, 4/15/22, Pool #325461....... 193
264 8.00%, 5/15/22, Pool #317346....... 276
15 8.00%, 5/15/22, Pool #317358....... 16
104 8.00%, 5/15/22, Pool #320675....... 109
419 8.00%, 7/15/22, Pool #183670....... 437
2,759 8.00%, 7/15/22, Pool #426612....... 2,866
467 7.50%, 8/15/22, Pool #333881....... 481
1,700 7.00%, 8/15/23, Pool #352108....... 1,723
6,751 7.00%, 9/15/23, Pool #363030....... 6,839
2,373 7.00%, 11/15/23, Pool #352022...... 2,405
8,933 6.50%, 1/15/24, Pool #366706....... 8,905
11,032 7.00%, 2/15/24, Pool #371281....... 11,174
3,492 9.00% 11/15/24, Pool #780029....... 3,791
1,884 7.50%, 1/15/26, Pool #416874....... 1,937
1,829 7.50%, 3/15/26, Pool #422292....... 1,879
2,825 7.50%, 4/15/26, Pool #426059....... 2,901
</TABLE>
Continued
15
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Intermediate Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 2,496 8.00%, 7/15/26, Pool #428509....... $ 2,592
2,879 7.50%, 11/15/26, Pool #442119...... 2,955
10,001 7.00%, 6/15/27, Pool #780584....... 10,120
5,185 7.50%, 7/15/27, Pool #411829....... 5,315
4,638 7.50%, 7/15/27, Pool #442119....... 4,754
10,070 6.00%, 10/20/27, Pool #80122, 1
Year CMT ARM..................... 10,164
--------
99,183
--------
Total U.S. Government Agency Mortgages 255,064
--------
U.S. GOVERNMENT AGENCY SECURITIES (0.1%):
Federal Home Loan Bank (0.1%):
800 7.06%, 2/12/99..................... 811
--------
Total U.S. Government Agency Securities 811
--------
U.S. TREASURY OBLIGATIONS (29.7%):
U.S. Treasury Bonds (6.0%):
3,000 10.75%, 5/15/03.................... 3,683
10,000 7.50%, 11/15/16 (b)................ 11,680
3,000 8.75%, 5/15/17 (b)................. 3,933
11,000 8.13%, 8/15/19 (b)................. 13,762
8,000 6.25%, 8/15/23 (b)................. 8,238
--------
41,296
--------
U.S. Treasury Inflation Protected Bonds (1.4%):
10,199 3.38%, 1/15/07 (b)................. 9,938
--------
U.S. Treasury Notes (22.3%):
7,000 7.25%, 2/15/98 (b)................. 7,013
5,000 8.25%, 7/15/98 (b)................. 5,072
4,000 4.75%, 8/31/98 (b)................. 3,979
2,500 7.13%, 10/15/98 (b)................ 2,529
3,000 8.88%, 11/15/98.................... 3,082
3,000 5.875%, 3/31/99.................... 3,009
6,000 8.00%, 8/15/99..................... 6,214
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury Notes, continued:
$10,000 7.50%, 10/31/99 (b)................ $ 10,313
1,000 7.88%, 11/15/99.................... 1,039
5,000 7.75%, 1/31/00 (b)................. 5,202
6,000 7.13%, 2/29/00 (b)................. 6,176
3,000 6.75%, 4/30/00..................... 3,069
6,000 5.875%, 6/30/00.................... 6,028
3,000 6.125%, 7/31/00.................... 3,031
1,000 8.75%, 8/15/00..................... 1,073
5,000 7.75%, 2/15/01..................... 5,289
5,000 6.25%, 10/31/01.................... 5,086
7,000 7.50%, 11/15/01 (b)................ 7,424
2,000 6.00%, 7/31/02 (b)................. 2,021
4,000 6.25%, 2/15/03..................... 4,093
11,000 5.75%, 8/15/03 (b)................. 11,009
500 5.88%, 2/15/04..................... 505
11,000 7.25%, 5/15/04 (b)................. 11,875
1,000 7.25%, 8/15/04..................... 1,082
4,000 7.88%, 11/15/04 (b)................ 4,474
13,000 6.50%, 5/15/05 (b)................. 13,554
18,000 5.88%, 11/15/05 (b)................ 18,101
1,000 6.50%, 10/15/06.................... 1,048
--------
152,390
--------
Total U.S. Treasury Obligations 203,624
--------
REPURCHASE AGREEMENTS (1.8%):
12,262 Prudential Securities, 6.80%,
1/02/98 (Collateralized by
$14,726 U.S. Treasury STRIPS,
0.00%, 11/15/00, market value
$12,508)......................... 12,262
--------
Total Repurchase Agreements 12,262
--------
Total (Cost $678,639) (a) $690,056
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $685,583.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 15,838
Unrealized depreciation..................................... (4,421)
--------
Net unrealized appreciation................................. $ 11,417
========
</TABLE>
(b) A portion of this security was loaned as of December 31, 1997.
(c) Amount is less than 1,000.
* The interest rate for this variable rate note, which will change periodically,
is based upon prime rates or an index of market rates. The rate reflected on
the Schedule of Portfolio of Investments is the rate in effect at December 31,
1997.
<TABLE>
<S> <C>
CMO Collateralized Mortgage Obligation
TBA To be Announced
</TABLE>
See notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES (71.7%):
Federal Home Loan Mortgage Corp. (29.8%):
$ 8,480 6.00%, 4/15/01, Gold Balloon, Pool
# G50347......................... $ 8,430
1,000 7.00%, 10/15/06, Series 1150, Class
I................................ 1,004
5,181 7.50%, 4/1/09, Gold Pool #E00315... 5,346
16,500 6.50%, 9/15/09, Series 1838 G,
CMO.............................. 16,546
4,152 8.50%, 1/1/10, Gold Pool #G10305... 4,312
30,000 6.50%, 7/1/12...................... 30,190
271 9.00%, 10/1/17, Gold Pool
#A00756.......................... 290
201 9.00%, 4/1/18, Gold Pool #A01143... 216
62 9.00%, 10/1/20, Gold Pool
#A01134.......................... 66
66 9.00%, 1/1/21, Gold Pool #A00948... 71
500 7.25%, 2/15/21, Series 1464, CMO... 510
59 9.00%, 4/1/21, Gold Pool #D04193... 63
99 9.00%, 6/1/21, Gold Pool #A01017... 106
103 9.00%, 7/1/21, Gold Pool #A01093... 111
68 9.00%, 9/1/21, Gold Pool #D32271... 72
102 9.00%, 11/1/21, Gold Pool
#D11191.......................... 109
53 9.00%, 11/1/21, Gold Pool
#C00078.......................... 56
108 9.00%, 11/1/21, Gold Pool
#D11866.......................... 115
216 9.00%, 5/1/22, Gold Pool #D19203... 231
76 9.00%, 5/1/22, Gold Pool #D19142... 81
900 7.00%, 8/25/22, Series 13, Class
PL............................... 916
10,000 5.50%, 9/15/22, Series 1367--K..... 9,124
3,845 7.00%, 4/15/23, Pool #348645....... 3,896
6,680 10.00%, 10/15/23, Series 1591 E,
CMO.............................. 7,593
8,837 6.00%, 10/15/23, Series 1785A...... 8,522
17,851 5.00%, 11/15/23, Series 1686 PG,
CMO.............................. 16,979
4,432 8.50%, 5/1/24, Gold Pool #G00229... 4,676
3,985 8.50%, 7/1/24, Gold Pool #C00354... 4,175
6,916 7.50%, 9/1/24, Gold Pool #D56307... 7,108
6,616 8.00%, 11/1/24, Gold Pool
#C00376.......................... 6,870
2,873 7.50%, 5/1/25, Gold Pool #D59996... 2,952
5,051 7.50%, 6/1/25, Gold Pool #C80321... 5,192
4,001 7.50%, 8/1/25, Gold Pool #C00414... 4,111
3,996 7.50%, 8/1/25, Gold Pool #C80334... 4,106
4,348 7.00%, 8/1/25, Gold Pool #C00418... 4,404
4,080 8.00%, 9/1/25, Gold Pool #D63705... 4,233
4,270 7.00%, 9/1/25, Gold Pool #D63303... 4,324
8,267 7.50%, 10/1/25, Gold Pool
#C80349.......................... 8,489
9,011 6.50%, 2/1/26, Gold Pool #D68098... 8,929
9,188 6.50%, 3/1/26, Gold Pool #G00453... 9,105
11,144 7.00%, 4/1/26, Gold Pool #D69811... 11,269
11,884 7.00%, 4/1/26, Gold Pool #D69810... 12,017
4,796 6.50%, 6/1/26, Pool #250575........ 4,743
10,000 6.50%, 10/17/26, Series 1985,
Class PL......................... 9,815
0 7.00%, 3/1/27, Pool #D78691 (c).... 0
0 7.00%, 4/1/27, Pool #C00512 (c).... 0
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
$14,983 6.50%, 11/1/27, Pool #C00568....... $ 14,810
9,900 7.00%, 12/1/27..................... 9,974
--------
256,257
--------
Federal National Mortgage Assoc. (22.4%):
9,333 6.00%, 3/1/01, Pool #50783......... 9,222
8,275 7.00%, 4/1/03, Pool #303876........ 8,386
1,282 7.50%, 5/1/03, Pool #347175........ 1,307
2,617 7.50%, 7/1/03, Pool #250656........ 2,669
6,703 7.00%, 7/17/05, Series 97-26 Gd.... 6,844
10,000 6.70%, 6/19/07..................... 10,477
3,769 7.00%, 4/1/08, Pool #211750........ 3,824
8,000 6.00%, 6/25/09, Series 1994-86 PJ,
CMO.............................. 7,802
3,620 7.00%, 7/1/10, Pool #250326........ 3,694
2,351 6.50%, 12/1/10, Pool #332301....... 2,362
13,132 6.00%, 3/1/11, Pool #340683........ 12,985
943 6.25%, 2/25/13, Series 1993-2 PC,
CMO.............................. 939
3,596 6.35%, 8/25/13, Series 1993-225B
VG, CMO.......................... 3,581
3,815 7.50%, 6/1/14, Pool #250081........ 3,918
3,156 7.50%, 7/1/14, Pool #250082........ 3,241
146 10.00%, 10/1/16, Pool #70110....... 159
7,109 10.00%, 9/1/17, Pool #303969....... 7,720
357 10.00%, 10/1/19, Pool #231675...... 389
10,000 7.00%, 5/25/20, Pool #1990-57...... 10,103
252 10.00%, 7/1/20, Pool #050318....... 274
5,584 6.50%, 5/25/21, Series 1992-205 K,
CMO.............................. 5,539
5,000 7.00%, 9/25/21, Series G92-64 K,
CMO.............................. 5,057
528 10.00%, 11/1/21, Pool #208372...... 576
567 10.00%, 11/1/21, Pool #208374...... 618
5,000 6.55%, 12/25/21, Pool #1993-137 PH,
CMO.............................. 5,025
1,000 7.25%, 5/25/22, Series G93-9, Class
K................................ 1,007
800 7.50%, 7/25/22, Series G92-35,
CMO.............................. 816
10,785 6.50%, 2/17/23, Series #G94-12 C,
CMO.............................. 10,424
5,000 6.50%, 5/25/23, Series 1994-110 H,
CMO.............................. 4,973
9,094 6.35%, 12/25/23, Series 1994-43 PJ,
CMO.............................. 8,844
5,042 7.00%, 1/25/24, Series 1994-62 PJ,
CMO.............................. 5,094
7,998 7.00%, 2/1/24, Pool #190257........ 8,085
3,114 9.00%, 12/1/24, Pool #353898....... 3,313
3,832 7.50%, 6/1/25, Pool #312899........ 3,935
4,294 7.00%, 8/1/25, Pool #315500........ 4,339
3,656 7.50%, 9/1/25, Pool #322899........ 3,751
</TABLE>
Continued
17
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 825 7.50%, 9/1/25, Pool #324749........ $ 846
20,000 6.50%, 12/1/27, Pool #406732....... 19,744
--------
191,882
--------
Government National Mortgage Assoc. (19.5%):
11 10.00%, 9/15/00, Pool #138814...... 12
8 10.00%, 12/15/00, Pool #136214..... 8
34 8.50%, 6/15/01, Pool #166491....... 35
4 8.50%, 7/15/01, Pool #161997....... 4
48 9.50%, 9/15/01, Pool #180786....... 50
5 9.00%, 9/15/01, Pool #174330....... 5
66 9.00%, 9/15/01, Pool #166928....... 69
16 9.50%, 11/15/01, Pool #182995...... 17
63 8.50%, 11/15/01, Pool #179383...... 65
68 9.00%, 12/15/01, Pool #187723...... 72
44 8.50%, 12/15/01, Pool #199837...... 46
69 8.00%, 3/15/02, Pool #205933....... 72
155 9.00%, 5/15/03, Pool #154134....... 163
117 9.00%, 6/15/05, Pool #283904....... 123
43 9.00%, 8/15/05, Pool #291836....... 45
53 9.00%, 9/15/05, Pool #292898....... 55
24 9.00%, 9/15/05, Pool #295227....... 25
62 8.00%, 7/15/06, Pool #11337........ 65
31 7.50%, 7/15/07, Pool #17316........ 32
66 8.00%, 8/15/07, Pool #18539........ 69
76 8.00%, 8/15/07, Pool #18677........ 80
291 7.50%, 12/15/07, Pool #338189...... 300
55 9.00%, 11/15/08, Pool #27932....... 59
94 9.00%, 4/15/09, Pool #30352........ 101
16 9.00%, 5/15/09, Pool #32214........ 18
6 9.50%, 7/15/09, Pool #34487........ 6
146 9.50%, 9/15/09, Pool #34878........ 159
37 9.50%, 10/15/09, Pool #36804....... 41
31 11.00%, 11/15/09, Pool #37615...... 34
1 12.00%, 4/15/15, Pool #125262...... 2
13 11.00%, 6/15/15, Pool #130125...... 14
76 9.00%, 5/15/16, Pool #149877....... 82
84 9.00%, 6/15/16, Pool #166130....... 91
12 9.50%, 7/15/16, Pool #166772....... 14
96 9.00%, 7/15/16, Pool #158921....... 105
75 9.50%, 8/15/16, Pool #177531....... 82
130 9.00%, 9/15/16, Pool #179044....... 142
22 9.50%, 1/15/17, Pool #185619....... 23
343 9.00%, 2/15/17, Pool #195058....... 373
256 9.00%, 6/15/17, Pool #219079....... 278
77 9.50%, 8/15/17, Pool #218841....... 84
43 9.50%, 8/15/17, Pool #224015....... 46
23 9.00%, 8/15/17, Pool #225825....... 25
103 9.00%, 6/15/18, Pool #238161....... 112
66 9.50%, 8/15/18, Pool #248390....... 72
19 9.00%, 10/15/18, Pool #253188...... 21
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 119 9.50%, 12/15/18, Pool #263400...... $ 130
3 9.00%, 10/15/19, Pool #267676...... 3
59 9.00%, 11/15/19, Pool #162768...... 64
65 9.00%, 1/15/20, Pool #283138....... 71
71 9.00%, 2/15/20, Pool #276157....... 77
123 9.00%, 3/15/20, Pool #285283....... 134
55 9.50%, 9/15/20, Pool #292918....... 60
79 9.50%, 12/15/20, Pool #291865...... 86
243 9.00%, 6/15/21, Pool #307120....... 264
14,334 9.00%, 8/15/21, Pool #306081....... 15,521
4,205 9.00%, 12/15/21, Pool #780284...... 4,512
32 7.50%, 2/15/22, Pool #324025....... 33
544 8.00%, 7/15/22, Pool #321560....... 568
713 7.50%, 8/15/22, Pool #337141....... 735
34 7.00%, 10/15/22, Pool #337175...... 35
193 7.00%, 11/15/22, Pool #323008...... 195
33 7.00%, 12/15/22, Pool #339969...... 33
235 7.00%, 1/15/23, Pool #346214....... 238
376 7.00%, 1/15/23, Pool #341536....... 381
474 7.00%, 1/15/23, Pool #332022....... 480
391 7.00%, 1/15/23, Pool #342248....... 396
40 7.00%, 1/15/23, Pool #321675....... 41
51 7.00%, 3/15/23, Pool #350110....... 52
698 7.00%, 5/15/23, Pool #351041....... 708
765 7.00%, 5/15/23, Pool #346572....... 775
734 7.00%, 5/15/23, Pool #342348....... 744
620 7.00%, 5/15/23, Pool #221604....... 629
58 7.00%, 5/15/23, Pool #338005....... 59
322 6.50%, 5/15/23, Pool #343208....... 321
378 6.50%, 6/15/23, Pool #348677....... 377
76 6.50%, 6/15/23, Pool #346624....... 76
54 6.50%, 6/15/23, Pool #349788....... 54
53 6.50%, 6/15/23, Pool #358250....... 52
433 7.00%, 7/15/23, Pool #358382....... 439
809 7.00%, 7/15/23, Pool #346673....... 820
174 7.00%, 7/15/23, Pool #357782....... 176
344 7.00%, 7/15/23, Pool #353569....... 349
23 7.00%, 7/15/23, Pool #350709....... 23
30 7.00%, 7/15/23, Pool #354538....... 30
811 7.00%, 7/15/23, Pool #362982....... 822
242 7.00%, 7/15/23, Pool #325977....... 246
544 7.00%, 7/15/23, Pool #360697....... 551
436 7.00%, 7/15/23, Pool #360889....... 442
267 6.50%, 7/15/23, Pool #322200....... 266
444 6.50%, 8/15/23, Pool #353137....... 443
591 6.50%, 8/15/23, Pool #356717....... 589
174 6.50%, 8/15/23, Pool #359027....... 173
310 6.50%, 8/15/23, Pool #344505....... 309
152 6.50%, 8/15/23, Pool #360713....... 152
286 6.50%, 8/15/23, Pool #360738....... 285
</TABLE>
Continued
18
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 764 6.50%, 9/15/23, Pool #345375....... $ 761
50 6.50%, 9/15/23, Pool #339041....... 50
3,615 8.00%, 10/15/23, Pool #354681...... 3,766
392 6.00%, 10/15/23, Pool #345389...... 382
454 6.00%, 10/15/23, Pool #364717...... 442
34 6.00%, 10/15/23, Pool #370006...... 33
214 6.50%, 10/15/23, Pool #345391...... 213
611 6.50%, 11/15/23, Pool #369356...... 609
19 6.50%, 11/15/23, Pool #370927...... 19
954 6.50%, 12/15/23, Pool #349265...... 951
140 6.50%, 12/15/23, Pool #349944...... 140
101 6.50%, 12/15/23, Pool #365740...... 101
33 6.50%, 12/15/23, Pool #370289...... 33
603 6.50%, 12/15/23, Pool #369830...... 602
650 6.50%, 1/15/24, Pool #379127....... 648
21,202 6.50%, 2/15/24, Pool #354747....... 21,140
166 6.50%, 2/15/24, Pool #380818....... 166
343 6.50%, 2/15/24, Pool #389200....... 342
1,177 6.50%, 2/15/24, Pool #362341....... 1,173
345 6.50%, 2/15/24, Pool #371999....... 344
282 6.50%, 2/15/24, Pool #370338....... 281
933 7.00%, 2/16/24, Series 1996-21,
CMO.............................. 935
79 7.50%, 6/15/24, Pool #389827....... 82
524 7.50%, 6/15/24, Pool #388747....... 539
377 8.00%, 9/15/24, Pool #393908....... 393
3,562 8.00%, 9/15/24, Pool #403212....... 3,711
8,730 9.00% 11/15/24, Pool #780029....... 9,478
1,079 7.25%, 12/15/25, Pool #411361...... 1,100
4,461 7.50%, 3/15/26, Pool #422308....... 4,583
10,842 8.00%, 5/15/26, Pool #422690....... 11,259
6,627 8.00% 5/15/26, Pool #416233........ 6,882
8,963 8.00%, 7/15/26, Pool #423877....... 9,308
9,463 8.00%, 7/15/26, Pool #412644....... 9,827
13,700 8.00%, 12/20/26, G2 Pool #2344..... 14,158
4,893 6.50%, 7/20/27, Pool #80095........ 4,966
9,852 6.00%, 7/20/27, Pool #80094........ 9,975
10,000 7.00%, 12/15/27, Pool # 449494..... 10,088
--------
166,895
--------
Total U.S. Government Agency Mortgages 615,034
--------
U.S. GOVERNMENT AGENCY SECURITIES (14.1%)
Federal Farm Credit Bank (0.6%):
5,000 6.88%, 5/1/00...................... 5,116
--------
Federal Home Loan Bank (2.6%):
2,000 9.25%, 11/25/98.................... 2,054
2,000 9.30%, 1/25/99..................... 2,073
3,000 8.60%, 6/25/99..................... 3,119
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES, CONTINUED:
Federal Home Loan Bank, continued:
$10,000 5.91%, 12/23/02.................... $ 10,002
5,000 6.27%, 1/14/04 (b)................. 4,978
--------
22,226
--------
Federal Home Loan Mortgage Corp. (0.8%):
2,000 6.44%, 1/28/00..................... 2,025
4,500 7.13%, 11/18/02.................... 4,719
--------
6,744
--------
Federal National Mortgage Assoc. (4.9%):
4,000 8.70%, 6/10/99..................... 4,157
3,000 8.90%, 6/12/00..................... 3,204
3,000 6.20%, 11/12/03.................... 2,979
15,000 7.16%, 5/11/05..................... 15,974
10,000 5.88%, 2/2/06 (b).................. 9,901
5,000 6.67%, 2/6/06, Callable 2/6/98 @
100.............................. 4,981
--------
41,196
--------
Resolution Funding Corp. (2.2%):
50,000 Principal STRIPS, 7/15/20 (b)...... 12,436
15,000 Principal STRIPS, 10/15/20......... 3,674
15,000 Principal STRIPS, 4/15/28.......... 2,431
5,000 Principal STRIPS, 4/15/30.......... 719
--------
19,260
--------
Tennessee Valley Authority (3.0%):
25,000 6.24%, 7/15/45, Putable on 7/15/01
@ 100............................ 25,875
--------
Total U.S. Government Agency Securities 120,417
--------
U.S. TREASURY OBLIGATIONS (13.2%):
U.S. Treasury Bonds (4.9%):
25,000 8.13%, 8/15/19 (b)................. 31,278
10,000 6.13%, 11/15/27 (b)................ 10,285
--------
41,563
--------
U.S. Treasury Notes (6.0%):
1,350 6.75%, 4/30/00..................... 1,381
1,500 6.25%, 5/31/00..................... 1,519
4,500 6.13%, 7/31/00..................... 4,547
2,800 6.25%, 4/30/01(b).................. 2,845
1,000 7.88%, 8/15/01..................... 1,069
500 6.38%, 8/15/02..................... 513
15,000 5.63%, 12/31/02.................... 14,945
250 6.25%, 2/15/03 (b)................. 256
2,500 6.50%, 8/15/05 (b)................. 2,609
20,700 6.50%, 10/15/06 (b)................ 21,685
--------
51,369
--------
</TABLE>
Continued
19
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury STRIPS (2.3%):
$25,000 7/15/20............................ $ 6,218
5,000 2/15/25 (b)........................ 3,855
50,000 2/15/25 (b)........................ 9,956
--------
20,029
--------
Total U.S. Treasury Obligations 112,961
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
REPURCHASE AGREEMENTS (5.4%):
$46,298 Prudential Securities, 6.80%,
1/2/98 (Collateralized by $48,271
various U.S. Government Agency
Securities, 6.19% - 7.04%,
6/1/07 - 10/1/24, market value
$47,687)......................... $ 46,298
--------
Total Repurchase Agreements 46,298
--------
Total (Cost $866,431) (a) $894,710
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $856,655.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $28,903
Unrealized depreciation..................................... (624)
-------
Net unrealized appreciation................................. $28,279
=======
</TABLE>
(b) A portion of this security was loaned as of December 31, 1997.
(c) Amount is less than $1,000.
CMO Collateralized Mortgage Obligation
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
ASSET BACKED SECURITIES (8.1%):
$ 5,000 Advanta Mortgage Loan Trust, 97-2,
Class A4, 7.60%, 6/25/27......... $ 5,250
7,500 Advanta Mortgage Loan Trust, Series
1995-1, Class A5, 8.32%,
12/25/19......................... 7,884
5,595 Aircraft Lease Portfolio
Securitization Ltd., Series 94-1,
Class A2, 7.15%, 9/15/04......... 5,626
2,304 Auto Finance Group, Inc., Series
1997-B, Class C, 7.00%,
2/15/03.......................... 2,266
2,739 BHN Multibanco S.A., Series 1997-1,
Class A2, 7.92%, 7/25/09......... 2,592
2,945 BHN Multibanco S.A., Series 97-2,
7.54%, 6/30/17................... 2,702
4,917 Federal Express, Series A-1, 7.85%,
6/1/24........................... 5,298
5,000 ML CBO 1996 PM1, 7.87%, 12/17/06... 5,097
2,205 NAL 96, Class A, 7.10%, 3/15/01,
Private Placement, 144A.......... 2,193
1,414 NAL, Series 96-4, 6.90%,
12/15/00......................... 1,387
11,114 Northwest Air, Series 2, Class A,
9.25%, 6/21/14................... 13,168
4,631 Northwest Air, Trust, Series B,
10.23%, 6/21/14.................. 5,580
4,258 Olympic Automobile Receivables
Trust, Series 1994-B, Class A2,
6.85%, 6/15/01................... 4,336
5,288 Olympic Automobile Receivables
Trust, Series 1995-B, Class A2,
7.35%, 10/15/01.................. 5,368
--------
Total Asset Backed Securities 68,747
--------
COMMERCIAL PAPER (1.2%):
Financial Services (1.2%):
10,000 Broadway Capital, 6.28%, 1/5/98.... 9,995
--------
Total Commercial Paper 9,995
--------
CORPORATE BONDS (50.3%):
Banking, Finance & Insurance (15.7%):
9,000 Associates Corp., 8.34%,
11/25/99......................... 9,360
6,000 Associates Corp., 8.15%, 8/1/09.... 6,848
5,000 BankAmerica Corp., 9.50%, 4/1/01... 5,469
5,000 Bear Stearns Co., 9.13%, 4/15/98... 5,045
5,000 Bear Stearns Co., 8.25%, 2/1/02.... 5,350
6,500 Corestates Capital, 8.00%, 12/15/26
(b).............................. 6,866
5,000 Cullen Frost Bank Capital Trust,
8.42%, 2/1/27.................... 5,488
1,500 Dynex Capital, Inc., 7.88%,
7/15/02.......................... 1,523
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Banking, Finance & Insurance, continued:
$ 5,000 First Chicago Capital Trust, 7.95%,
12/1/26.......................... $ 5,200
2,000 Fleet Financial Group, Inc., 8.13%,
7/1/04........................... 2,185
3,500 Ford Capital BV, 10.13%,
11/15/00......................... 3,863
1,500 Ford Motor Credit Corp., 6.38%,
10/6/00.......................... 1,511
3,000 General Motors Acceptance Corp.,
8.40%, 10/15/99.................. 3,116
8,000 General Motors Acceptance Corp.,
7.00%, 3/1/00.................... 8,150
10,000 Lehman Brothers Holdings, Inc.,
8.88%, 3/1/02.................... 10,910
5,000 Lehman Brothers Holdings, Inc.,
8.80%, 3/1/15.................... 5,900
5,000 Lehman Brothers Holdings, Inc.,
11.63%, 5/15/05.................. 6,450
6,000 Massachusetts Mutual Life
Insurance, 7.50%, 3/1/24, 144A... 6,390
5,000 MIC Financial Trust, 8.38%
2/1/27........................... 5,381
5,000 Money Store, Inc., 8.05% 4/15/02... 5,188
6,000 Morgan Stanley Group, Inc., 6.13%,
10/1/03.......................... 5,978
5,000 Principal Mutual, 7.88%, 3/1/24.... 5,375
5,000 Security Pacific Corp., 11.00%,
3/1/01........................... 5,675
5,000 Sun Life, 8.53%, 5/6/27............ 5,538
--------
132,759
--------
Food Products & Services (0.3%):
2,500 RJR Nabisco Corp., 8.75%,
8/15/05 (b)...................... 2,672
--------
Industrial Goods & Services (9.5%):
1,500 Advanced Micro Device, 11.00%,
8/1/03 (b)....................... 1,613
3,000 Boise Cascade Co., 9.45%,
11/1/09.......................... 3,600
1,500 Chesapeake Energy, 10.50%,
6/1/02 (b)....................... 1,605
4,000 Comcast Cable, 8.38%, 5/1/07,
144A (b)......................... 4,450
1,500 Comcast Cellular, 9.50%, 5/1/07.... 1,571
1,500 D.R. Horton, 8.38%, 6/15/04........ 1,519
2,356 EES Coke Battery, 7.13%, 4/15/02,
144A............................. 2,381
5,000 Excel Paralubes Funding, 7.13%,
11/1/11.......................... 5,160
2,000 Freeport McMoran, Copper & Gold,
7.50%, 11/15/06.................. 2,008
5,000 General Motors Corp., 9.13%,
7/15/01.......................... 5,456
3,000 Golden State Petroleum, 8.04%,
2/1/19, 144A..................... 3,281
</TABLE>
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Industrial Goods & Services, continued:
$ 5,000 Hilton Hotels Corp., 7.95%,
4/15/07.......................... $ 5,319
5,000 Hyundai Semiconductor, 8.63%,
5/15/07.......................... 3,275
2,500 Mississippi Chemical, 7.25%,
11/15/17......................... 2,509
4,640 Newmont Mining Co., 8.91%,
1/5/09........................... 5,133
1,500 Nine West Group, Inc., 8.38%,
8/15/05.......................... 1,455
2,500 Northrop Grumman, 7.00%, 3/1/06.... 2,588
4,703 Oslo Seismic Service, 8.28%,
6/1/11, 144A..................... 5,095
9,000 Penske Truck Leasing, 8.25%,
11/1/99 (b)...................... 9,349
1,500 Pride Petroleum Services, Inc.,
9.38%,
5/1/07........................... 1,616
1,500 Tenet Healthcare, 8.00%, 1/15/05... 1,528
4,000 Tenneco Inc., 8.20%, 11/15/99...... 4,145
1,500 Terra Industries, 10.50%, 6/15/05,
Callable 6/15/00 @ 105.25........ 1,616
2,000 Trico Marine, 8.50%, 8/1/05........ 1,511
2,000 Wyman-Gordon Co., 8.00%,
12/15/07......................... 2,028
--------
79,811
--------
Real Estate (5.9%):
2,000 American Health Properties, 7.50%,
1/15/07.......................... 2,123
2,000 Avalon Properties, 7.38%,
9/15/02.......................... 2,065
4,750 Meditrust, 7.77%, 8/16/02.......... 4,934
3,000 Meditrust, 7.82% 9/10/26........... 3,379
3,500 MEPC Finance, Inc., 7.50%,
5/1/03........................... 3,714
5,000 Security Capital Pacific Trust,
6.95%, 10/15/02.................. 5,088
2,500 Security Capital Pacific Trust,
7.15%, 10/15/03.................. 2,563
5,000 Spieker Properties, 6.65%,
12/15/00......................... 5,025
4,000 Spieker Properties, 8.00%,
7/19/05.......................... 4,260
8,000 Taubman Realty Group, 7.00%,
10/1/03.......................... 8,048
3,000 Wellsford Residential Property,
7.25%, 8/15/00................... 3,064
5,000 Western Banktrust REIT, 7.88%,
2/15/04.......................... 5,275
--------
49,538
--------
Transportation & Shipping (0.2%):
1,500 Viking Star Shipping, 9.63%
7/15/03.......................... 1,573
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Utilities (1.3%):
$ 7,000 NRG Energy Corp., 7.63%, 2/1/06.... $ 7,350
3,764 Salton Sea Funding Corp., 6.69%,
5/30/00.......................... 3,797
--------
11,147
--------
Yankee & Eurodollar (17.4%):
1,500 AES China Generating Co., 10.13%,
12/15/06......................... 1,459
1,500 APP International Finance, 11.75%,
10/1/05 (b)...................... 1,425
5,000 Bangkok Bank Public Co. Ltd.,
7.25%, 9/15/05, 144A (b)......... 3,569
10,000 Bank Nagrara Indonesia, 7.63%,
2/5/07........................... 7,300
5,000 BCH Cayman Islands, 8.25%,
6/15/04.......................... 5,388
4,000 BCH Cayman Islands, 7.50%,
6/15/05.......................... 4,175
5,000 Celulosa Arauco, 6.75%, 12/15/03... 4,975
12,548 Centra Gas, 10.65%, 12/1/10,
144A............................. 12,857
5,000 China International Trust &
Investing, 9.00%, 10/15/06 (b)... 5,350
5,000 China Light & Power, 7.50%,
4/15/06.......................... 4,963
3,500 Citra Marga Finance, 7.25%,
2/20/02.......................... 2,765
5,000 Coca Cola Femsa, 8.95%, 11/1/06.... 5,225
4,000 Dao Heng Bank, 7.75%, 1/24/07,
Private Placement................ 3,525
1,500 DGS International Finance, 10.00%,
6/1/07........................... 1,163
9,000 Financiera Energy, 9.38%,
6/15/06.......................... 9,135
1,500 Greater Beijing, 9.50%, 6/15/07.... 1,215
3,000 Guangdong Enterprises, 8.88%,
5/22/07.......................... 2,756
5,000 Guangdong International, 6.75%,
11/15/03......................... 4,500
6,000 Honam Oil Refinery Co., 7.13%,
10/15/05, 144A................... 4,440
5,000 Industrial Bank of Korea, 7.10%,
10/15/01......................... 4,000
4,000 Industrial Finance Corp., Thailand,
7.38%, 1/14/07 (b)............... 3,040
2,449 Jasmine Submarine, 8.48%, 5/30/11,
Private Placement................ 1,935
2,000 Kansalis-Osake Pankki, 9.75%,
12/15/98......................... 2,063
6,000 Peoples Democratic Republic of
Poland, 3.75%, 10/27/14.......... 5,190
1,500 Philippine Long Distance Telephone,
7.85%, 3/6/07.................... 1,309
500 Philippine Long Distance Telephone,
9.38%, 7/30/07................... 355
</TABLE>
Continued
22
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Yankee & Eurodollar, continued:
$ 1,000 Polysindo International Finance,
9.38%, 7/30/07................... $ 710
4,250 Ras Laffan Gas, 7.63%, 9/15/06,
144A............................. 4,123
2,500 Republic of Indonesia, 7.75%,
8/1/06 (b)....................... 1,963
5,000 Republic of South Africa, 8.50%,
6/23/17 (b)...................... 4,925
5,000 Scotland International Finance,
8.80%, 1/27/04, 144A............. 5,556
4,000 Scotland International Finance,
8.85%, 11/1/06, 144A............. 4,580
5,000 Taegu City, 7.38% 10/15/07......... 4,675
5,000 Tenaga Nasional Berhad, 7.88%,
6/15/04, 144A (b)................ 4,813
4,000 Termoemcali, 10.13%, 12/15/14,
144A............................. 4,273
1,500 Tjiwi Kimia Finance, 10.00%,
8/1/04 (b)....................... 1,245
2,500 Total Access, 8.38%, 11/4/06,
144A............................. 1,650
2,450 Yanacocha, 8.40%, 5/15/04.......... 2,474
2,662 Ypf Sociedad Anomima, 7.00%,
10/26/02......................... 2,722
--------
147,786
--------
Total Corporate Bonds 425,286
--------
OTHER MORTGAGED BACKED SECURITIES (0.6%):
5,000 Residential Funding Corp., Series
96-H52, Class A4, 7.55%,
9/25/12.......................... 5,175
--------
Total Other Mortgaged Backed Securities 5,175
--------
U.S. GOVERNMENT AGENCY MORTGAGES (17.1%):
Federal Home Loan Mortgage Corp. (9.4%):
5,000 7.13%, 7/21/99..................... 5,100
18,000 0.00%, 8/15/02 (b)................. 13,729
4,147 7.00%, 6/1/09, Pool #E00313........ 4,233
8,246 7.50%, 5/1/11, Pool #E00438........ 8,509
7,742 7.00%, 5/1/11, Gold Pool #E00434... 7,875
6,957 7.00%, 6/1/11, Gold Pool #E64220... 7,077
1,148 7.50%, 6/1/24, Pool #C80161........ 1,180
14,881 7.00%, 9/1/24, Pool #G00271........ 15,073
6,868 7.50%, 10/1/24, Pool #C80245....... 7,059
9,180 7.00%, 12/1/24, Pool #G00278....... 9,297
--------
79,132
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY MORTGAGES, CONTINUED:
Federal National Mortgage Assoc. (5.1%):
$ 500 8.15%, 5/11/98..................... $ 504
8,275 7.00%, 4/1/03, Pool #303865........ 8,386
500 6.53%, 4/10/03..................... 500
19,206 8.00%, 12/1/09, Pool #250168....... 19,879
2,000 8.20%, 3/10/16 (b)................. 2,383
11,103 7.50%, 9/1/25, Pool #324179........ 11,391
--------
43,043
--------
Government National Mortgage Assoc. (2.6%):
3,056 9.00%, 11/15/24, Pool #780029...... 3,317
8,645 7.50%, 7/15/26, Pool #430999....... 8,877
9,679 7.50%, 7/20/27, Pool #2457......... 9,882
--------
22,076
--------
Total U.S. Government Agency Mortgages 144,251
--------
U.S. GOVERNMENT AGENCY SECURITIES (1.9%):
Federal Home Loan Bank (1.2%):
10,000 7.10%, 3/16/98 (b)................. 10,028
--------
Government Trust Certificate (0.3%):
2,037 Israel, 9.40%, 5/15/02............. 2,139
--------
Tennessee Valley Authority (0.4%):
3,200 8.63%, 11/15/29.................... 3,548
--------
Total U.S. Government Agency Securities 15,715
--------
U.S. TREASURY OBLIGATIONS (19.3%):
U.S. Treasury Bonds (9.8%):
10,250 13.38%, 8/15/01 (b)................ 12,808
9,600 11.88%, 11/15/03 (b)............... 12,493
14,000 9.00%, 11/15/18.................... 18,918
11,250 8.13%, 8/15/21 (b)................. 14,196
3,000 8.00%, 11/15/21 (b)................ 3,742
17,600 7.13%, 2/15/23 (b)................. 20,101
--------
82,258
--------
U.S. Treasury Notes (7.5%):
15,000 6.25%, 8/31/00 (b)................. 15,203
25,300 6.63%, 6/30/01 (b)................. 26,008
11,500 6.25%, 2/15/07 (b)................. 11,800
10,000 6.63%, 5/15/07 (b)................. 10,589
--------
63,600
--------
</TABLE>
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Income Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS, CONTINUED:
U.S. Treasury STRIPS (2.0%):
$65,000 0.00%, 10/15/19.................... $ 16,970
--------
Total U.S. Treasury Obligations 162,828
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
REPURCHASE AGREEMENTS (0.6%)
$ 4,776 Prudential Securities, 6.80%,
1/2/98 (Collateralized by $5,000
U.S. Treasury Bills, 6/25/98,
market value $4,872)............. $ 4,776
--------
Total Repurchase Agreements 4,776
--------
Total (Cost $808,735) (a) $836,773
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $844,257.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 43,379
Unrealized depreciation..................................... (15,341)
--------
Net unrealized appreciation................................. $ 28,038
========
</TABLE>
(b) A portion of this security was loaned as of December 31, 1997.
<TABLE>
<S> <C>
REIT Real Estate Investment Trust
</TABLE>
See notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
Treasury & Agency Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- ----------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCY (31.1%):
Federal Farm Credit Bank (6.8%):
$7,000 7.16%, 5/15/06..................... $ 7,499
--------
Federal Home Loan Bank (9.8%):
3,800 5.70%, 3/11/99..................... 3,791
5,000 6.66%, 6/3/03...................... 5,012
2,000 6.26%, 11/26/03.................... 1,997
--------
10,800
--------
Other U.S. Agencies (14.5%):
6,000 Student Loan Marketing Association,
6.00%, 3/5/01.................... 5,980
10,000 Tennessee Valley Authority, 6.13%,
7/15/03.......................... 9,987
--------
15,967
--------
Total U.S. Government Agency 34,266
--------
U.S. TREASURY OBLIGATIONS (65.9%):
U.S. Treasury Inflation Protected Bonds (4.5%):
5,099 3.38%, 1/15/07..................... 4,969
--------
U.S. Treasury Notes (61.4%):
4,500 5.88%, 10/31/98 (b)................ 4,509
27,000 7.75%, 11/30/99 (b)................ 28,011
32,000 6.63%, 6/30/01 (b)................. 32,895
2,000 6.88%, 5/15/06..................... 2,141
--------
67,556
--------
Total U.S. Treasury Obligations 72,525
--------
INVESTMENT COMPANIES (2.7%):
2,962 The One Group Treasury Only Money
Market Fund Fiduciary Class...... 2,962
--------
Total Investment Companies 2,962
--------
Total (Cost $107,135) (a) $109,753
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $110,087.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation..................................... $2,647
Unrealized depreciation..................................... (29)
------
Net unrealized appreciation................................. $2,618
======
</TABLE>
(b) A portion of this security was loaned as of December 31, 1997.
See notes to financial statements.
25
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
ULTRA SHORT- LIMITED VOLATILITY INTERMEDIATE
TERM INCOME BOND BOND
FUND FUND FUND
------------ ------------------ ------------
<S> <C> <C> <C>
ASSETS
Investments, at value....................................... $204,521 $598,135 $677,794
Repurchase agreements, at cost.............................. 1,601 892 12,262
-------- -------- --------
Total (cost $205,155; $593,578; $678,639, respectively)..... 206,122 599,027 690,056
Cash........................................................ -- 1 55
Interest receivable......................................... 1,294 6,695 7,362
Receivable from brokers for investments sold................ 195 11 5
Receivable for capital shares issued........................ 27 11 435
Prepaid expenses and other assets........................... 3 9 8
-------- -------- --------
TOTAL ASSETS................................................ 207,641 605,754 697,921
-------- -------- --------
LIABILITIES
Cash overdrafts............................................. 6 -- --
Dividends payable........................................... 1,071 2,964 3,756
Payable to brokers for investments purchased................ -- -- 8,159
Payable for capital shares redeemed......................... 458 40 95
Payable for variation margin on futures contracts........... 36 -- --
Accrued expenses and other payables:
Investment advisory fees.................................. 37 157 186
Administration fees....................................... -- 85 93
12b-1 fees................................................ 11 8 17
Other..................................................... 19 60 32
-------- -------- --------
TOTAL LIABILITIES........................................... 1,638 3,314 12,338
-------- -------- --------
NET ASSETS
Capital..................................................... 209,547 608,782 680,391
Undistributed (distributions in excess of) net investment
income.................................................... (181) (246) 69
Accumulated undistributed net realized gains (losses) from
investment and
futures transactions...................................... (4,278) (11,545) (6,294)
Net unrealized appreciation (depreciation) from investments
and futures............................................... 915 5,449 11,417
-------- -------- --------
Net Assets.................................................. $206,003 $602,440 $685,583
======== ======== ========
Net Assets
Fiduciary............................................... $163,219 $579,814 $638,657
Class A................................................. 39,304 17,792 32,298
Class B................................................. 3,480 4,834 14,438
Class C................................................. -- -- 190
-------- -------- --------
Total....................................................... $206,003 $602,440 $685,583
======== ======== ========
Outstanding units of beneficial interest (shares)
Fiduciary............................................... 16,510 55,345 63,498
Class A................................................. 3,976 1,700 3,202
Class B................................................. 354 458 1,435
Class C................................................. -- -- 19
-------- -------- --------
Total....................................................... 20,840 57,503 68,154
======== ======== ========
Net asset value
Fiduciary
Offering and redemption price per share............. $ 9.89 $ 10.48 $ 10.06
======== ======== ========
Class A
Redemption price per share.......................... $ 9.88 $ 10.47 $ 10.09
======== ======== ========
Maximum sales charge................................ 3.00% 3.00% 4.50%
======== ======== ========
Maximum offering price (100%/(100%--maximum sales
charge) of net asset value adjusted to nearest
cent) per share................................... $ 10.19 $ 10.79 $ 10.57
======== ======== ========
Class B
Offering price per share (a)........................ $ 9.83 $ 10.54 $ 10.06
======== ======== ========
Class C
Offering price per share (a)........................ $ -- $ -- $ 10.06
======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B and Class C shares varies based on length of
time shares are held.
See notes to financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(Amounts in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
GOVERNMENT INCOME TREASURY &
BOND BOND AGENCY
FUND FUND FUND
---------- -------- ----------
<S> <C> <C> <C>
ASSETS
Investments, at value....................................... $848,412 $831,997 $109,753
Repurchase agreements, at cost.............................. 46,298 4,776 --
-------- -------- --------
Total (cost $866,431; $808,735; $107,135, respectively)..... 894,710 836,773 109,753
Cash........................................................ -- -- --
Interest receivable......................................... 6,501 12,888 989
Receivable for capital shares issued........................ 78 -- --
Deferred organization costs................................. -- -- 2
Prepaid expenses and other assets........................... 10 11 1
-------- -------- --------
TOTAL ASSETS................................................ 901,299 849,672 110,745
-------- -------- --------
LIABILITIES
Dividends payable........................................... 4,189 4,894 583
Payable to brokers for investments purchased................ 39,862 -- --
Payable for capital shares redeemed......................... 3 15 1
Accrued expenses and other payables:
Investment advisory fees.................................. 317 286 19
Administration fees....................................... 87 123 7
12b-1 fees................................................ 18 14 3
Other..................................................... 168 83 45
-------- -------- --------
TOTAL LIABILITIES........................................... 44,644 5,415 658
-------- -------- --------
NET ASSETS
Capital..................................................... 845,755 870,547 107,396
Undistributed (distributions in excess of) net investment
income.................................................... (101) 288 --
Accumulated undistributed net realized gains (losses) from
investment and
futures transactions...................................... (17,278) (54,616) 73
Net unrealized appreciation (depreciation) from investments
and futures............................................... 28,279 28,038 2,618
-------- -------- --------
Net Assets.................................................. $856,655 $844,257 $110,087
======== ======== ========
Net Assets
Fiduciary............................................... $809,738 $815,669 $ 99,552
Class A................................................. 32,295 14,522 7,671
Class B................................................. 14,622 14,066 2,864
-------- -------- --------
Total....................................................... $856,655 $844,257 $110,087
======== ======== ========
Outstanding units of beneficial interest (shares)
Fiduciary............................................... 80,877 86,057 9,885
Class A................................................. 3,225 1,533 761
Class B................................................. 1,461 1,472 284
-------- -------- --------
Total....................................................... 85,563 89,062 10,930
======== ======== ========
Net asset value
Fiduciary
Offering and redemption price per share............. $ 10.01 $ 9.48 $ 10.07
======== ======== ========
Class A
Redemption price per share.......................... $ 10.01 $ 9.47 $ 10.07
======== ======== ========
Maximum sales charge................................ 4.50% 4.50% 3.00%
======== ======== ========
Maximum offering price (100%/(100%--maximum sales
charge) of net asset value adjusted to nearest
cent) per share................................... $ 10.48 $ 9.92 $ 10.38
======== ======== ========
Class B
Offering price per share (a)........................ $ 10.01 $ 9.55 $ 10.07
======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B shares varies based on length of time shares
are held.
See notes to financial statements.
27
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
ULTRA SHORT- LIMITED VOLATILITY INTERMEDIATE
TERM INCOME BOND BOND
FUND FUND FUND
------------ ------------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income............................................ $5,922 $19,341 $21,155
Dividend income............................................ -- -- --
Income from securities lending............................. -- 72 107
------ ------- -------
Total Income............................................... 5,922 19,413 21,262
------ ------- -------
EXPENSES
Investment advisory fees................................... 525 1,764 1,809
Administration fees........................................ 157 483 495
12b-1 fees (Class A)....................................... 63 34 45
12b-1 fees (Class B)....................................... 15 24 62
Custodian and accounting fees.............................. 14 45 50
Legal and audit fees....................................... -- 13 10
Organization costs......................................... 2 -- --
Trustees' fees and expenses................................ 1 4 4
Transfer agent fees........................................ 24 46 38
Registration and filing fees............................... 30 19 66
Printing costs............................................. 13 24 14
Other...................................................... 4 16 4
------ ------- -------
Total expenses before waivers.............................. 848 2,472 2,597
Less waivers............................................... (507) (869) (817)
------ ------- -------
Net Expenses............................................. 341 1,603 1,780
------ ------- -------
Net Investment Income...................................... 5,581 17,810 19,482
------ ------- -------
REALIZED / UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FUTURES
Net realized gains (losses) from investment and futures
transactions............................................. (236) (363) (1,013)
Net change in unrealized appreciation (depreciation) from
investments and futures.................................. 387 748 8,434
------ ------- -------
Net realized/unrealized gains (losses) from investments and
futures.................................................. 151 385 7,421
------ ------- -------
Change in net assets resulting from operations............. $5,732 $18,195 $26,903
====== ======= =======
</TABLE>
See notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
GOVERNMENT INCOME TREASURY &
BOND BOND AGENCY
FUND FUND FUND
---------- ------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income............................................. $27,398 $30,108 $3,573
Dividend income............................................. -- -- 89
Income from securities lending.............................. 41 105 7
------- ------- ------
Total Income................................................ 27,439 30,213 3,669
------- ------- ------
EXPENSES
Investment advisory fees.................................... 1,835 2,436 221
Administration fees......................................... 670 667 91
12b-1 fees (Class A)........................................ 59 26 5
12b-1 fees (Class B)........................................ 65 63 8
Custodian and accounting fees............................... 62 40 1
Legal and audit fees........................................ 16 7 1
Organization costs.......................................... 2 -- --
Trustees' fees and expenses................................. 9 7 1
Transfer agent fees......................................... 81 46 30
Registration and filing fees................................ 47 62 33
Printing costs.............................................. 37 15 2
Other....................................................... 34 8 3
------- ------- ------
Total expenses before waivers............................... 2,917 3,377 396
Less waivers................................................ (284) (826) (178)
------- ------- ------
Net Expenses.............................................. 2,633 2,551 218
------- ------- ------
Net Investment Income....................................... 24,806 27,662 3,451
------- ------- ------
REALIZED / UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FUTURES
Net realized gains (losses) from investment and futures
transactions.............................................. 3,886 89 413
Net change in unrealized appreciation (depreciation) from
investments and futures................................... 22,155 4,148 1,050
------- ------- ------
Net realized/unrealized gains (losses) from investments and
futures................................................... 26,041 4,237 1,463
------- ------- ------
Change in net assets resulting from operations.............. $50,847 $31,899 $4,914
======= ======= ======
</TABLE>
See notes to financial statements.
29
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
ULTRA SHORT-TERM LIMITED VOLATILITY
INCOME FUND BOND FUND
------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ---------- ------------ ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income..................................... $ 5,581 $ 5,647 $ 17,810 $ 36,887
Net realized gains (losses) from investment and futures
transactions............................................ (236) (269) (363) (2,851)
Net change in unrealized appreciation (depreciation) from
investments and futures................................. 387 1,032 748 5,502
-------- -------- -------- ---------
Change in net assets resulting from operations.............. 5,732 6,410 18,195 39,538
-------- -------- -------- ---------
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income................................ (4,456) (4,769) (17,108) (35,406)
From net realized gains from investment transactions...... -- -- -- --
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income................................ (1,024) (761) (563) (1,219)
From net realized gains from investment transactions...... -- -- -- --
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income................................ (81) (94) (139) (262)
From net realized gains from investment transactions...... -- -- -- --
-------- -------- -------- ---------
Change in net assets from shareholder distributions....... -- -- -- --
-------- -------- -------- ---------
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income................................ -- -- -- --
-------- -------- -------- ---------
Change in net assets from shareholder distributions......... (5,561) (5,624) (17,810) (36,887)
-------- -------- -------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................... 120,876 109,550 51,748 117,648
Proceeds from shares issued in connection with
conversion.............................................. 1,303 -- 41,843 --
Dividends reinvested...................................... 957 790 1,114 3,251
Cost of shares redeemed................................... (64,178) (26,641) (81,604) (165,778)
-------- -------- -------- ---------
Change in net assets from share transactions................ 58,958 83,699 13,101 (44,879)
-------- -------- -------- ---------
Change in net assets........................................ 59,129 84,485 13,486 (42,228)
NET ASSETS:
Beginning of period....................................... 146,874 62,389 588,954 631,182
-------- -------- -------- ---------
End of period............................................. $206,003 $146,874 $602,440 $ 588,954
======== ======== ======== =========
SHARE TRANSACTIONS:
Issued.................................................... 12,223 11,129 4,914 11,253
Issued in conversion...................................... 132 -- 3,970 --
Reinvested................................................ 97 81 107 311
Redeemed.................................................. (6,490) (2,708) (7,747) (15,866)
-------- -------- -------- ---------
Change in shares............................................ 5,962 8,502 1,244 (4,302)
======== ======== ======== =========
Undistributed (distributions in excess of) net investment
income included in net assets:
End of period............................................... $ (181) $ (201) $ (246) $ (246)
======== ======== ======== =========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Amount is less than 1,000.
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND GOVERNMENT BOND FUND INCOME BOND FUND TREASURY & AGENCY FUND
- ------------------------- ------------------------- ------------------------- -------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS JANUARY 20, 1997
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED THROUGH
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1996 1997 1997 1997 1997 1997 1997(a)
- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
$ 19,482 $ 26,017 $ 24,806 $ 46,994 $ 27,662 $ 44,089 $ 3,451 $ 3,196
(1,013) (935) 3,886 (894) 89 (280) 413 178
8,434 3,378 22,155 10,875 4,148 6,049 1,050 (341)
- ---------- -------- -------- --------- -------- --------- -------- --------
26,903 28,460 50,847 56,975 31,899 49,858 4,914 3,033
- ---------- -------- -------- --------- -------- --------- -------- --------
(18,334) (24,622) (23,475) (44,081) (26,803) (42,737) (3,321) (3,196)
-- -- -- -- -- -- (474) --
(801) (940) (994) (2,290) (483) (828) (88) --(b)
-- -- -- -- -- -- (32) --
(346) (455) (337) (623) (376) (524) (42) --(b)
-- -- -- -- -- -- (12) --
- ---------- -------- -------- --------- -------- --------- -------- --------
-- -- (24,806) (46,994) (27,662) (44,089) (3,969) (3,196)
- ---------- -------- -------- --------- -------- --------- -------- --------
(1) -- -- -- -- -- -- --
- ---------- -------- -------- --------- -------- --------- -------- --------
(19,482) (26,017) -- -- -- -- -- --
- ---------- -------- -------- --------- -------- --------- -------- --------
128,318 187,226 130,965 229,453 150,907 224,558 13,316 6,409
55,814 207,582 26,687 -- -- 132,470 -- 113,243
1,216 1,664 1,322 3,881 1,382 4,757 440 --(b)
(58,524) (98,172) (99,239) (199,344) (68,221) (148,078) (14,872) (9,231)
- ---------- -------- -------- --------- -------- --------- -------- --------
126,824 298,300 59,735 33,990 84,068 213,707 (1,116) 110,421
- ---------- -------- -------- --------- -------- --------- -------- --------
134,245 300,743 85,776 43,971 88,305 219,476 (171) 110,258
551,338 250,595 770,879 726,908 755,952 536,476 110,258 --
- ---------- -------- -------- --------- -------- --------- -------- --------
$685,583 $551,338 $856,655 $ 770,879 $844,257 $ 755,952 $110,087 110,258
- ---------- ======== ======== ========= ======== ========= ======== ========
- ----------
12,764 18,923 13,262 23,794 15,811 23,912 1,320 644
5,521 20,926 2663 -- -- 14,063 -- 11,324
121 169 134 404 145 508 44 --(b)
(5,821) (9,913) (10,040) (20,680) (7,150) (15,750) (1,475) (927)
- ---------- -------- -------- --------- -------- --------- -------- --------
12,585 30,105 6,019 3,518 8,806 22,733 (111) 11,041
========== ======== ======== ========= ======== ========= ======== ========
$ 69 $ 69 $ (101) $ (101) $ 288 $ 288 $ -- $ --
========== ======== ======== ========= ======== ========= ======== ========
</TABLE>
31
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31,1997
(Unaudited)
1. ORGANIZATION:
The One Group (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
established as a Massachusetts business trust. The accompanying financial
statements and financial highlights are those of the Ultra Short-Term Income
Fund, the Limited Volatility Bond Fund, the Intermediate Bond Fund, the
Government Bond Fund, the Income Bond Fund, and the Treasury & Agency Fund
(individually a "Fund", collectively the "Funds") only. Each Fund is a
diversified mutual fund.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Ultra Short-Term Income Fund A high level of current income consistent with low
volatility of principal by investing in a diversified
portfolio of short-term investment grade securities.
Limited Volatility Bond Fund Current income consistent with the preservation of capital
through investment in high and medium-grade fixed-income
securities.
Intermediate Bond Fund Current income consistent with the preservation of capital
through investments in high and medium-grade fixed-income
securities with intermediate maturities.
Government Bond Fund A high level of current income with liquidity and safety of
principal.
Income Bond Fund A high level of current income by investing primarily in a
diversified portfolio of high, medium and low grade debt
securities.
Treasury & Agency Fund A high level of current income by investing in U.S. Treasury
and other U.S. Agency obligations with a primary, but not
exclusive, focus on issues that produce income exempt from
state income taxes.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION
Debt securities (other than short-term investments maturing in 60 days or
less), including municipal securities, are valued on the basis of valuations
provided by dealers or by an independent pricing service approved by the
Board of Trustees. Short-term investments maturing in 60 days or less are
valued at amortized cost, which approximates market value. Futures contracts
are valued at the settlement price established each day by the board of trade
or an exchange on which they are traded. Options traded on an exchange are
valued using the last sale price or, in the absence of a sale, the last
offering price. Options traded over-the-counter are valued using
dealer-supplied valuations. Investments for which there are no such
quotations or valuations are carried at fair value as determined by the Fair
Value Committee which is
Continued
32
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Unaudited)
comprised of members from Banc One Investment Advisors Corporation (the
"Advisor") and The One Group Services Company (the "Administrator") under the
direction of the Board of Trustees.
REPURCHASE AGREEMENTS
The Funds (except for the Treasury & Agency Fund) may invest in repurchase
agreements with institutions that are deemed by the Advisor to be of good
standing and creditworthy under guidelines established by the Board of
Trustees. Each repurchase agreement is recorded at cost. The Fund requires
that the securities purchased in a repurchase agreement transaction be
transferred to the custodian in a manner sufficient to enable the Fund to
obtain those securities in the event of a counterparty default. The seller,
under the repurchase agreement, is required to maintain the value of the
securities held at not less than the repurchase price, including accrued
interest. Repurchase agreements are considered to be loans by a fund under
the 1940 Act.
WRITTEN OPTIONS
The Funds (except for the Limited Volatility Fund and the Treasury & Agency
Fund) may write covered call or secured put options for which premiums
received are recorded as liabilities and are subsequently adjusted to the
current value of the options written. Premiums received from writing options
which expire are treated as realized gains. Premiums received from writing
options, which are either exercised or closed, are offset against the
proceeds received or amount paid on the transaction to determine realized
gains or losses.
FUTURES CONTRACTS
The Funds (except for the Limited Volatility Fund and the Treasury & Agency
Fund) may enter into futures contracts for the delayed delivery of securities
at a fixed price at some future date or for the change in the value of a
specified financial index over a predetermined time period. Cash or
securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change in
the market value of the position are recorded as unrealized appreciation or
depreciation until the contract is closed out, at which time the appreciation
or depreciation is realized.
INDEXED SECURITIES
The Funds (except for the Limited Volatility Fund and the Treasury & Agency
Fund) may invest in indexed securities whose value is linked either directly
or inversely to changes in foreign currencies, interest rates, commodities,
indices or other reference instruments. Indexed securities may be more
volatile than the referenced instrument itself, but any loss is limited to
the amount of the original investment.
MORTGAGE ROLLS
The Funds (except for the Treasury & Agency Fund) may enter into mortgage
"dollar rolls" in which the Fund sells mortgage-backed securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar securities on a specified future date. During the roll
period, the Fund forgoes principal and interest paid on the mortgage-backed
securities. The Fund is compensated by fee income or the difference between
the current sales price and the lower forward price for the future purchase.
Continued
33
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Unaudited)
SECURITIES LENDING
To generate additional income, the Funds may lend up to 33% of securities in
which they are invested pursuant to agreements requiring that the loan be
continuously secured by cash, U.S. Government or U.S. Government Agency
securities, shares of an investment trust or mutual fund, or any combination
of cash and such securities as collateral equal at all times to at least 100%
of the market value plus accrued interest on the securities lent. The Funds
continue to earn interest on securities lent while simultaneously seeking to
earn interest on the investment of collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the market value of
securities lent. There may be risks of delay in recovery of the securities or
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines established
by the Board of Trustees and when, in the judgment of the Advisor, the
consideration which can be earned currently from such securities loans
justifies the attendant risks. Loans are subject to termination by the Funds
or the borrower at any time, and are, therefore, not considered to be
illiquid investments. As of December 31, 1997, the following Funds had
securities with the following market values on loan (amounts in thousands):
<TABLE>
<CAPTION>
MARKET VALUE
OF LOANED
SECURITIES
------------
<S> <C>
Limited Volatility Bond Fund................................ $140,219
Intermediate Bond Fund...................................... 139,464
Government Bond Fund........................................ 84,041
Income Bond Fund............................................ 176,022
Treasury & Agency Fund...................................... 35,454
</TABLE>
The loaned securities were fully collateralized by cash, U.S. Government
securities, and commercial paper as of December 31, 1997.
SECURITY TRANSACTIONS AND RELATED INCOME
Security transactions are accounted for on a trade date basis. Net
realized gains or losses from sales of securities are determined on the
specific identification cost method. Interest income and expenses are
recognized on the accrual basis. Dividends are recorded on the
ex-dividend date. Interest income, including any discount or premium, is
accrued as earned using the effective interest method.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly
for the Funds. Net realized capital gains, if any, are distributed at
least annually. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend
rates are due to differences in separate class expenses.
Continued
34
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Unaudited)
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for mortgage-backed securities,
expiring capital loss carryforwards, and deferrals of certain losses.
Permanent book and tax basis differences have been reclassified among the
components of net assets.
ORGANIZATION COSTS
Costs incurred by the Trust in connection with its organization,
including the fees and expenses of registering and qualifying its shares
for distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs, which are
attributable to more than one fund of the Trust, have been allocated
among the respective funds pro-rata, based on the relative net assets of
each Fund. In the event that any of the initial shares are redeemed
during such period by any holder thereof, the related fund will be
reimbursed by such holder for any unamortized organization costs in the
proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of redemption.
FEDERAL INCOME TAXES
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies as defined in applicable sections of the Internal
Revenue Code, and to make distributions from net investment income and
from net realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
3. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified or
reclassified into one or more classes. The Trust is registered to offer forty
series and five classes of shares: Fiduciary Class, 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. As of
December 31, 1997, no shareholders were in Class C of the Funds except for
the Intermediate Bond Fund. Shareholders are entitled to one vote for each
full share held and will vote in the aggregate and not by class or series,
except as otherwise expressly required by law or when the Board of Trustees
has determined that the matter to be voted on affects only the interest of
shareholders of a particular class or series. The following is a summary of
transactions in Fund shares for the periods ending December 31, 1997 and June
30, 1997.
Continued
35
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND LIMITED VOLATILITY BOND FUND
---------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------- ------------ ------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $107,365 $ 77,614 $ 50,391 $ 111,732
Proceeds from shares issued in conversion................. 1,303 -- 41,843 --
Dividends reinvested...................................... 7 148 596 2,151
Cost of shares redeemed................................... (60,002) (21,314) (77,356) (157,344)
-------- -------- -------- ---------
Change in net assets from Fiduciary Share transactions.... $ 48,673 $ 56,448 $ 15,474 $ (43,461)
======== ======== ======== =========
CLASS A SHARES:
Proceeds from shares issued............................... $ 12,481 $ 29,729 $ 1,011 $ 5,026
Dividends reinvested...................................... 891 578 395 870
Cost of shares redeemed................................... (3,749) (4,720) (3,697) (7,282)
-------- -------- -------- ---------
Change in net assets from Class A Share transactions...... $ 9,623 $ 25,587 $ (2,291) $ (1,386)
======== ======== ======== =========
CLASS B SHARES:
Proceeds from shares issued............................... $ 1,030 $ 2,207 $ 346 $ 890
Dividends reinvested...................................... 59 64 123 230
Cost of shares redeemed................................... (427) (607) (551) (1,152)
-------- -------- -------- ---------
Change in net assets from Class B Share transactions...... $ 662 $ 1,664 $ (82) $ (32)
======== ======== ======== =========
CLASS C SHARES:
Proceeds from shares issued............................... $ -- $ -- $ -- $ --
Dividends reinvested...................................... -- -- -- --
Cost of shares redeemed................................... -- -- -- --
-------- -------- -------- ---------
Change in net assets from Class C Share transactions...... $ -- $ -- $ -- $ --
======== ======== ======== =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 10,857 7,886 4,784 10,686
Issued in conversion...................................... 132 -- 3,970 --
Reinvested................................................ 1 15 57 206
Redeemed.................................................. (6,068) (2,166) (7,342) (15,059)
-------- -------- -------- ---------
Change in Fiduciary Shares................................ 4,922 5,735 1,469 (4,167)
======== ======== ======== =========
CLASS A SHARES:
Issued.................................................... 1,262 3,018 97 482
Reinvested................................................ 90 59 38 83
Redeemed.................................................. (379) (480) (352) (697)
-------- -------- -------- ---------
Change in Class A Shares.................................. 973 2,597 (217) (132)
======== ======== ======== =========
CLASS B SHARES:
Issued.................................................... 104 225 33 85
Reinvested................................................ 6 7 12 22
Redeemed.................................................. (43) (62) (53) (110)
-------- -------- -------- ---------
Change in Class B Shares.................................. 67 170 (8) (3)
======== ======== ======== =========
CLASS C SHARES:
Issued.................................................... -- -- -- --
Reinvested................................................ -- -- -- --
Redeemed.................................................. -- -- -- --
-------- -------- -------- ---------
Change in Class C Shares.................................. -- -- -- --
======== ======== ======== =========
</TABLE>
Continued
36
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND GOVERNMENT BOND FUND
---------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------- ------------ ------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $107,864 $172,698 $125,700 $ 217,351
Proceeds from shares issued in conversion................. 55,814 207,582 26,687 --
Dividends reinvested...................................... 352 661 363 1,826
Cost of shares redeemed................................... (54,804) (91,579) (91,959) (181,374)
-------- -------- -------- ---------
Change in net assets from Fiduciary Share transactions.... $109,226 $289,362 $ 60,791 $ 37,803
======== ======== ======== =========
CLASS A SHARES:
Proceeds from shares issued............................... $ 15,541 $ 9,430 $ 2,015 $ 9,184
Dividends reinvested...................................... 600 671 701 1,575
Cost of shares redeemed................................... (2,876) (5,173) (6,251) (15,371)
-------- -------- -------- ---------
Change in net assets from Class A Share transactions...... $ 13,265 $ 4,928 $ (3,535) $ (4,612)
======== ======== ======== =========
CLASS B SHARES:
Proceeds from shares issued............................... $ 4,723 $ 5,098 $ 3,250 $ 2,918
Dividends reinvested...................................... 264 332 258 480
Cost of shares redeemed................................... (844) (1,420) (1,029) (2,599)
-------- -------- -------- ---------
Change in net assets from Class B Share transactions...... $ 4,143 $ 4,010 $ 2,479 $ 799
======== ======== ======== =========
CLASS C SHARES:
Proceeds from shares issued............................... $ 190 $ -- $ -- $ --
Dividends reinvested...................................... --(a) -- -- --
Cost of shares redeemed................................... -- -- -- --
-------- -------- -------- ---------
Change in net assets from Class C Share transactions...... $ 190 $ -- -- --
======== ======== ======== =========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 10,734 17,457 12,729 22,536
Issued in connection with conversion...................... 5,521 20,926 2,663 --
Reinvested................................................ 35 67 37 190
Redeemed.................................................. (5,452) (9,247) (9,303) (18,817)
-------- -------- -------- ---------
Change in Fiduciary Shares................................ 10,838 29,203 6,126 3,909
======== ======== ======== =========
CLASS A SHARES:
Issued.................................................... 1,541 951 204 956
Reinvested................................................ 60 68 71 164
Redeemed.................................................. (285) (522) (633) (1,593)
-------- -------- -------- ---------
Change in Class A Shares.................................. 1,316 497 (358) (473)
======== ======== ======== =========
CLASS B SHARES:
Issued.................................................... 470 515 329 302
Reinvested................................................ 26 34 26 50
Redeemed.................................................. (84) (144) (104) (270)
-------- -------- -------- ---------
Change in Class B Shares.................................. 412 405 251 82
======== ======== ======== =========
CLASS C SHARES:
Issued.................................................... 19 -- -- --
Reinvested................................................ --(a) -- -- --
Redeemed.................................................. -- -- -- --
-------- -------- -------- ---------
Change in Class C Shares.................................. 19 -- -- --
======== ======== ======== =========
</TABLE>
- ------------
(a) Amounts are less than 1,000.
Continued
37
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
INCOME BOND FUND TREASURY & AGENCY FUND
--------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED JANUARY 20, 1997
DECEMBER 31, JUNE 30, DECEMBER 31, THROUGH JUNE 30,
1997 1997 1997 1997(a)
------------- ---------- ------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
FIDUCIARY SHARES:
Proceeds from shares issued............................... $143,576 $ 210,985 $ 2,900 $ 6,235
Proceeds from shares issued in conversion................. -- 132,470 -- 113,243
Dividends reinvested...................................... 727 3,766 373 --(b)
Cost of shares redeemed................................... (63,486) (142,285) (14,762) (9,231)
-------- --------- -------- --------
Change in net assets from Fiduciary Share transactions.... $ 80,817 $ 204,936 $(11,489) $110,247
======== ========= ======== ========
CLASS A SHARES:
Proceeds from shares issued............................... $ 3,210 $ 7,637 $ 7,640 $ 94
Dividends reinvested...................................... 387 647 46 --(b)
Cost of shares redeemed................................... (3,491) (4,192) (97) --
-------- --------- -------- --------
Change in net assets from Class A Share transactions...... $ 106 $ 4,092 $ 7,589 $ 94
======== ========= ======== ========
CLASS B SHARES:
Proceeds from shares issued............................... $ 4,121 $ 5,936 $ 2,776 $ 80
Dividends reinvested...................................... 268 344 21 --(b)
Cost of shares redeemed................................... (1,244) (1,601) (13) --(b)
-------- --------- -------- --------
Change in net assets from Class B Share transactions...... $ 3,145 $ 4,679 $ 2,784 $ 80
======== ========= ======== ========
SHARE TRANSACTIONS:
FIDUCIARY SHARES:
Issued.................................................... 15,046 22,470 288 627
Issued in connection with conversion...................... -- 14,063 -- 11,324
Reinvested................................................ 76 403 37 --(b)
Redeemed.................................................. (6,654) (15,133) (1,464) (927)
-------- --------- -------- --------
Change in Fiduciary Shares................................ 8,468 21,803 (1,139) 11,024
======== ========= ======== ========
CLASS A SHARES:
Issued.................................................... 337 814 757 9
Reinvested................................................ 41 69 5 --(b)
Redeemed.................................................. (367) (448) (10) --
-------- --------- -------- --------
Change in Class A Shares.................................. 11 435 752 9
======== ========= ======== ========
CLASS B SHARES:
Issued.................................................... 428 628 275 8
Reinvested................................................ 28 36 2 --(b)
Redeemed.................................................. (129) (169) (1) --(b)
-------- --------- -------- --------
Change in Class B Shares.................................. 327 495 276 8
======== ========= ======== ========
</TABLE>
- ------------
(a) Period from commencement of operations.
(b) Amounts are less than 1,000.
Continued
38
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Unaudited)
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and the Advisor are parties to an investment advisory agreement
under which the Advisor is entitled to receive an annual fee, computed daily
and paid monthly, equal to the following percentages of the Funds' average
net assets: 0.60% of the Income Bond Fund, the Intermediate Bond Fund and the
Limited Volatility Bond Fund; 0.55% of the Ultra Short-Term Income Fund;
0.45% of the Government Bond Fund; and 0.40% of the Treasury & Agency Fund.
The Trust and the Administrator, a wholly-owned subsidiary of The BISYS
Group, Inc., are parties to an administrative agreement under which the
Administrator provides services for a fee that is computed daily and paid
monthly, at an annual rate of 0.20% on the first $1.5 billion of Trust net
assets (excluding the Investor Growth Fund, the Investor Growth & Income
Fund, the Investor Conservative Growth Fund and the Investor Balanced Fund
(the "Investor Funds") and the Treasury Only Money Market Fund and the
Government Money Market Fund (the "Institutional Money Market Funds"); 0.18%
on the next $0.5 billion of Trust net assets (excluding the Investor Funds
and the Institutional Money Market Funds); and 0.16% of Trust net assets
(excluding the Investor Funds and the Institutional Money Market Funds) over
$2 billion. The Advisor also serves as Sub-Administrator to each fund of the
Trust, pursuant to an agreement between the Administrator and the Advisor.
Pursuant to this agreement, the Advisor performs many of the Administrator's
duties, for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the Funds are sold on a
continuous basis. Class A, 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, 0.75% of average daily
net assets of the Class B Shares of the Ultra Short-Term Income Fund, the
Limited Volatility Bond Fund and the Treasury & Agency Fund, 0.90% of average
daily net assets of the Class B Shares of the Intermediate Bond Fund, the
Government Bond Fund and the Income Bond Fund and 0.90% of the average daily
net assets of the Class C Shares of the Intermediate Bond Fund. Up to 0.25%
of the fees payable under the Plans may be used as compensation for
shareholder services by the Distributor and/or financial institutions and
intermediaries. Fees paid under the Plans may be applied by the Distributor
toward (i) compensation for its services in connection with distribution
assistance or provision of shareholder services; or (ii) payments to
financial institutions and intermediaries such as banks (including affiliates
of the 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 six months ended December 31,
1997, the Distributor received $666,025 from commissions earned on sales of
Class A Shares and redemptions of Class B and Class C Shares, of which the
Distributor re-allowed $662,333 to affiliated broker-dealers of the Funds.
Certain officers of the Trust are affiliated with the Administrator. Such
officers receive no compensation from the Funds for serving in their
respective roles.
Continued
39
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Unaudited)
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the six months ended December 31, 1997,
fees in the following amounts were waived (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT 12B-1 FEES
ADVISORY WAIVED
FEES ADMINISTRATION -----------------
WAIVED FEES WAIVED CLASS A CLASS B
------ ----------- ------- -------
<S> <C> <C> <C> <C>
Ultra Short-Term Income Fund......................... $ 329 $156 $18 $ 4
Limited Volatility Bond Fund......................... 853 -- 10 6
Intermediate Bond Fund............................... 798 -- 13 6
Government Bond Fund................................. 80 181 17 6
Income Bond Fund..................................... 812 -- 8 6
Treasury & Agency Fund............................... 111 64 1 2
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the six months
ended December 31, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OTHER SECURITIES
-------------------- --------------------
PURCHASES SALES PURCHASES SALES
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Ultra Short-Term Income Bond Fund....................... $ 53,519 $ 22,344 $ 41,679 $ 9,543
Limited Volatility Bond Fund............................ 111,628 108,321 19,803 44,684
Intermediate Bond Fund.................................. 186,744 130,068 69,000 43,955
Government Bond Fund.................................... 515,969 496,299 -- --
Income Bond Fund........................................ 83,191 29,168 56,801 21,456
Treasury & Agency....................................... 27,463 30,683 -- --
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risks in excess of the
amounts reflected in the Statement of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in the
particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates, an
illiquid secondary market for the instruments or inability of counterparties
to perform under the terms of the contract. The Funds enter into these
contracts primarily as a means to hedge against adverse fluctuations in
securities.
Continued
40
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED DECEMBER 31,1997
(Unaudited)
7. CONVERSION OF COMMON TRUST FUNDS:
On December 19, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following
is a summary of shares issued, net assets converted, net asset value per
share issued and unrealized appreciation of assets acquired as of the
conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
VALUE
SHARES NET ASSETS PER SHARE UNREALIZED
ISSUED CONVERTED ISSUED APPRECIATION
------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Ultra Short-Term Income Fund........................... 132 $ 1,303 $ 9.89 $ 0
Limited Volatility Bond Fund........................... 3,970 41,843 10.54 254
Intermediate Bond Fund................................. 5,521 55,814 10.11 639
Government Bond Fund................................... 2,663 26,687 10.02 127
</TABLE>
On January 20, 1997, the net assets of certain common trust funds managed by
the Advisor were exchanged in a tax-free conversion for shares of the
corresponding One Group Funds. The transaction was accounted for by a method
followed for tax purposes in a tax-free business combination. The following is
a summary of shares issued, net assets converted, net asset value per share
issued and unrealized appreciation of assets acquired as of the conversion
date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
VALUE
SHARES NET ASSETS PER SHARE UNREALIZED
ISSUED CONVERTED ISSUED APPRECIATION
------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Income Bond Fund....................................... 14,063 $132,470 $ 9.42 $4,511
Intermediate Bond Fund................................. 20,926 207,582 9.92 1,740
Treasury & Agency Fund................................. 11,324 113,243 10.00 1,909
</TABLE>
Continued
41
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
---------------------------------------------------------------------
FIDUCIARY
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31 ------------------------------------------------------
1997 1997 1996 1995 1994 1993(a)
----------- -------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......................... $ 9.87 $ 9.79 $ 9.84 $ 9.85 $ 10.03 $ 10.00
-------- -------- ------- ------- -------- --------
Investment Activities
Net investment income........................ 0.30 0.62 0.62 0.55 0.36 0.17
Net realized and unrealized gains (losses)
from investments and futures............... 0.01 0.05 (0.07) (0.05) (0.15) 0.03
-------- -------- ------- ------- -------- --------
Total from Investment Activities........... 0.31 0.67 0.55 0.50 0.21 0.20
-------- -------- ------- ------- -------- --------
Distributions
Net investment income........................ (0.29) (0.59) (0.60) (0.48) (0.37) (0.17)
In excess of net investment income........... -- -- -- (0.03) (0.02) --
-------- -------- ------- ------- -------- --------
Total Distributions........................ (0.29) (0.59) (0.60) (0.51) (0.39) (0.17)
-------- -------- ------- ------- -------- --------
NET ASSET VALUE,
END OF PERIOD................................ $ 9.89 $ 9.87 $ 9.79 $ 9.84 $ 9.85 $ 10.03
======== ======== ======= ======= ======== ========
Total Return................................... 3.21%(b) 7.14% 5.71% 5.14% 2.16% 4.93%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............ $163,219 $114,413 $57,276 $51,050 $139,593 $154,413
Ratio of expenses to average net assets...... 0.30%(c) 0.35% 0.45% 0.61% 0.65% 0.58%(c)
Ratio of net investment income to average net
assets..................................... 5.91%(c) 6.02% 6.20% 5.18% 3.70% 4.71%(c)
Ratio of expenses to average net assets *.... 0.78%(c) 0.81% 1.06% 1.01% 0.81% 1.03%(c)
Ratio of net investment income to average net
assets *................................... 5.42%(c) 5.56% 5.59% 4.78% 3.54% 4.26%(c)
Portfolio Turnover (d)....................... 17.93% 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on February 2, 1993.
(b) 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.
42
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31 --------------------------------------------------
1997 1997 1996 1995 1994 1993(a)
----------- ------- ------ ------ ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................... $ 9.87 $ 9.78 $ 9.83 $ 9.84 $ 10.03 $10.00
------- ------- ------ ------ ------- ------
Investment Activities
Net investment income............................. 0.29 0.58 0.58 0.52 0.36 0.14
Net realized and unrealized gains (losses) from
investments and futures......................... 0.00 0.09 (0.06) (0.06) (0.17) 0.03
------- ------- ------ ------ ------- ------
Total from Investment Activities................ 0.29 0.67 0.52 0.46 0.19 0.17
------- ------- ------ ------ ------- ------
Distributions
Net investment income............................. (0.28) (0.58) (0.57) (0.46) (0.34) (0.14)
In excess of net investment income................ -- -- -- (0.01) (0.04) --
------- ------- ------ ------ ------- ------
Total Distributions............................. (0.28) (0.58) (0.57) (0.47) (0.38) (0.14)
------- ------- ------ ------ ------- ------
NET ASSET VALUE,
END OF PERIOD..................................... $ 9.88 $ 9.87 $ 9.78 $ 9.83 $ 9.84 $10.03
======= ======= ====== ====== ======= ======
Total Return (Excludes Sales Charge)................ 3.00%(b) 7.00% 5.42% 4.84% 1.95% 4.78%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................. $39,304 $29,643 $3,969 $4,631 $19,053 $3,106
Ratio of expenses to average net assets........... 0.55%(c) 0.61% 0.70% 0.86% 0.89% 0.81%(c)
Ratio of net investment income to average net
assets.......................................... 5.65%(c) 5.78% 5.95% 4.88% 3.54% 4.47%(c)
Ratio of expenses to average net assets *......... 1.13%(c) 1.17% 1.41% 1.36% 1.14% 1.34%(c)
Ratio of net investment income to average net
assets *........................................ 5.07%(c) 5.22% 5.24% 4.38% 3.29% 3.95%(c)
Portfolio Turnover (d)............................ 17.93% 70.36% 67.65% 2.91% 242.20% 109.96%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on March 10, 1993.
(b) 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.
43
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ULTRA SHORT-TERM INCOME FUND
-----------------------------------------------------
CLASS B
-----------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31 --------------------------------------
1997 1997 1996 1995 1994(a)
----------- ------ ------ ------ --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 9.81 $ 9.76 $ 9.84 $ 9.86 $ 9.98
------ ------ ------ ------ -------
Investment Activities
Net investment income..................................... 0.27 0.54 0.52 0.47 0.12
Net realized and unrealized gains (losses) from
investments and futures................................. 0.01 0.05 (0.07) (0.04) (0.11)
------ ------ ------ ------ -------
Total from Investment Activities........................ 0.28 0.59 0.45 0.43 0.01
------ ------ ------ ------ -------
Distributions
Net investment income..................................... (0.26) (0.54) (0.53) (0.45) (0.12)
In excess of net investment income........................ -- -- -- -- (0.01)
------ ------ ------ ------ -------
Total Distributions..................................... (0.26) (0.54) (0.53) (0.45) (0.13)
------ ------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD............................................. $ 9.83 $ 9.81 $ 9.76 $ 9.84 $ 9.86
====== ====== ====== ====== =======
Total Return (Excludes Sales Charge)........................ 2.91%(b) 6.22% 4.63% 4.77% (0.09)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................... $3,480 $2,818 $1,144 $ 160 $ 15
Ratio of expenses to average net assets................... 1.05%(c) 1.07% 1.20% 1.31% 1.41%(c)
Ratio of net investment income to average net assets...... 5.15%(c) 5.18% 5.45% 4.91% 3.49%(c)
Ratio of expenses to average net assets *................. 1.53%(c) 1.81% 2.06% 1.96% 1.83%(c)
Ratio of net investment income to average net assets *.... 4.67%(c) 4.44% 4.59% 4.26% 3.07%(c)
Portfolio Turnover (d).................................... 17.93% 70.36% 67.65% 2.91% 242.20%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
44
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------ -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................ $ 10.47 $ 10.42 $ 10.53 $ 10.33 $ 10.87 $ 10.72
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income...................... 0.32 0.63 0.64 0.60 0.54 0.61
Net realized and unrealized gains (losses)
from investments and futures............. 0.01 0.05 (0.11) 0.19 (0.45) 0.25
-------- -------- -------- -------- -------- --------
Total from Investment Activities......... 0.33 0.68 0.53 0.79 0.09 0.86
-------- -------- -------- -------- -------- --------
Distributions
Net investment income...................... (0.32) (0.63) (0.64) (0.59) (0.55) (0.62)
In excess of net investment income......... -- -- -- -- (0.02) --
Net realized gains......................... -- -- -- -- (0.06) (0.09)
-------- -------- -------- -------- -------- --------
Total Distributions...................... (0.32) (0.63) (0.64) (0.59) (0.63) (0.71)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.............................. $ 10.48 $ 10.47 $ 10.42 $ 10.53 $ 10.33 $ 10.87
======== ======== ======== ======== ======== ========
Total Return................................. 3.20%(a) 6.75% 5.13% 7.96% 0.79% 8.27%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $579,814 $563,979 $604,916 $410,746 $447,394 $397,820
Ratio of expenses to average net assets.... 0.53%(b) 0.51% 0.51% 0.52% 0.50% 0.56%
Ratio of net investment income to average
net assets............................... 6.07%(b) 6.06% 6.06% 5.82% 5.10% 5.70%
Ratio of expenses to average net assets
*........................................ 0.81%(b) 0.81% 0.82% 0.85% 0.85% 0.90%
Ratio of net investment income to average
net assets *............................. 5.79%(b) 5.76% 5.75% 5.49% 4.75% 5.36%
Portfolio Turnover (c)..................... 22.72% 66.61% 75.20% 76.43% 30.61% 40.28%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
45
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
-------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------------------------------------
1997 1997 1996 1995 1994 1993
------------ ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................. $ 10.46 $ 10.41 $ 10.52 $ 10.32 $ 10.87 $ 10.72
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income........................... 0.31 0.61 0.63 0.56 0.52 0.59
Net realized and unrealized gains (losses) from
investments and futures....................... 0.01 0.05 (0.13) 0.21 (0.46) 0.24
------- ------- ------- ------- ------- -------
Total from Investment Activities.............. 0.32 0.66 0.50 0.77 0.06 0.83
------- ------- ------- ------- ------- -------
Distributions
Net investment income........................... (0.31) (0.61) (0.61) (0.56) (0.51) (0.59)
In excess of net investment income.............. -- -- -- (0.01) (0.04) --
Net realized gains.............................. -- -- -- -- (0.06) (0.09)
------- ------- ------- ------- ------- -------
Total Distributions........................... (0.31) (0.61) (0.61) (0.57) (0.61) (0.68)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................... $ 10.47 $ 10.46 $ 10.41 $ 10.52 $ 10.32 $ 10.87
======= ======= ======= ======= ======= =======
Total Return (Excludes Sales Charge).............. 3.06%(a) 6.47% 4.86% 7.67% 0.49% 8.04%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............... $17,792 $20,055 $21,343 $12,516 $15,216 $15,719
Ratio of expenses to average net assets......... 0.78%(b) 0.76% 0.76% 0.77% 0.75% 0.76%
Ratio of net investment income to average net
assets........................................ 5.82%(b) 5.81% 5.81% 5.57% 4.92% 5.35%
Ratio of expenses to average net assets *....... 1.16%(b) 1.16% 1.17% 1.20% 1.20% 1.27%
Ratio of net investment income to average
net assets *.................................. 5.44%(b) 5.41% 5.40% 5.14% 4.47% 4.84%
Portfolio Turnover (c).......................... 22.72% 66.61% 75.20% 76.43% 30.61% 40.28%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
46
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED VOLATILITY BOND FUND
-----------------------------------------------------
CLASS B
-----------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -------------------------------------
1997 1997 1996 1995 1994(a)
------------ ------ ------ ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $10.53 $10.49 $10.60 $10.40 $10.78
------ ------ ------ ------ ------
Investment Activities
Net investment income..................................... 0.30 0.55 0.55 0.53 0.17
Net realized and unrealized gains (losses) from
investments
and futures............................................. 0.01 0.04 (0.10) 0.19 (0.37)
------ ------ ------ ------ ------
Total from Investment Activities........................ 0.31 0.59 0.45 0.72 (0.20)
------ ------ ------ ------ ------
Distributions
Net investment income..................................... (0.30) (0.55) (0.56) (0.52) (0.15)
In excess of net realized gains........................... -- -- -- -- (0.03)
------ ------ ------ ------ ------
Total Distributions..................................... (0.30) (0.55) (0.56) (0.52) (0.18)
------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................................. $10.54 $10.53 $10.49 $10.60 $10.40
====== ====== ====== ====== ======
Total Return (Excludes Sales Charge)........................ 2.99%(b) 5.74% 4.28% 7.18% (1.81)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $4,834 $4,920 $4,923 $2,906 $1,974
Ratio of expenses to average net assets................... 1.28%(c) 1.20% 1.26% 1.28% 1.26%(c)
Ratio of net investment income to average net assets...... 5.32%(c) 5.21% 5.31% 5.10% 4.39%(c)
Ratio of expenses to average net assets *................. 1.81%(c) 1.81% 1.82% 1.86% 1.86%(c)
Ratio of net investment income to average net assets *.... 4.79%(c) 4.60% 4.75% 4.52% 3.79%(c)
Portfolio Turnover (d).................................... 22.72% 66.61% 75.20% 76.43% 30.61%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
47
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
----------------------------------------------------------------------
FIDUCIARY
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------ -------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......................... $ 9.92 $ 9.84 $ 10.01 $ 9.72 $ 10.51 $ 10.09
-------- -------- -------- -------- ------- -------
Investment Activities
Net investment income........................ 0.33 0.65 0.66 0.66 0.60 0.63
Net realized and unrealized gains (losses)
from investments and futures............... 0.14 0.08 (0.17) 0.29 (0.67) 0.42
-------- -------- -------- -------- ------- -------
Total from Investment Activities........... 0.47 0.73 0.49 0.95 (0.07) 1.05
-------- -------- -------- -------- ------- -------
Distributions
Net investment income........................ (0.33) (0.65) (0.66) (0.66) (0.60) (0.63)
In excess of net investment income........... -- -- -- -- (0.02) --
Net realized gains........................... -- -- -- -- (0.10) --
-------- -------- -------- -------- ------- -------
Total Distributions........................ (0.33) (0.65) (0.66) (0.66) (0.72) (0.63)
-------- -------- -------- -------- ------- -------
NET ASSET VALUE,
END OF PERIOD................................ $ 10.06 $ 9.92 $ 9.84 $ 10.01 $ 9.72 $ 10.51
======== ======== ======== ======== ======= =======
Total Return................................... 4.77%(a) 7.68% 4.95% 10.15% (0.74)% 10.67%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)............ $638,657 $522,423 $230,812 $191,216 $98,483 $44,252
Ratio of expenses to average net assets...... 0.56%(b) 0.54% 0.54% 0.56% 0.32% 0.39%
Ratio of net investment income to average net
assets..................................... 6.49%(b) 6.63% 6.56% 6.88% 6.04% 6.14%
Ratio of expenses to average net assets *.... 0.81%(b) 0.81% 0.87% 0.99% 0.87% 1.17%
Ratio of net investment income to average net
assets *................................... 6.25%(b) 6.36% 6.23% 6.45% 5.49% 5.36%
Portfolio Turnover (c)....................... 29.78% 55.91% 101.06% 99.71% 85.62% 21.51%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
48
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
---------------------------------------------
CLASS A
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------
1997 1997 1996 1995(a)
------------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 9.95 $ 9.87 $ 10.04 $ 9.45
------- ------- ------- ------
Investment Activities
Net investment income..................................... 0.32 0.63 0.64 0.37
Net realized and unrealized gains (losses) from
investments and futures................................. 0.14 0.08 (0.17) 0.59
------- ------- ------- ------
Total from Investment Activities........................ 0.46 0.71 0.47 0.96
------- ------- ------- ------
Distributions
Net investment income..................................... (0.32) (0.63) (0.64) (0.37)
------- ------- ------- ------
Total Distributions..................................... (0.32) (0.63) (0.64) (0.37)
------- ------- ------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 10.09 $ 9.95 $ 9.87 $10.04
======= ======= ======= ======
Total Return (Excludes Sales Charge)........................ 4.65%(b) 7.40 4.77% 10.29%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $32,298 $18,763 $13,706 $4,941
Ratio of expenses to average net assets................... 0.81%(c) 0.78% 0.79% 0.83%(c)
Ratio of net investment income to average net assets...... 6.24%(c) 6.35% 6.31% 6.64%(c)
Ratio of expenses to average net assets *................. 1.17%(c) 1.16% 1.22% 1.66%(c)
Ratio of net investment income to average net assets *.... 5.88%(c) 5.97% 5.88% 5.81%(c)
Portfolio Turnover (d).................................... 29.78% 55.91% 101.06% 99.71%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced operations November 30, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
49
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
---------------------------------------------
CLASS B
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, -----------------------------
1997 1997 1996 1995(a)
------------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 9.92 $ 9.83 $ 10.01 $ 9.45
------- ------- ------- ------
Investment Activities
Net investment income..................................... 0.28 0.56 0.58 0.23
Net realized and unrealized gains (losses) from
investments and futures................................. 0.14 0.09 (0.18) 0.56
------- ------- ------- ------
Total from Investment Activities........................ 0.42 0.65 0.40 0.79
------- ------- ------- ------
Distributions
Net investment income..................................... (0.28) (0.56) (0.58) (0.23)
------- ------- ------- ------
Total Distributions..................................... (0.28) (0.56) (0.58) (0.23)
------- ------- ------- ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 10.06 $ 9.92 $ 9.83 $10.01
======= ======= ======= ======
Total Return (Excludes Sales Charge)........................ 4.31%(b) 6.83% 4.10% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $14,438 $10,152 $ 6,077 $ 266
Ratio of expenses to average net assets................... 1.46%(c) 1.44% 1.44% 1.51%(c)
Ratio of net investment income to average net assets...... 5.60%(c) 5.71% 5.66% 6.15%(c)
Ratio of expenses to average net assets *................. 1.82%(c) 1.81% 1.87% 2.34%(c)
Ratio of net investment income to average net assets *.... 5.24%(c) 5.34% 5.23% 5.31%(c)
Portfolio Turnover (d).................................... 29.78% 55.91% 101.06% 99.71%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced operations on November 30, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
50
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
----------------------
CLASS C
----------------------
NOVEMBER 4,
1997 TO
DECEMBER 31,
1997(a)
----------------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $10.07
------
Investment Activities
Net investment income..................................... 0.46
Net realized and unrealized gains (losses) from
investments and futures................................. (0.01)
------
Total from Investment Activities........................ 0.45
------
Distributions
Net investment income..................................... (0.46)
------
Total Distributions..................................... (0.46)
------
NET ASSET VALUE,
END OF PERIOD............................................. $10.06
======
Total Return (Excludes Sales Charge)........................ 4.31%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $ 190
Ratio of expenses to average net assets................... 1.46%(c)
Ratio of net investment income to average net assets...... 5.60%(c)
Ratio of expenses to average net assets *................. 1.82%(c)
Ratio of net investment income to average net assets *.... 5.24%(c)
Portfolio Turnover (d).................................... 29.78%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) 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.
51
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-----------------------------------------------------------------------
FIDUCIARY
-----------------------------------------------------------------------
SIX MONTHS YEAR ENDED JUNE 30,
ENDED -------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993(a)
------------ -------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................... $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.15 $ 10.00
-------- -------- -------- -------- -------- -------
Investment Activities
Net investment income....................... 0.30 0.62 0.62 0.62 0.51 0.20
Net realized and unrealized gains (losses)
from investments and futures.............. 0.32 0.13 (0.25) 0.46 (0.77) 0.15
-------- -------- -------- -------- -------- -------
Total from Investment Activities.......... 0.62 0.75 0.37 1.08 (0.26) 0.35
-------- -------- -------- -------- -------- -------
Distributions
Net investment income....................... (0.30) (0.62) (0.62) (0.61) (0.50) (0.20)
In excess of net investment income.......... -- -- -- (0.01) (0.02) --
In excess of net realized gains............. -- -- -- -- (0.02) --
-------- -------- -------- -------- -------- -------
Total Distributions....................... (0.30) (0.62) (0.62) (0.62) (0.54) (0.20)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD............................... $ 10.01 $ 9.69 $ 9.56 $ 9.81 $ 9.35 $ 10.15
======== ======== ======== ======== ======== =======
Total Return.................................. 6.51%(b) 8.10% 3.81% 12.04% (2.73)% 9.03%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........... $809,738 $724,423 $677,326 $379,826 $209,692 $52,152
Ratio of expenses to average net assets..... 0.62%(c) 0.62% 0.68% 0.71% 0.68% 0.69%(c)
Ratio of net investment income to average
net assets................................ 6.11%(c) 6.45% 6.34% 6.65% 5.13% 5.43%(c)
Ratio of expenses to average net assets *... 0.68%(c) 0.68% 0.69% 0.73% 0.71% 1.05%(c)
Ratio of net investment income to average
net assets *.............................. 6.05%(c) 6.39% 6.33% 6.63% 5.10% 5.07%(c)
Portfolio Turnover (d)...................... 62.06% 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The Fund commenced offering on February 8, 1993.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
52
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
SIX MONTHS YEAR ENDED JUNE 30,
ENDED -------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993(a)
------------ ------- ------- ------ ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................... $ 9.69 $ 9.56 $ 9.81 $ 9.35 $10.17 $10.22
------- ------- ------- ------ ------ ------
Investment Activities
Net investment income............................. 0.29 0.60 0.60 0.61 0.48 0.17
Net realized and unrealized gains (losses) from
investments and futures......................... 0.32 0.13 (0.25) 0.45 (0.79) (0.05)
------- ------- ------- ------ ------ ------
Total from Investment Activities................ 0.61 0.73 0.35 1.06 (0.31) 0.12
------- ------- ------- ------ ------ ------
Distributions
Net investment income............................. (0.29) (0.60) (0.60) (0.59) (0.47) (0.17)
In excess of net investment income................ -- -- -- (0.01) (0.02) --
In excess of net realized gains................... -- -- -- -- (0.02) --
------- ------- ------- ------ ------ ------
Total Distributions............................. (0.29) (0.60) (0.60) (0.60) (0.51) (0.17)
------- ------- ------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD..................................... $ 10.01 $ 9.69 $ 9.56 $ 9.81 $ 9.35 $10.17
======= ======= ======= ====== ====== ======
Total Return (Excludes Sales Charge)................ 6.38%(b) 7.83% 3.58% 11.84% (3.16)% 5.35%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................. $32,295 $34,727 $38,800 $8,130 $1,690 $ 840
Ratio of expenses to average net assets........... 0.87%(c) 0.87% 0.93% 0.97% 0.92% 0.95%(c)
Ratio of net investment income to average net
assets.......................................... 5.86%(c) 6.20% 6.09% 6.46% 4.84% 5.56%(c)
Ratio of expenses to average net assets *......... 1.01%(c) 1.03% 1.04% 1.09% 1.05% 1.44%(c)
Ratio of net investment income to average net
assets *........................................ 5.72%(c) 6.04% 5.98% 6.34% 4.71% 5.07%(c)
Portfolio Turnover (d)............................ 62.06% 60.53% 62.70% 106.14% 377.78% 139.24%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class A Shares commenced offering on March 5, 1993.
(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.
53
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-------------------------------------------------------
CLASS B
-------------------------------------------------------
SIX MONTHS YEAR ENDED JUNE 30,
ENDED ---------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994(a)
------------ ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 9.69 $ 9.56 $ 9.81 $ 9.35 $10.04
------- ------- ------- ------ ------
Investment Activities
Net investment income..................................... 0.26 0.54 0.54 0.55 0.18
Net realized and unrealized gains (losses) from
investments and futures................................. 0.32 0.13 (0.25) 0.46 (0.69)
------- ------- ------- ------ ------
Total from Investment Activities........................ 0.58 0.67 0.29 1.01 (0.51)
------- ------- ------- ------ ------
Distributions
Net investment income..................................... (0.26) (0.54) (0.54) (0.55) (0.16)
In excess of net investment income........................ -- -- -- -- (0.02)
------- ------- ------- ------ ------
Total Distributions..................................... (0.26) (0.54) (0.54) (0.55) (0.18)
------- ------- ------- ------ ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 10.01 $ 9.69 $ 9.56 $ 9.81 $ 9.35
======= ======= ======= ====== ======
Total Return (Excludes Sales Charge)........................ 6.05%(b) 7.14% 2.95% 11.20% (4.99)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $14,622 $11,729 $10,782 $2,513 $ 656
Ratio of expenses to average net assets................... 1.52%(c) 1.52% 1.58% 1.62% 1.52%(c)
Ratio of net investment income to average net assets...... 5.21%(c) 5.55% 5.44% 5.76% 4.60%(c)
Ratio of expenses to average net assets *................. 1.66%(c) 1.68% 1.69% 1.74% 1.63%(c)
Ratio of net investment income to average net assets
*..................................................... 5.07%(c) 5.39% 5.33% 5.64% 4.49%(c)
Portfolio Turnover (d).................................... 62.06% 60.53% 62.70% 106.14% 377.78%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 14, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
54
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
------------------------------------------------------------------------
FIDUCIARY
------------------------------------------------------------------------
SIX MONTHS YEAR ENDED JUNE 30,
ENDED --------------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........................ $ 9.42 $ 9.33 $ 9.54 $ 9.23 $ 10.43 $ 10.18
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income...................... 0.33 0.64 0.65 0.64 0.54 0.66
Net realized and unrealized gains (losses)
from investments and futures............. 0.06 0.09 (0.21) 0.35 (0.74) 0.38
-------- -------- -------- -------- -------- --------
Total from Investment Activities......... 0.39 0.73 0.44 0.99 (0.20) 1.04
-------- -------- -------- -------- -------- --------
Distributions
Net investment income...................... (0.33) (0.64) (0.65) (0.64) (0.57) (0.66)
Net realized gains......................... -- -- -- (0.04) (0.43) (0.13)
-------- -------- -------- -------- -------- --------
Total Distributions...................... (0.33) (0.64) (0.65) (0.68) (1.00) (0.79)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.............................. $ 9.48 $ 9.42 $ 9.33 $ 9.54 $ 9.23 $ 10.43
======== ======== ======== ======== ======== ========
Total Return................................. 4.15%(a) 8.10% 4.62% 11.29% (2.54)% 10.62%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $815,669 $730,754 $520,239 $474,124 $560,071 $483,291
Ratio of expenses to average net assets.... 0.61%(b) 0.60% 0.59% 0.59% 0.53% 0.56%
Ratio of net investment income to average
net assets............................... 6.83%(b) 6.85% 6.76% 6.94% 5.35% 6.44%
Ratio of expenses to average net assets
*........................................ 0.80%(b) 0.80% 0.81% 0.86% 0.85% 0.90%
Ratio of net investment income to average
net assets *............................. 6.64%(b) 6.65% 6.54% 6.67% 5.03% 6.10%
Portfolio Turnover (c)..................... 6.46% 55.18% 95.52% 262.25% 131.04% 143.52%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
55
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
SIX MONTHS YEAR ENDED JUNE 30,
ENDED -------------------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ ------- ------- ------ ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................... $ 9.41 $ 9.32 $ 9.54 $ 9.22 $10.43 $ 10.16
------- ------- ------- ------ ------ -------
Investment Activities
Net investment income............................. 0.32 0.62 0.63 0.61 0.52 0.63
Net realized and unrealized gains (losses) from
investments and futures......................... 0.06 0.09 (0.23) 0.36 (0.75) 0.41
------- ------- ------- ------ ------ -------
Total from Investment Activities................ 0.38 0.71 0.40 0.97 (0.23) 1.04
------- ------- ------- ------ ------ -------
Distributions
Net investment income............................. (0.32) (0.62) (0.62) (0.60) (0.55) (0.64)
In excess of net investment income................ -- -- -- (0.01) -- --
Net realized gains................................ -- -- -- (0.04) (0.43) (0.13)
------- ------- ------- ------ ------ -------
Total Distributions............................. (0.32) (0.62) (0.62) (0.65) (0.98) (0.77)
------- ------- ------- ------ ------ -------
NET ASSET VALUE,
END OF PERIOD..................................... $ 9.47 $ 9.41 $ 9.32 $ 9.54 $ 9.22 $ 10.43
======= ======= ======= ====== ====== =======
Total Return (Excludes Sales Charge)................ 4.02%(a) 7.85 4.26 10.90% (2.33)% 10.58%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)................. $14,522 $14,325 $10,127 $6,796 $5,347 $ 7,064
Ratio of expenses to average net assets........... 0.86%(b) 0.85% 0.84% 1.01% 0.78% 0.77%
Ratio of net investment income to average net
assets.......................................... 6.58%(b) 6.59% 6.51% 6.57% 5.25% 6.12%
Ratio of expenses to average net assets *......... 1.16%(b) 1.15% 1.16% 1.38% 1.20% 1.26%
Ratio of net investment income to average net
assets *........................................ 6.28%(b) 6.29% 6.19% 6.20% 4.83% 5.63%
Portfolio Turnover (c)............................ 6.46% 55.18% 95.52% 262.25% 131.04% 143.52%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
56
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME BOND FUND
------------------------------------------------------
CLASS B
------------------------------------------------------
SIX MONTHS YEAR ENDED JUNE 30,
ENDED --------------------------------------
DECEMBER 31,
1997 1997 1996 1995 1994(a)
------------ ------- ------ ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 9.49 $ 9.40 $ 9.62 $ 9.29 $ 9.97
------- ------- ------ ------ ------
Investment Activities
Net investment income..................................... 0.29 0.56 0.56 0.56 0.17
Net realized and unrealized gains (losses) from
investments and futures................................. 0.06 0.09 (0.21) 0.38 (0.70)
------- ------- ------ ------ ------
Total from Investment Activities........................ 0.35 0.65 0.35 0.94 (0.53)
------- ------- ------ ------ ------
Distributions
Net investment income..................................... (0.29) (0.56) (0.57) (0.57) (0.15)
Net realized gains........................................ -- -- -- (0.04) --
------- ------- ------ ------ ------
Total Distributions..................................... (0.29) (0.56) (0.57) (0.61) (0.15)
------- ------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................................. $ 9.55 $ 9.49 $ 9.40 $ 9.62 $ 9.29
======= ======= ====== ====== ======
Total Return (Excludes Sales Charge)........................ 3.69%(b) 7.15% 3.65% 10.63% (5.29)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $14,066 $10,873 $6,110 $1,887 $ 723
Ratio of expenses to average net assets................... 1.51%(c) 1.50% 1.49% 1.49% 1.45%(c)
Ratio of net investment income to average net assets...... 5.94%(c) 5.95% 5.86% 6.16% 5.20%(c)
Ratio of expenses to average net assets *................. 1.81%(c) 1.80% 1.81% 1.86% 1.84%(c)
Ratio of net investment income to average net assets *.... 5.64%(c) 5.65% 5.54% 5.80% 4.81%(c)
Portfolio Turnover (d).................................... 6.46% 55.18% 95.52% 262.25% 131.04%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Class B Shares commenced offering on January 17, 1994.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
57
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY & AGENCY FUND
--------------------------------
FIDUCIARY
--------------------------------
SIX MONTHS JANUARY 20, 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(a)
------------ ----------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.99 $ 10.00
------- --------
Investment Activities
Net investment income..................................... 0.32 0.28
Net realized and unrealized gains (losses) from
investments and futures................................. 0.13 (0.01)
------- --------
Total from Investment Activities........................ 0.45 0.27
------- --------
Distributions
Net investment income..................................... (0.32) (0.28)
Net realized gains........................................ (0.05) --
------- --------
Total Distributions..................................... (0.37) (0.28)
------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.07 $ 9.99
======= ========
Total Return................................................ 4.51%(b) 2.78%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $99,552 $110,084
Ratio of expenses to average net assets................... 0.38%(c) 0.45%(c)
Ratio of net investment income to average net assets...... 6.29%(c) 6.44%(c)
Ratio of expenses to average net assets *................. 0.68%(c) 0.78%(c)
Ratio of net investment income to average net assets *.... 5.98%(c) 6.11%(c)
Portfolio Turnover (d).................................... 25.96% 54.44%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
58
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY & AGENCY FUND
--------------------------------
CLASS A
--------------------------------
SIX MONTHS JANUARY 20, 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(a)
------------ ----------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................................... $ 9.98 $10.00
------ ------
Investment Activities Net investment income................. 0.32 0.29
Net realized and unrealized gains (losses) from
investments and futures................................. 0.14 (0.02)
------ ------
Total from Investment Activities........................ 0.46 0.27
------ ------
Distributions
Net investment income..................................... (0.32) (0.29)
Net realized gains........................................ (0.05) --
------ ------
Total Distributions..................................... (0.37) (0.29)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $10.07 $ 9.98
====== ======
Total Return (Excludes Sales Charge)........................ 4.68%(b) 2.78%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $7,671 $ 94
Ratio of expenses to average net assets................... 0.59%(c) 0.71%(c)
Ratio of net investment income to average net assets...... 6.12%(c) 6.47%(c)
Ratio of expenses to average net assets *................. 0.99%(c) 1.15%(c)
Ratio of net investment income to average net assets *.... 5.72%(c) 6.03%(c)
Portfolio Turnover (d).................................... 25.96% 54.44%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
59
<PAGE>
- --------------------------------------------------------------------------------
The One Group Family of Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TREASURY & AGENCY FUND
--------------------------------
CLASS B
--------------------------------
SIX MONTHS JANUARY 20, 1997
ENDED THROUGH
DECEMBER 31, JUNE 30,
1997 1997(a)
------------ ----------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.99 $10.00
------ ------
Investment Activities
Net investment income..................................... 0.30 0.26
Net realized and unrealized gains (losses) from
investments and futures................................. 0.13 (0.01)
------ ------
Total from Investment Activities........................ 0.43 0.25
------ ------
Distributions
Net investment income..................................... (0.30) (0.26)
Net realized gains........................................ (0.05) --
------ ------
Total Distributions..................................... (0.35) (0.26)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $10.07 $ 9.99
====== ======
Total Return (Excludes Sales Charge)........................ 4.36%(b) 2.58%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......................... $2,864 $ 80
Ratio of expenses to average net assets................... 1.10%(c) 1.23%(c)
Ratio of net investment income to average net assets...... 5.58%(c) 6.30%(c)
Ratio of expenses to average net assets *................. 1.65%(c) 1.81%(c)
Ratio of net investment income to average net assets *.... 5.03%(c) 5.72%(c)
Portfolio Turnover (d).................................... 25.96% 54.44%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
60
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
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, including
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
[LOGO] TOG-F-042
<PAGE>
[ART OMIITTED]
SEMI-
ANNUAL
REPORT
MARCH 31, 1998
MARQUIS[SERVICE MARK]
FAMILY OF FUNDS
High Quality. High Standards. Highly Personal.
[ART OMIITTED]
<PAGE>
TABLE OF CONTENTS
Letter to Shareholders 1
Statements of Net Assets 2
Statement of Assets and Liabilities 33
Statements of Operations 34
Statements of Changes in Net Assets 36
Financial Highlights 40
Notes to Financial Statements 46
FUND PORTFOLIOS TRADING SYMBOLS
MONEY MARKET FUNDS TRUST RETAIL
Institutional Money Market Fund N/A N/A
Treasury Securities Money Market Fund MQTXX MQRXX
Tax Exempt Money Market Fund MQEXX MQEXX
FIXED INCOME FUNDS A SHARES B SHARES
Government Securities Fund MQGAX MFGSB
Strategic Income Bond Fund MSIAX N/A
Louisiana Tax-Free Income Fund MQLAX MFLTF
BALANCED FUNDS
Balanced Fund MQIAX MFGIB
EQUITY FUNDS
Value Equity Fund MQVAX MFVEB
Growth Equity Fund MNEUX N/A
Small Cap Equity Fund N/A N/A
International Equity Fund N/A N/A
<PAGE>
LETTER TO SHAREHOLDERS
DEAR SHAREHOLDER:
During the six-month period ended March 31, 1998, the financial markets
continued to perform well overall, as the three major asset classes -- stocks,
bonds, and money market instruments -- all produced healthy gains. Once again,
these gains were fueled by exceptionally favorable economic conditions,
including moderate growth, low inflation, and stable interest rates.
The Marquis Funds participated fully in this ongoing rally, generating positive
returns nearly across the board. The Marquis Value Equity Fund performed
particularly well, and has gained national attention recently for its truly
outstanding track record.
On October 20, 1997, First Commerce Corporation -- the parent of First National
Bank of Commerce in New Orleans, the Marquis Funds' investment adviser -- and
Banc One Corporation, the parent of Banc One, Louisiana, announced that they
have signed a definitive agreement for the merger of First Commerce with Banc
One. Subject to certain conditions being met, it is currently anticipated that
First Commerce will merge with Banc One by the end of June 1998.
The organization that results from this merger will be a strong one, with
extensive investment management resources and a time-tested record of
performance. In months ahead, we will endeavor to help our shareholders take
advantage of these resources.
As always, we thank you for your continued trust in our organization, and look
forward to serving you in the future.
Sincerely,
/S/Signature
Suzanne T. Mestayer
Executive Vice President
First National Bank of Commerce
MARCH 31, 1998 1
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
INSTITUTIONAL MONEY MARKET FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
U.S. TREASURY OBLIGATIONS -- 21.7%
U.S. Treasury Bill
5.386%, 04/16/98 $15,000 $ 14,966
U.S. Treasury Notes
4.750%, 09/30/98 4,000 3,987
5.750%, 12/31/98 4,000 4,008
5.875%, 03/31/99 2,000 2,008
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $24,969) 24,969
--------
REPURCHASE AGREEMENTS -- 78.7%
DEUTSCHE BANK
5.900%, dated 03/31/98, matures
04/01/98, repurchase price
$4,602,175 (collateralized by
U.S. Treasury Obligations,
total market value:
$4,693,725) (1) 4,601 4,601
HSBC
5.830%, dated 03/31/98, matures
04/01/98, repurchase price
$5,000,810 (collateralized
by U.S. Treasury STRIPS,
total market value:
$5,121,412) 5,000 5,000
LEHMAN BROTHERS
5.900%, dated 03/31/98, matures
04/01/98, repurchase price
$28,004,589 (collateralized by
various U.S. Treasury
STRIPS, total market
value: $28,707,761) 28,000 28,000
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
MERRILL LYNCH
5.850%, dated 03/31/98, matures
04/01/98, repurchase price
$3,119,656 (collateralized by
U.S. Treasury Bond, total
market value:
$3,186,674) (1) $ 3,119 $ 3,119
J.P. MORGAN
5.980%, dated 03/31/98, matures
04/01/98, repurchase price
$28,004,651 (collateralized by
U.S. Treasury STRIPS, total
market value:
$28,615,098) 28,000 28,000
MORGAN STANLEY
5.870%, dated 03/31/98, matures
04/01/98, repurchase price
$3,180,248 (collateralized
by various U.S. Treasury
Notes, total market
value: $3,262,193) (1) 3,180 3,180
NOMURA SECURITIES
5.900%, dated 03/31/98, matures
04/01/98, repurchase price
$4,253,300 (collateralized by
U.S. Treasury Obligations,
total market value:
$4,338,343) (1) 4,253 4,253
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2 MARCH 31, 1998
<PAGE>
INSTITUTIONAL MONEY MARKET FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
PRUDENTIAL SECURITIES
5.950%, dated 03/31/98, matures
04/01/98, repurchase price
$5,000,826 (collateralized by
U.S. Treasury Bill, total
market value:
$5,107,143) $5,000 $ 5,000
UBS SECURITIES
5.920%, dated 03/31/98, matures
04/01/98, repurchase price
$4,646,443 (collateralized by
U.S. Treasury STRIPS, total
market value:
$4,741,279) (1) 4,646 4,646
WACHOVIA
5.700%, dated 03/31/98, matures
04/01/98, repurchase price
$5,000,792 (collateralized by
U.S. Treasury Note, total
market value:
$5,102,656) 5,000 5,000
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $90,799) 90,799
--------
TOTAL INVESTMENTS -- 100.4%
(Cost $115,768) 115,768
--------
OTHER ASSETS AND LIABILITIES,
NET -- (0.4%) (418)
--------
DESCRIPTION VALUE (000)
- ------------------------------------------
NET ASSETS:
FUND SHARES
(unlimited authorization -- no
par value) based on 115,350,112
outstanding shares of
beneficial interest $115,350
========
TOTAL NET ASSETS -- 100.0% $115,350
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
========
- ------------------------------------------
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST
AND PRINCIPAL OF SECURITIES
(1) TRI-PARTY REPURCHASE AGREEMENT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 3
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
TREASURY SECURITIES MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
U.S. TREASURY OBLIGATIONS -- 17.6%
U.S. Treasury Bill
5.393%, 04/16/98 $ 90,000 $ 89,799
U.S. Treasury Notes
4.750%, 09/30/98 50,000 49,838
5.750%, 12/31/98 50,000 50,104
5.875%, 03/31/99 25,000 25,099
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $214,840) 214,840
----------
REPURCHASE AGREEMENTS -- 82.5%
DEUTSCHE BANK
5.900%, dated 03/31/98, matures
04/01/98, repurchase price
$57,947,216 (collateralized by
various U.S. Treasury Obligations,
total market value:
$59,096,804) (1) 57,938 57,938
HSBC
5.830%, dated 03/31/98, matures
04/01/98, repurchase price
$50,008,097 (collateralized by
various U.S. Treasury STRIPS,
total market value:
$51,154,496) 50,000 50,000
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
LEHMAN BROTHERS
5.900%, dated 03/31/98, matures
04/01/98, repurchase price
$295,048,347 (collateralized by
various U.S. Treasury
STRIPS, total market
value: $303,839,884) $295,000 $ 295,000
MORGAN STANLEY
5.870%, dated 03/31/98, matures
04/01/98, repurchase price
$50,038,717 (collateralized by
various U.S. Treasury
Obligations, total market
value: $51,708,576) (1) 50,030 50,030
J.P. MORGAN
5.980%, dated 03/31/98, matures
04/01/98, repurchase price
$295,049,003 (collateralized
by various U.S. Treasury
STRIPS, total market
value: $301,604,985) 295,000 295,000
MERRILL LYNCH
5.850%, dated 03/31/98, matures
04/01/98, repurchase price
$50,038,689 (collateralized by
various U.S. Treasury
Obligations, total market
value: $51,035,097) (1) 50,031 50,031
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4 MARCH 31, 1998
<PAGE>
TREASURY SECURITIES MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
NOMURA SECURITIES
5.900%, dated 03/31/98, matures
04/01/98, repurchase price
$53,173,099 (collateralized by
various U.S. Treasury
Obligations, total market
value: $54,228,352) (1) $53,164 $ 53,164
PRUDENTIAL SECURITIES
5.950%, dated 03/31/98, matures
04/01/98, repurchase price
$50,008,264 (collateralized by
various U.S. Treasury
Obligations, total market
value: $51,047,136) 50,000 50,000
UBS SECURITIES
5.920%, dated 03/31/98, matures
04/01/98, repurchase price
$57,858,108 (collateralized by
various U.S. Treasury
Obligations, total market
value: $59,006,372) (1) 57,849 57,849
WACHOVIA
5.700%, dated 03/31/98, matures
04/01/98, repurchase price
$50,007,917 (collateralized by
various U.S. Treasury Obligations,
total market value:
$51,006,454) 50,000 50,000
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $1,009,012) 1,009,012
----------
TOTAL INVESTMENTS -- 100.1%
(Cost $1,223,852) 1,223,852
----------
OTHER ASSETS AND LIABILITIES,
NET -- (0.1%) (920)
----------
DESCRIPTION VALUE (000)
- -----------------------------------------------
NET ASSETS:
FUND SHARES OF TRUST CLASS
(unlimited authorization --
no par value) based on
409,380,792 outstanding
shares of beneficial interest $ 409,381
FUND SHARES OF RETAIL CLASS
(unlimited authorization --
no par value) based on
610,475,941 outstanding
shares of beneficial interest 610,476
FUND SHARES OF CASH SWEEP CLASS
(unlimited authorization --
no par value) based
on 203,050,377 outstanding
shares of beneficial interest 203,050
Accumulated net realized gain
on investments 25
----------
TOTAL NET ASSETS -- 100.0% $1,222,932
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- TRUST CLASS $1.00
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- RETAIL CLASS $1.00
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CASH SWEEP CLASS $1.00
==========
- -----------------------------------------------
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST
AND PRINCIPAL OF SECURITIES
(1) TRI-PARTY REPURCHASE AGREEMENT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 5
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
TAX EXEMPT MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
MUNICIPAL BONDS -- 99.2%
ARIZONA -- 1.5%
Phoenix, Multi-Family
Housing Authority, Del Mar
Terrace Apartments Project,
VRDN, RB (A) (B) (C)
3.750%, 04/07/98 $ 2,000 $ 2,000
----------
CALIFORNIA -- 6.8%
California State, RAN
4.500%, 06/30/98 4,230 4,237
Los Angeles County,
Series A, TRAN
4.500%, 06/30/98 5,000 5,009
----------
9,246
----------
COLORADO -- 3.7%
Denver City & County,
Ogden Residence Project,
VRDN, RB (A) (B) (C)
3.850%, 04/01/98 300 300
Eagle County, Smith Creek
Metropolitan District
Project, Series 95, VRDN,
RB (A) (B) (C)
3.500%, 04/07/98 2,400 2,400
University of Colorado,
Series A, VRDN, RB (A)
3.700%, 04/07/98 2,300 2,300
----------
5,000
----------
DISTRICT OF COLUMBIA -- 0.1%
District of Columbia,
Series B-1, VRDN,
RB (A) (B) (C)
3.850%, 04/01/98 100 100
----------
FLORIDA -- 4.3%
Broward County, Housing
Finance Authority,
Lake Park Association,
VRDN, RB (A) (B) (C)
3.700%, 04/07/98 3,410 3,410
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
Orange County, Industrial
Development Authority,
Orlando Hawaiian Motel,
VRDN, RB (A) (B) (C)
3.900%, 04/01/98 $ 530 $ 530
Palm Beach County, Jewish
Community Campus
Corporation, VRDN,
RB (AMBAC) (A) (B)
3.650%, 04/07/98 1,600 1,600
Pinellas County, Health
Facilities Authority,
Hospital Program,
VRDN, RB (A) (B) (C)
3.700%, 04/01/98 300 300
----------
5,840
----------
GEORGIA -- 5.3%
Burke County, Oglethorpe
Power Project, TECP
3.450%, 05/29/98 3,000 3,000
Floyd County, Georgia
Power Plant Hammond
Project, VRDN, RB (A) (B)
3.900%, 04/01/98 950 950
Gorden County, Hospital
Authority, Adventist Health
System, Series A, VRDN,
RAN (A) (B) (C)
3.750%, 04/07/98 1,325 1,325
Marietta, Multi-Family
Housing, Falls at Bells
Ferry Project, RB (A) (B)
3.950%, 07/15/98 1,000 1,001
Monroe County, Pollution
Control Authority, Power
Plant Project, Series 1,
VRDN, RB (A) (B)
3.900%, 04/01/98 950 950
----------
7,226
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6 MARCH 31, 1998
<PAGE>
TAX EXEMPT MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
HAWAII -- 2.3%
Hawaii State Multi-Family
Housing Authority,
Tropicana West Project,
Series A, VRDN,
RB (A) (B) (C)
3.500%, 04/07/98 $ 3,100 $ 3,100
----------
IDAHO -- 0.8%
Nez Perce County,
Pollution Control,
VRDN, RB (A) (B) (C)
3.700%, 04/07/98 1,025 1,025
----------
ILLINOIS -- 6.5%
Chicago, Multi-Family
Housing, Waveland
Association Project,
Series D, VRDN,
RB (A) (B) (C)
3.650%, 04/07/98 2,300 2,300
Chicago, Multi-Family
Housing, Waveland
Association Project,
Series E, VRDN,
RB (A) (B) (C)
3.650%, 04/07/98 300 300
Illinois State Education
Facilities Authority, TECP
3.750%, 04/07/98 1,000 1,000
Illinois State Health
Facilities Authority,
Advocate Healthcare
Network, Series B,
VRDN, RB (A) (B)
3.750%, 04/07/98 1,700 1,700
Illinois State Health
Facilities Authority,
Pekin Memorial Hospital
Project, VRDN,
RB (A) (B) (C)
3.750%, 04/07/98 1,500 1,500
Illinois State Sales Tax, RB
5.000%, 06/15/98 325 326
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
McCook, St. Andrew Society
Project, Series 1996 A,
VRDN, RB (A) (B) (C)
3.750%, 04/07/98 $ 1,700 $ 1,700
----------
8,826
----------
INDIANA -- 6.0%
Benton, Community
School, TAW
4.250%, 12/31/98 1,000 1,001
Fort Wayne, Hospital
Authority, Parkview
Memorial Hospital,
Series B, VRDN,
RB (BA) (A) (B) (C)
3.700%, 04/17/98 2,400 2,400
Hammond, Local Public
Improvements, Advance
Funding Program,
Series A-1, GO
3.750%, 07/09/98 885 885
Indiana State, GO
4.000%, 01/20/99 1,500 1,505
Indiana State Health
Facilities Authority,
Hartsfield Village Project,
Series B, VRDN,
RB (A) (B) (C)
3.750%, 04/07/98 2,000 2,000
Purdue University, Student
Fee, Series B, RB
6.100%, 07/01/98 250 251
Rockport County, Pollution
Control, AEP Generating
Company Project,
Series B, VRDN,
RB (AMBAC) (A) (B)
3.800%, 04/01/98 100 100
----------
8,142
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 7
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
TAX EXEMPT MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
KENTUCKY -- 0.0%
Covington Industrial Building,
Atkins & Pearce Inc.,
Series 1995, VRDN, RB (A)
(B) (C)
3.700%, 04/07/98 $ 45 $ 45
----------
LOUISIANA -- 5.3%
Louisiana State Public
Facilities Authority, Sisters
of Charity Project, VRDN,
RB (CS) (A) (B)
3.700%, 04/07/98 2,700 2,700
Louisiana State Public
Facilities Authority,
Willis Knighton Medical
Center, VRDN,
RB (AMBAC) (A) (B)
3.700%, 04/07/98 4,000 4,000
Louisiana State Recovery,
District Sales Tax,
RB (MBIA)
4.250%, 07/01/98 500 500
----------
7,200
----------
MAINE -- 1.2%
Maine State Health &
Higher Education Facilities
Authority, Series C, VRDN,
RB (AMBAC) (A) (B)
3.700%, 04/07/98 1,600 1,600
----------
MARYLAND -- 1.6%
Maryland State Industrial
Development Finance
Authority, Liberty Medical
Center Project, VRDN,
RB (A) (B) (C)
3.700%, 04/07/98 2,200 2,200
----------
MASSACHUSETTS -- 2.2%
Brockton, RAN
4.500%, 06/30/98 800 801
Fall River, BAN
4.250%, 06/15/98 1,200 1,200
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
New England Education
Loan Marketing
Corporation, Student
Loans, Series C, RB
4.750%, 07/01/98 $1,000 $ 1,002
----------
3,003
----------
MICHIGAN -- 2.2%
Michigan State Strategic
Fund, Van Andel Research
Institution Project,
VRDN, RB (A) (B) (C)
3.700%, 04/07/98 3,000 3,000
----------
MISSOURI -- 1.5%
Jackson County, Industrial
Development Recreational
Authority, Greater Kansas
YMCA Project, Series A,
VRDN, RB (A) (B) (C)
4.050%, 04/01/98 1,100 1,100
Missouri State Health &
Educational Facilities
Authority, Saint Francis
Medical Center Project,
Series A, VRDN,
RB (A) (B) (C)
3.900%, 04/01/98 1,000 1,000
----------
2,100
----------
NEBRASKA -- 0.7%
Hamilton County,
Industrial Development
Authority, Iams
Corporation Project,
VRDN, RB (A) (B) (C)
3.750%, 04/07/98 1,020 1,020
----------
NEW JERSEY -- 2.7%
New Jersey State
Transportation Trust
Fund Authority,
Transportation Systems,
Series A, RB
4.500%, 06/15/98 2,600 2,605
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8 MARCH 31, 1998
<PAGE>
TAX EXEMPT MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
Ventnor City, New Jersey,
Series A, BAN
4.250%, 04/30/98 $ 1,000 $ 1,000
----------
3,605
----------
NEW MEXICO -- 2.9%
New Mexico State,
Series A, TRAN
4.500%, 06/30/98 4,000 4,008
----------
NEW YORK -- 5.0%
Freeport, Unified School
District, TAN (C)
4.250%, 06/29/98 500 500
Lindenhurst, Unified
School District, TAN (C)
4.250%, 06/24/98 500 500
New York, TRAN (C)
4.500%, 06/30/98 5,000 5,009
North Hempstead,
Series C, BAN
4.375%, 05/06/98 750 750
----------
6,759
----------
NORTH CAROLINA -- 0.9%
Greensboro, Greensboro
Coliseum Project,
Series A, VRDN,
COP (A) (B)
3.700%, 04/07/98 1,200 1,200
----------
NORTH DAKOTA -- 0.2%
Grand Forks, Aurora Project,
Series A, RB (MBIA)
3.800%, 06/15/98 215 215
----------
OHIO -- 3.4%
Clermont County, Economic
Development Authority,
Eastmark Center Association
Project, VRDN,
RB (A) (B) (C)
3.800%, 06/01/98 260 260
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
Cuyahoga County, Hospital
Authority, Cleveland Clinic
Project, Series A, VRDN,
RB (A) (B)
3.700%, 04/07/98 $ 3,600 $ 3,600
Lorain County, Hospital
Facilities, United
Methodist Village Project,
Series 1996-B, VRDN,
RB (A) (B) (C)
3.800%, 04/07/98 800 800
----------
4,660
----------
PENNSYLVANIA -- 9.0%
Allegheny County Industrial
Development Authority,
Longwood at Oakmont
Project, Series D, VRDN,
RB (A) (B) (C)
3.900%, 04/01/98 600 600
Bucks County Industrial
Development Authority,
Edgecomb Metals Project,
VRDN, RB (A) (B) (C)
3.450%, 04/02/98 100 100
Chester County Health &
Education Facilities
Authority, Barclay Friends
Project, Series A, VRDN,
RB (A) (B) (C)
3.700%, 04/01/98 900 900
Dauphin County, General
Authority Pooled Finance
Project, VRDN,
RB (AMBAC) (A) (B)
3.750%, 04/07/98 1,000 1,000
Norristown, TRAN
4.050%, 12/31/98 1,000 1,000
Pennsylvania State Higher
Education Facilities
Authority, Allegheny
College Project, VRDN,
RB (A) (B) (C)
3.700%, 04/07/98 1,400 1,400
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 9
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
TAX EXEMPT MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
Pennsylvania State, TAN
4.500%, 06/30/98 $ 4,000 $ 4,008
Pennsylvania State
Municipal Authority,
Pre-refunded @102 RB
(FGIC) (D)
7.800%, 04/01/98 385 393
Philadelphia, Industrial
Development Authority,
Fox Chase Cancer Center
Project, VRDN, RB (A) (B)
3.750%, 04/01/98 700 700
Philadelphia School District
Authority, TRAN (C)
4.500%, 06/30/98 750 751
West Allegheny School
District, GO (D)
6.600%, 02/01/99 1,400 1,434
----------
12,286
----------
SOUTH CAROLINA -- 0.4%
South Carolina State, State
Institution, Series B, GO
7.000%, 04/01/98 500 500
----------
TENNESSEE -- 1.9%
Hamilton County, Industrial
Development Board,
Tennessee Aquarium Project,
VRDN, RB (BNY)
(A) (B) (C)
3.700%, 04/07/98 1,100 1,100
Jefferson County, Economic
Development Authority,
Ball Corporation Project,
VRDN, RB (A) (B) (C)
3.950%, 04/07/98 1,000 1,000
Nashville & Davidson
Counties, Metro
Government Water &
Sewer, RB
5.700%, 04/01/98 500 500
----------
2,600
----------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
TEXAS -- 8.2%
Bexar County, Detention
Facilities, GO
7.250%, 06/15/98 $ 200 $ 201
Brazos River Authority,
Series A, RB (D)
8.250%, 05/01/98 500 512
Harris County, Toll Road
Project, Series G, VRDN,
RB (A) (B)
3.650%, 04/07/98 1,500 1,500
Harris County, Toll Road
Project, Series B, VRDN,
RB (A) (B)
3.650%, 04/07/98 2,875 2,875
San Antonio, GO
8.750%, 08/01/98 725 737
San Antonio, River Channel
Improvement Authority,
RB (FSA)
6.550%, 07/01/98 290 292
Texas State, Series A, TRAN
4.750%, 08/31/98 5,000 5,022
----------
11,139
----------
UTAH -- 2.6%
Salt Lake City, Revenue
Authority Pooled Project,
VRDN, GO (A) (B) (C)
3.650%, 04/07/98 3,550 3,550
----------
VIRGINIA -- 0.7%
Roanoke, Industrial
Development Authority,
Carilion Health Systems,
Series A, VRDN, RB (A) (B)
3.800%, 04/01/98 900 900
----------
WASHINGTON -- 1.0%
Washington State,
Series A, GO
6.500%, 07/01/98 500 504
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10 MARCH 31, 1998
<PAGE>
TAX EXEMPT MONEY MARKET FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
Washington State,
Non-profit Housing
Revenue Authority,
Panorama City Project,
VRDN, RB (A) (B) (C)
3.850%, 04/01/98 $ 900 $ 900
----------
1,404
----------
WEST VIRGINIA -- 0.6%
Wood County, Industrial
Development, AGA Gas
Project, VRDN,
RB (A) (B) (C)
3.500%, 04/07/98 800 800
----------
WISCONSIN -- 7.3%
Clinton, Community School
District, TRAN
4.240%, 08/31/98 475 475
Cudahy School District,
TRAN
4.190%, 09/29/98 500 500
Fox Point and Bayside,
Joint School District, BAN
4.200%, 04/10/98 775 775
Janesville, Water Utility
Improvements, PN
4.700%, 06/01/98 1,000 1,001
Janesville, Water Utility
Improvements, PN (FSA)
4.800%, 06/01/98 380 381
La Crosse, Series A,
PN (FSA)
5.250%, 12/01/98 455 460
Menasha Joint School
District, TRAN
4.250%, 10/13/98 1,350 1,351
Middletown, Cross Plains
Area School District,
GO (FGIC)
4.875%, 04/01/98 315 315
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
Oregon School District,
TRAN
4.220%, 09/16/98 $1,000 $ 1,001
Ozaukee County, PN
4.250%, 09/01/98 1,690 1,694
Wisconsin State Health &
Elderly Facilities Authority,
Cedar Crest Project,
VRDN, RB (A) (B) (C)
3.750%, 04/07/98 1,000 1,000
Wisconsin State Health
Facilities Authority,
Alverno College Project,
VRDN, RB (A) (B) (C)
3.950%, 04/01/98 900 900
----------
9,853
----------
WYOMING -- 0.4%
Cheyenne County, Economic
Development Authority,
Holiday Inn Project,
VRDN, RB (A) (B) (C)
3.900%, 04/01/98 250 250
University of Wyoming,
RB (MBIA)
4.000%, 06/01/98 265 265
----------
515
----------
TOTAL MUNICIPAL BONDS
(Cost $134,667) 134,667
----------
TOTAL INVESTMENTS -- 99.2%
(Cost $134,667) 134,667
----------
OTHER ASSETS AND LIABILITIES,
NET -- 0.8% 1,139
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 11
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
TAX EXEMPT MONEY MARKET FUND
===============================================
DESCRIPTION VALUE (000)
- -----------------------------------------------
NET ASSETS:
FUND SHARES
(unlimited authorization --
no par value) based on
135,806,261 outstanding shares
of beneficial interest $135,806
--------
TOTAL NET ASSETS -- 100.0% $135,806
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
========
- --------------------------------------------------------------------------------
(A) VARIABLE RATE INSTRUMENT. THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MARCH 31, 1998.
(B) PUT AND DEMAND FEATURES EXIST REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY. THE DATE SHOWN IS THE EARLIER OF THE PUT DATE
OR THE MATURITY DATE.
(C) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT OR OTHER CREDIT
SUPPORT.
(D) PRE-REFUNDED SECURITY--THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
BAN--BOND ANTICIPATION NOTE
COP--CERTIFICATE OF PARTICIPATION
GO--GENERAL OBLIGATION
PN--PROMISSORY NOTE
RAN--REVENUE ANTICIPATION NOTE
RB--REVENUE BOND
TAN--TAX ANTICIPATION NOTE
TAW--TAX ANTICIPATION WARRANT
TECP--TAX EXEMPT COMMERCIAL PAPER
TRAN--TAX AND REVENUE ANTICIPATION NOTE
VRDN--VARIABLE RATE DEMAND NOTE
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR CERTAIN
SECURITIES AS DEFINED IN THE STATEMENT OF NET ASSETS:
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
BNY--BANK OF NEW YORK
CS--CREDIT SUISSE
FGIC--FEDERAL GUARANTY INSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
GOVERNMENT SECURITIES FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 9.3%
Farmer MAC
7.560%, 05/28/02 $ 500 $ 531
FFCB
8.650%, 10/01/99 255 265
FHLB
5.370%, 11/03/00 500 494
7.500%, 08/10/04 500 542
FHLMC
6.300%, 03/15/03 135 135
6.280%, 07/15/03 250 250
7.930%, 01/20/05 250 277
FICO STRIPS
0.000%, 10/05/05 180 115
0.000%, 12/27/05 334 211
0.000%, 10/06/06 500 300
0.000%, 11/11/06 1,000 597
0.000%, 12/27/06 500 296
FNMA
9.150%, 04/10/98 1,175 1,176
9.550%, 03/10/99 255 264
5.875%, 02/02/06 5,000 4,961
SBA Ser 1988-10-C
9.350%, 07/01/98 3 4
TVA
6.250%, 08/01/99 400 401
8.375%, 10/01/99 3,000 3,101
----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $13,765) 13,920
----------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 36.9%
FHLMC
7.000%, 04/01/00 7 7
9.000%, 11/01/05 623 652
9.000%, 05/01/06 831 869
7.250%, 05/01/07 34 35
9.000%, 08/01/09 632 656
9.000%, 12/01/09 955 1,016
9.500%, 04/01/16 4 5
6.500%, 11/15/22 5,200 5,164
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12 MARCH 31, 1998
<PAGE>
GOVERNMENT SECURITIES FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
FHLMC CMO
7.500%, 11/15/01 $3,932 $ 4,002
6.700%, 05/15/05 1,925 1,938
7.000%, 09/15/07 3,425 3,430
6.500%, 04/15/08 4,850 4,865
7.750%, 01/15/20 223 223
FNMA
7.000%, 08/01/02 157 160
6.500%, 04/01/04 56 56
8.000%, 05/25/05 100 105
6.250%, 02/25/07 150 150
7.000%, 09/01/07 2,739 2,786
6.250%, 01/25/09 1,000 1,003
6.550%, 12/25/21 150 151
FNMA REMIC
7.350%, 06/25/07 2,000 2,016
6.250%, 10/25/22 42 43
GNMA
9.000%, 07/15/02 8 9
6.500%, 07/15/08 1,100 1,108
6.500%, 03/15/09 105 106
6.500%, 05/15/09 2,600 2,619
9.000%, 06/15/16 13 14
9.000%, 07/15/16 298 406
9.000%, 09/15/16 255 273
9.000%, 10/15/16 82 88
9.000%, 11/15/16 215 230
9.000%, 02/15/17 23 25
9.500%, 08/15/17 394 428
10.000%, 04/15/19 158 173
10.000%, 05/15/19 33 37
10.000%, 06/15/19 5 6
9.500%, 12/15/19 351 381
7.500%, 06/15/23 3,701 3,796
7.000%, 03/15/24 1,999 2,019
7.000%, 04/15/24 2,871 2,900
8.500%, 10/15/24 995 1,051
7.500%, 06/15/25 204 210
8.000%, 06/15/25 182 189
8.000%, 07/15/25 1,859 1,925
7.000%, 01/15/26 4,556 4,601
7.500%, 03/15/26 141 145
8.000%, 08/15/26 211 219
7.500%, 03/15/27 2,702 2,773
----------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $54,322) 55,063
----------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
U.S. TREASURY OBLIGATIONS -- 43.7%
U.S. Treasury Bonds
6.125%, 05/15/98 $ 200 $ 200
5.625%, 02/15/06 12,500 12,393
9.375%, 02/15/06 1,000 1,227
7.125%, 02/15/23 2,500 2,852
U.S. Treasury Notes
5.125%, 04/30/98 1,800 1,800
9.000%, 05/15/98 1,550 1,557
5.125%, 06/30/98 2,650 2,649
8.250%, 07/15/98 100 101
9.250%, 08/15/98 2,500 2,534
8.875%, 11/15/98 50 51
5.625%, 11/30/98 3,000 3,003
6.375%, 01/15/99 1,500 1,510
8.000%, 08/15/99 100 103
7.125%, 09/30/99 3,000 3,064
6.000%, 10/15/99 1,500 1,508
7.875%, 11/15/99 1,400 1,449
6.375%, 01/15/00 150 152
8.500%, 02/15/00 2,850 2,994
5.500%, 04/15/00 650 649
6.000%, 08/15/00 7,500 7,550
8.750%, 08/15/00 2,775 2,964
6.375%, 08/15/02 5,425 5,565
6.250%, 02/15/03 150 154
5.750%, 08/15/03 2,150 2,155
5.875%, 02/15/04 1,500 1,515
6.500%, 08/15/05 3,000 3,133
5.500%, 02/15/08 2,500 2,468
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $64,442) 65,300
----------
CORPORATE OBLIGATION -- 1.3%
CPD Barge
6.120%, 02/15/23 1,935 1,887
----------
TOTAL CORPORATE OBLIGATION
(Cost $1,935) 1,887
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 13
<PAGE>
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS
(UNAUDITED)
GOVERNMENT SECURITIES FUND
===============================================
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------
CASH EQUIVALENTS -- 4.7%
SEI Liquid Asset Trust
Government Portfolio $ 3,895 $ 3,895
SEI Liquid Asset Trust
Treasury Portfolio 3,144 3,144
--------
TOTAL CASH EQUIVALENTS
(Cost $7,039) 7,039
--------
REPURCHASE AGREEMENT -- 3.7%
UBS SECURITIES
5.920%, dated 03/31/98, matures
04/01/98, repurchase price
$5,594,414 (collateralized by
a FNMA Obligation, total
market value:
$5,705,772) (1) 5,593 5,593
--------
TOTAL REPURCHASE AGREEMENT
(Cost $5,593) 5,593
--------
TOTAL INVESTMENTS -- 99.6%
(Cost $147,096) 148,802
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.4% 991
--------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization --
no par value) based on
14,797,002 outstanding
shares of beneficial interest 147,756
FUND SHARES OF CLASS B (unlimited
authorization -- no
par value) based on
113,389 outstanding shares
of beneficial interest 1,122
Accumulated net realized loss
on investments (790)
Net unrealized appreciation
on investments 1,706
Distributions in excess of net
investment income (1)
--------
TOTAL NET ASSETS -- 100.0% $149,793
========
DESCRIPTION VALUE (000)
- -----------------------------------------------
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $10.05
========
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A
($10.05 / 96.50%) $10.41
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (2) $10.10
========
- --------------------------------------------------------------------------------
CMO--COLLATERALIZED MORTGAGE OBLIGATION FARMER
FARMER MAC--FEDERAL AGRICULTURAL MORTGAGE CORPORATION
FFCB--FEDERAL FARM CREDIT BANK
FHLB--FEDERAL HOME LOAN BANK
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FICO--FINANCING CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SBA--SMALL BUSINESS ADMINISTRATION
SER--SERIES
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
TVA--TENNESSEE VALLEY AUTHORITY
(1) TRI-PARTY REPURCHASE AGREEMENT
(2) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14 MARCH 31, 1998
<PAGE>
STRATEGIC INCOME BOND FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
CORPORATE OBLIGATIONS -- 64.8%
Aetna Services
7.625%, 08/15/26 $250 $ 269
AT&T
8.625%, 12/01/31 250 275
Bankers Trust NY
7.250%, 10/15/11 250 259
Brunswick
7.375%, 09/01/23 400 419
Canadian Pacific Limited
9.450%, 08/01/21 280 361
Coca-Cola Enterprises
7.125%, 08/01/17 500 522
6.950%, 11/15/26 400 407
Commonwealth Edison
8.375%, 09/15/22 300 320
Eastman Chemical
7.600%, 02/01/27 250 267
Florida Power
8.000%, 12/01/22 500 530
Ford Motor Credit
6.250%, 12/08/05 250 247
GTE
7.900%, 02/01/27 400 419
IBM
7.000%, 10/30/25 650 674
Ingersoll-Rand
7.200%, 06/01/25 300 312
Lehman Brothers
8.500%, 08/01/15 295 340
Loew's
7.625%, 06/01/23 300 311
Loral
7.000%, 09/15/23 400 405
MCI Communications
8.250%, 01/20/23 400 428
Merrill Lynch
5.580%, 05/12/98 600 596
Minnesota Power & Light
7.500%, 08/01/07 200 209
NationsBank
7.800%, 09/15/16 500 554
Pacificorp, Ser F
7.240%, 08/16/23 250 257
Philip Morris
7.200%, 02/01/07 250 257
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
Sunamerica
8.125%, 04/28/23 $419 $ 470
Texas Utilities
7.875%, 03/01/23 250 259
Torchmark
7.875%, 05/15/23 400 428
United Telephone Florida
8.375%, 01/15/25 270 320
U.S. West Capital Funding
7.300%, 01/15/07 250 264
Weyerhaeuser
7.500%, 03/01/13 500 541
-------
TOTAL CORPORATE OBLIGATIONS
(Cost $10,490) 10,920
-------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 26.3%
FHLMC
7.500%, 02/01/27 858 881
7.000%, 02/01/28 349 354
FNMA
7.500%, 10/01/26 435 446
7.500%, 02/01/27 445 457
7.000%, 02/01/28 445 450
GNMA
7.500%, 02/15/27 456 468
7.750%, 02/15/27 460 474
8.000%, 03/20/27 428 442
7.000%, 11/15/27 445 449
-------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $4,365) 4,421
-------
CASH EQUIVALENT -- 0.5%
SEI Liquid Asset Trust
Government Portfolio 85 85
-------
TOTAL CASH EQUIVALENT
(Cost $85) 85
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 15
<PAGE>
SCHEDULE OF INVESTMENTS/STATEMENT OF NET ASSETS
(UNAUDITED)
STRATEGIC INCOME BOND FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
REPURCHASE AGREEMENT -- 2.6%
UBS SECURITIES
5.920%, dated 03/31/98,
matures 04/01/98, repurchase
price $436,467
(collateralized by
FNMA Obligation, total
market value:
$446,453) (1) $436 $ 436
-------
TOTAL REPURCHASE AGREEMENT
(Cost $436) 436
-------
TOTAL INVESTMENTS -- 94.2%
(Cost $15,376) 15,862
=======
- -----------------------------------------------
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
SER--SERIES
(1) TRI-PARTY REPURCHASE AGREEMENT
LOUISIANA TAX-FREE INCOME FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
MUNICIPAL BONDS -- 89.8%
LOUISIANA -- 89.8%
Alexandria, Utilities,
RB (FGIC)
5.250%, 05/01/11 $100 $ 103
Alexandria, Utilities,
Series B, RB
4.650%, 05/01/04 150 153
Ascension Parish School
District, GO (AMBAC)
4.900%, 03/01/09 150 152
Baton Rouge, Sales & Use
Tax, RB (FSA)
6.000%, 08/01/08 200 214
Bossier City, Utilities,
RB (FGIC)
4.800%, 10/01/05 500 513
Caddo Parish, GO (MBIA)
5.000%, 02/01/05 350 363
East Baton Rouge Parish,
Sales & Use Tax, RB (FGIC)
4.800%, 02/01/06 650 665
East Baton Rouge Parish,
Sales & Use Tax, Series A,
RB (FGIC)
4.800%, 02/01/09 340 343
East Baton Rouge Parish,
Sales & Use Tax, RB (FGIC)
5.900%, 02/01/16 500 533
East Baton Rouge, Mortgage
Financing Authority,
Series B, RB
4.350%, 10/01/00 75 76
5.300%, 10/01/14 85 85
Ernest N. Morial Exhibition
Hall, Special Tax,
RB (MBIA)
4.700%, 07/15/05 115 117
4.900%, 07/15/07 515 531
Gretna, Sales Tax,
RB (AMBAC)
5.200%, 06/01/06 225 231
Iberville School District,
GO (FSA)
5.750%, 10/01/03 250 268
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16 MARCH 31, 1998
<PAGE>
LOUISIANA TAX-FREE INCOME FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
Jefferson Parish, Ad Valorem
Property Tax, Series A,
GO (FGIC)
5.250%, 09/01/05 $ 250 $ 263
Jefferson Parish, Hospital
Services, RB (FGIC)
5.100%, 01/01/05 300 311
5.300%, 01/01/07 100 105
Jefferson Parish, Sales &
Use Tax, RB (AMBAC)
5.000%, 02/01/08 130 134
5.000%, 02/01/13 700 699
Jefferson Parish, Sales &
Use Tax, RB (MBIA)
6.250%, 02/01/08 300 326
Kenner, Sales Tax, RB (FGIC)
5.750%, 06/01/06 100 107
Lafayette Parish, Sales Tax,
RB (FSA)
4.875%, 04/01/04 575 592
Lafayette Parish, Sales Tax,
RB (FGIC) (A)
6.000%, 04/01/08 1,250 1,394
Lafayette, Public
Improvements, Sales Tax,
RB (FGIC)
4.625%, 05/01/05 300 304
Lafayette, Public Power
Authority, RB (AMBAC)
5.000%, 11/01/06 250 258
5.300%, 11/01/07 510 529
5.250%, 11/01/09 250 259
Lafayette, Utilities,
RB (AMBAC)
4.100%, 11/01/99 275 276
4.700%, 11/01/04 125 128
Lafayette, Public
Improvements, Sales Tax,
RB (FGIC)
5.500%, 03/01/07 200 212
Lafayette, Public
Improvements, Series A,
RB (FGIC)
4.900%, 03/01/03 505 519
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
Lafourche Parish, School
Improvements, GO (FSA)
5.000%, 02/01/16 $ 900 $ 891
Louisiana State Housing
Finance Agency, Single
Family Mortgages,
Series B, RB
6.000%, 06/01/15 820 860
Louisiana State Public
Facilities Authority,
Department of Public
Safety, RB (AMBAC)
4.900%, 08/01/04 500 514
5.000%, 08/01/05 400 413
Louisiana State Public
Facilities Authority,
Series A-1, RB (AMBAC)
5.000%, 12/01/15 1,500 1,525
Louisiana State Energy &
Power Authority,
RB (FGIC)
6.000%, 01/01/13 500 521
Louisiana State,
Miscellaneous Taxes
Refunding Bonds,
Series A, RB
5.700%, 08/01/08 500 547
Louisiana State, Mississippi
River Bridge
Authority, RB
6.625%, 11/01/06 1,130 1,258
Louisiana State Public
Facilities Authority,
Jefferson Parish, Eastbank
Project, RB (FGIC)
4.850%, 08/01/06 250 257
Louisiana State Public
Facilities Authority,
Loyola University
Project, RB (MBIA)
4.900%, 10/01/05 1,000 1,032
Louisiana State Public
Facilities Authority, Our
Lady of Lake Regional
Center, RB (MBIA)
5.900%, 12/01/06 390 414
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 17
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
LOUISIANA TAX-FREE INCOME FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
Louisiana State Public
Facilities Authority,
Series A, RB (FSA)
5.100%, 03/01/01 $ 250 $ 257
Louisiana State Public
Facilities Authority, Alton
Ochsner Medical
Foundation Project,
Series A, RB (MBIA)
6.000%, 05/15/01 100 106
Louisiana State Public
Facilities Authority, Alton
Ochsner Medical
Foundation Project,
Series PJ-B, RB (MBIA)
6.000%, 05/15/17 100 105
Louisiana State Public
Facilities Authority,
Special Insurance
Assessment, RB
4.400%, 10/01/00 120 121
Louisiana State, Refunding
Bonds, Ad Valorem
Property Tax, GO (MBIA)
6.250%, 08/01/99 250 257
Louisiana State, Refunding
Bonds, GO (MBIA)
5.375%, 08/01/05 400 424
Louisiana State, Refunding
Bonds, Series A,
GO (MBIA)
5.100%, 08/01/01 250 258
5.300%, 08/01/04 250 263
Louisiana State University,
Agricultural & Mechanical
College Project, RB (FGIC)
5.400%, 07/01/05 150 159
Louisiana State University,
Agricultural & Mechanical
College Project, RB (MBIA)
6.000%, 07/01/07 580 645
Louisiana State University,
Agricultural & Mechanical
College Project, RB (FGIC)
5.500%, 07/01/06 250 267
5.750%, 07/01/14 500 524
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
Louisiana State, Unlimited
Tax, GO (FGIC)
5.125%, 04/15/08 $1,000 $ 1,043
Louisiana State, Unlimited
Tax, GO (MBIA)
5.600%, 08/01/07 250 270
Louisiana State,
Unlimited Tax, Series A,
GO (AMBAC)
6.000%, 05/01/07 1,000 1,097
Louisiana State, Unlimited
Tax, Series A, GO (FGIC)
5.500%, 04/15/02 1,750 1,836
Louisiana State, Unlimited
Tax, Series A, GO (MBIA)
6.000%, 05/15/99 950 974
Louisiana State, Unlimited
Tax, GO (MBIA)
5.600%, 08/01/08 250 272
Louisiana State, GO (FGIC)
6.000%, 08/01/04 1,000 1,092
Louisiana State, Series A,
GO (MBIA)
5.500%, 05/15/05 500 533
5.600%, 05/15/07 750 810
5.700%, 05/15/08 250 270
Mandeville, Water Utility
Improvements, Ad
Valorem Property Tax, RB
5.150%, 02/01/10 100 102
Monroe, Special School
District, GO (FGIC)
5.350%, 03/01/09 500 521
Natchitoches Parish School
District #7, GO (FSA)
4.900%, 03/01/07 190 194
New Orleans, Home
Mortgages, Special
Obligation, RB
6.250%, 01/15/11 500 562
New Orleans, GO (FGIC)
5.850%, 11/01/09 350 374
New Orleans, Sewer
Service, RB (FGIC)
6.250%, 06/01/07 1,215 1,374
5.250%, 06/01/11 1,000 1,035
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18 MARCH 31, 1998
<PAGE>
LOUISIANA TAX-FREE INCOME FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
Orleans Parish School
Board, GO (FGIC)
5.300%, 09/01/10 $ 250 $ 259
Orleans Parish School
Board, Public School
Capital Refinancing,
RB (MBIA)
5.000%, 12/01/05 250 260
6.000%, 06/01/09 555 621
Saint Bernard Parish,
School Board Refunding,
GO (MBIA)
4.550%, 05/01/06 200 201
4.600%, 05/01/07 200 201
4.700%, 05/01/08 200 202
4.800%, 05/01/09 200 201
4.900%, 05/01/10 200 202
Saint Charles Parish,
Sales Tax, Series St-96,
RB (MBIA)
5.000%, 12/01/06 500 520
Saint James Parish,
Ad Valorem Property
Tax, GO
4.800%, 03/01/05 85 87
5.200%, 03/01/08 75 77
Saint Landry Parish School
District #1, GO (FSA)
4.350%, 05/01/05 1,750 1,746
Saint Tammany Parish,
Sales & Use Tax,
RB (FGIC)
5.750%, 04/01/03 250 267
5.750%, 04/01/06 250 266
Saint Tammany Parish
School District #12,
GO (FGIC)
6.500%, 03/01/05 200 213
Shreveport, Public
Improvements, Ad
Valorem Property Tax, RB
4.750%, 12/01/09 200 200
Shreveport, Unlimited Tax,
GO (AMBAC)
5.150%, 02/01/09 265 273
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
Slidell, GO (AMBAC)
4.900%, 03/01/09 $ 200 $ 203
5.000%, 03/01/13 400 399
Slidell, Public
Improvements, Sales
& Use Tax, Series B, RB
5.200%, 10/01/05 100 105
5.400%, 10/01/07 200 210
-------
41,453
-------
TOTAL MUNICIPAL BONDS
(Cost $40,096) 41,453
-------
CASH EQUIVALENTS -- 8.9%
SEI Tax Exempt Trust
Institutional Trust Tax-
Free Portfolio 2,142 2,142
SEI Tax Exempt Trust Tax-
Free Portfolio 1,946 1,946
-------
TOTAL CASH EQUIVALENTS
(Cost $4,088) 4,088
-------
REPURCHASE AGREEMENT -- 5.8%
UBS SECURITIES
5.920%, dated 03/31/98,
matures 04/01/98, repurchase
price $2,664,886
(collateralized by FNMA
Obligation, total
market value:
$2,719,769) (1) 2,664 2,664
-------
TOTAL REPURCHASE AGREEMENT
(Cost $2,664) 2,664
-------
TOTAL INVESTMENTS -- 104.5%
(Cost $46,848) 48,205
-------
OTHER ASSETS AND LIABILITIES,
NET -- (4.5%) (2,068)
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 19
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
LOUISIANA TAX-FREE INCOME FUND
==========================================
DESCRIPTION VALUE (000)
- ------------------------------------------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization --
no par value) based on
4,320,893 outstanding shares
of beneficial interest $42,770
FUND SHARES OF CLASS B
(unlimited authorization --
no par value) based on
204,208 outstanding shares
of beneficial interest 2,064
Accumulated net realized loss
on investments (54)
Net unrealized appreciation
on investments 1,357
-------
TOTAL NET ASSETS -- 100.0% $46,137
=======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $10.20
=======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($10.20 / 96.50%) $10.57
=======
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (2) $10.20
=======
- --------------------------------------------------------------------------------
(A) WHEN-ISSUED SECURITY
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GO--GENERAL OBLIGATION
RB--REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR CERTAIN
SECURITIES AS DEFINED IN THE STATEMENT OF NET ASSETS:
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
FGIC--FINANCIAL GUARANTY INSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
(1) TRI-PARTY REPURCHASE AGREEMENT
(2) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
BALANCED FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
COMMON STOCKS -- 53.0%
AEROSPACE & DEFENSE -- 1.5%
Sci Systems* 32,400 $ 1,154
Thiokol 23,560 1,138
-------
2,292
-------
AIR TRANSPORTATION -- 0.7%
British Airways,
PLC, ADR 9,200 957
-------
APPAREL/TEXTILES -- 1.0%
Tommy Hilfiger* 10,000 601
VF 15,800 830
-------
1,431
-------
AUTOMOTIVE -- 2.4%
Chrysler 26,500 1,101
Ford Motor 26,350 1,708
TRW 13,600 750
-------
3,559
-------
BANKS -- 1.7%
First Union 21,400 1,214
J.P. Morgan 9,900 1,330
-------
2,544
-------
BEAUTY PRODUCTS -- 0.8%
Avon Products 14,420 1,125
-------
BUILDING & CONSTRUCTION -- 1.4%
Fluor 23,720 1,180
Lennar 25,600 882
-------
2,062
-------
CHEMICALS -- 2.9%
Dow Chemical 7,000 681
E.I. du Pont
de Nemours 18,140 1,234
Lubrizol 22,800 878
Vulcan Materials 13,950 1,528
-------
4,321
-------
COMPUTERS & SERVICES -- 2.4%
Compaq Computer 35,000 906
Computer Associates
International 20,700 1,195
Quantum* 27,360 583
Tektronix 21,370 954
-------
3,638
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
20 MARCH 31, 1998
<PAGE>
BALANCED FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
CONCRETE & MINERAL PRODUCTS -- 0.7%
Armstrong World
Industries 12,470 $ 1,079
-------
CONSUMER PRODUCTS -- 0.5%
International Game
Technology 21,000 525
Nine West Group* 11,000 271
-------
796
-------
DRUGS -- 1.7%
Merck 9,830 1,262
Schering Plough 16,400 1,340
-------
2,602
-------
ELECTRICAL SERVICES -- 4.5%
Consolidated Edison 29,100 1,360
Duke Power 13,600 810
GPU 27,500 1,217
New England Electric
Systems 19,300 882
OGE Energy 15,400 891
Pacific Enterprises 19,600 800
Southern 27,100 750
-------
6,710
-------
FINANCIAL SERVICES -- 2.6%
Countrywide Credit
Industries 20,540 1,092
Greenpoint Financial 34,800 1,251
Slm Holding 37,100 1,618
-------
3,961
-------
FOOD, BEVERAGE & TOBACCO -- 1.8%
IBP 28,400 637
Philip Morris 20,100 838
Quaker Oats 20,660 1,183
-------
2,658
-------
GAS/NATURAL GAS -- 0.7%
Nicor 26,150 1,105
-------
HOUSEHOLD PRODUCTS -- 1.0%
Maytag 30,000 1,434
-------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
INSURANCE -- 2.8%
Allstate 10,680 $ 982
AMBAC 34,600 2,022
Conseco 21,840 1,237
-------
4,241
-------
LEISURE -- 0.3%
Callaway Golf 16,000 464
-------
LUMBER & WOOD PRODUCTS -- 0.7%
Plum Creek Timber 32,000 1,056
-------
MACHINERY -- 3.8%
Applied Materials* 17,000 600
Caterpillar 20,400 1,123
Crane 19,500 1,033
Cummins Engine 14,000 772
Deere 13,800 855
Parker Hannifin 25,275 1,295
-------
5,678
-------
MEDICAL PRODUCTS & SERVICES -- 0.7%
Lincare Holdings* 15,700 1,109
-------
MISCELLANEOUS MANUFACTURING -- 1.3%
Trinity Industries 20,750 1,139
Wolverine Tube* 20,800 835
-------
1,974
-------
PETROLEUM & FUEL PRODUCTS -- 3.5%
Ensco International 31,480 874
Noble Drilling* 36,000 1,100
Phillips Petroleum 18,200 909
Union Texas Petroleum 50,000 1,106
USX-Marathon Group 33,000 1,242
-------
5,231
-------
PETROLEUM REFINING -- 1.3%
British Petroleum ADR 11,960 1,029
Mobil 12,000 919
-------
1,948
-------
PROFESSIONAL SERVICES -- 0.6%
Tech Data* 23,000 885
-------
RAILROADS -- 0.0%
Illinois Central 466 18
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 21
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
BALANCED FUND
==========================================
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ------------------------------------------
RETAIL -- 3.6%
Dayton Hudson 16,010 $ 1,409
Lone Star Steakhouse
& Saloon* 20,000 454
Ross Stores 34,260 1,512
TJX 40,400 1,828
-------
5,203
-------
RUBBER & PLASTICS -- 0.7%
Premark International 33,210 1,100
-------
SEMI-CONDUCTORS/INSTRUMENTS -- 0.6%
Novellus Systems* 21,890 947
-------
STEEL & STEEL WORKS -- 1.5%
Texas Industries 19,030 1,100
USX-U.S. Steel Group 28,530 1,077
-------
2,177
-------
TELEPHONES & TELECOMMUNICATION -- 2.6%
Ameritech 25,400 1,256
Century Telephone
Enterprises 25,750 1,574
SBC Communications 21,600 942
-------
3,772
-------
TRUCKING -- 0.7%
Werner Enterprises 41,550 1,060
-------
TOTAL COMMON STOCKS
(Cost $54,402) 79,137
-------
U.S. GOVERNMENT AGENCY
OBLIGATION -- 3.3%
FNMA
5.875%, 02/02/06 $ 5,000 4,961
-------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATION
(Cost $4,891) 4,961
-------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 13.8%
FHLMC
7.000%, 04/01/00 $ 2 $ 2
9.000%, 05/01/06 68 71
9.000%, 08/01/09 329 341
6.500%, 11/15/22 1,486 1,476
FHLMC REMIC
7.150%, 01/15/23 2,000 2,041
FNMA
7.000%, 09/01/07 1,060 1,079
FNMA CMO
7.000%, 01/25/03 1,790 1,790
GNMA
7.500%, 08/15/07 340 352
6.500%, 07/15/08 550 554
7.000%, 07/15/08 387 396
6.500%, 03/15/09 1,352 1,362
13.500%, 05/15/11 15 19
12.500%, 10/15/13 2 3
12.000%, 03/15/14 17 21
13.500%, 09/15/14 12 15
9.000%, 12/15/16 65 70
10.000%, 07/15/18 95 105
10.000%, 03/15/19 81 89
7.000%, 04/15/24 1,089 1,100
7.500%, 06/15/25 1,604 1,645
7.000%, 02/15/26 6,757 6,823
7.500%, 05/15/26 656 674
8.000%, 05/15/26 529 549
-------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $20,352) 20,577
-------
U.S. TREASURY OBLIGATIONS -- 25.3%
U.S. Treasury Bonds
5.625%, 02/15/06 3,000 2,974
7.125%, 02/15/23 1,000 1,141
U.S. Treasury Notes
6.500%, 08/15/05 1,500 1,567
9.000%, 05/15/98 2,000 2,009
9.250%, 08/15/98 2,000 2,027
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
22 MARCH 31, 1998
<PAGE>
BALANCED FUND
==========================================
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------
6.375%, 01/15/99 $1,000 $ 1,006
7.000%, 04/15/99 3,000 3,043
6.375%, 07/15/99 1,500 1,514
8.000%, 08/15/99 2,000 2,062
8.500%, 02/15/00 500 525
6.250%, 10/31/01 2,000 2,036
6.250%, 08/31/02 2,000 2,042
6.250%, 02/15/03 4,000 4,095
5.750%, 08/15/03 1,500 1,504
5.875%, 11/15/05 5,000 5,038
6.250%, 02/15/07 2,000 2,067
6.125%, 08/15/07 3,000 3,083
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $37,272) 37,733
--------
CASH EQUIVALENTS -- 4.1%
SEI Liquid Asset Trust
Government Portfolio 3,047 3,047
SEI Liquid Asset Trust
Treasury Portfolio 3,104 3,104
--------
TOTAL CASH EQUIVALENTS
(Cost $6,151) 6,151
--------
REPURCHASE AGREEMENT -- 1.1%
UBS SECURITIES
5.920%, dated 03/31/98, matures
04/01/98, repurchase price
$1,681,676 (collateralized by
U.S. Treasury Obligation,
total market value:
$1,712,129) (1) 1,681 1,681
--------
TOTAL REPURCHASE AGREEMENT
(Cost $1,681) 1,681
--------
TOTAL INVESTMENTS -- 100.6%
(Cost $124,749) 150,240
--------
OTHER ASSETS AND LIABILITIES,
NET -- (0.6%) (894)
--------
DESCRIPTION VALUE (000)
- ------------------------------------------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization --
no par value) based on
11,098,034 outstanding shares
of beneficial interest $114,807
FUND SHARES OF CLASS B
(unlimited authorization --
no par value) based on
366,493 outstanding shares
of beneficial interest 4,197
Accumulated net realized gain
on investments 4,851
Net unrealized appreciation
on investments 25,491
--------
TOTAL NET ASSETS -- 100.0% $149,346
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $13.03
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($13.03 / 96.50%) $13.50
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (2) $13.09
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CMO--COLLATERALIZED MORTGAGE OBLIGATION
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
PLC--PUBLIC LIMITED COMPANY
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
(1) TRI-PARTY REPURCHASE AGREEMENT
(2) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 23
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
VALUE EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
COMMON STOCKS -- 97.3%
AEROSPACE & DEFENSE -- 2.7%
Sci Systems* 61,600 $ 2,195
Thiokol 42,800 2,068
--------
4,263
--------
AIR TRANSPORTATION -- 3.6%
Airborne Freight 87,040 3,275
Southwest Airlines 87,960 2,600
--------
5,875
--------
APPAREL/TEXTILES -- 2.0%
Russell 42,000 1,126
VF 40,000 2,103
--------
3,229
--------
AUTOMOTIVE -- 3.9%
Arvin Industries 49,130 2,011
Chrysler 39,800 1,654
Ford Motor 41,000 2,657
--------
6,322
--------
BANKS -- 4.7%
BankAmerica 28,600 2,363
Chase Manhattan 15,830 2,135
First Union 25,000 1,419
J.P. Morgan 13,500 1,813
--------
7,730
--------
BUILDING & CONSTRUCTION -- 3.0%
Centex 70,120 2,673
Fluor 43,870 2,183
--------
4,856
--------
CHEMICALS -- 4.6%
Dexter 48,800 2,019
Dow Chemical 17,300 1,682
Lubrizol 41,850 1,611
Vulcan Materials 21,760 2,383
--------
7,695
--------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
COMPUTERS & SERVICES -- 3.7%
Compaq Computer 92,000 $ 2,381
Computer Associates
International 43,665 2,522
Quantum* 49,720 1,060
--------
5,963
--------
CONCRETE & MINERAL PRODUCTS -- 1.5%
Lafarge 63,000 2,418
--------
DRUGS -- 2.2%
Eli Lilly 25,000 1,491
Mylan Laboratories 84,960 1,954
--------
3,445
--------
ELECTRICAL SERVICES -- 10.6%
Baltimore Gas &
Electric 51,500 1,683
Consolidated Edison 41,000 1,917
Duke Power 24,598 1,465
Enova 70,100 1,958
Florida Progress 44,810 1,868
GPU 40,000 1,770
New England Electric
System 24,300 1,110
PP&L Resources 57,000 1,347
Philips Electronics,
N.V. 27,560 2,024
Southern 74,500 2,063
--------
17,205
--------
FINANCIAL SERVICES -- 5.2%
AG Edwards 45,000 1,969
Countrywide Credit
Industries 37,990 2,021
FNMA 36,910 2,335
Slm Holding 43,855 1,913
--------
8,238
--------
FOOD, BEVERAGE & TOBACCO -- 2.6%
Quaker Oats 37,700 2,158
Universal 43,600 1,921
--------
4,079
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
24 MARCH 31, 1998
<PAGE>
VALUE EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
GAS/NATURAL GAS -- 3.0%
National Fuel & Gas 37,000 $ 1,739
Nicor 49,090 2,074
Peoples Energy 26,500 964
--------
4,777
--------
INSURANCE -- 7.7%
Allstate 21,650 1,990
AMBAC 41,000 2,396
Conseco 36,300 2,055
Equitable 49,800 2,811
Travelers 49,500 2,970
--------
12,222
--------
MACHINERY -- 7.4%
Aerquip-Vickers 34,890 2,017
Applied Materials* 53,800 1,900
Caterpillar 38,200 2,103
Deere 31,000 1,920
Ingersoll Rand 36,000 1,726
Parker Hannifin 42,330 2,169
--------
11,835
--------
MEDICAL PRODUCTS & SERVICES -- 1.3%
Guidant 27,490 2,017
--------
MISCELLANEOUS TRANSPORTATION -- 1.0%
Fleetwood Enterprises 36,000 1,676
--------
PETROLEUM & FUEL PRODUCTS -- 5.3%
K N Energy 35,340 2,087
Noble Drilling* 70,300 2,149
Transocean Offshore 45,380 2,334
USX-Marathon Group 50,000 1,881
--------
8,451
--------
PETROLEUM REFINING -- 4.5%
British Petroleum, ADR 21,740 1,871
Chevron 22,000 1,767
Mobil 20,800 1,594
Texaco 32,620 1,965
--------
7,197
--------
RETAIL -- 10.9%
Brinker International* 96,880 2,119
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ------------------------------------------
Cracker Barrel Old
Country Stores 51,480 $ 2,059
Fingerhut 87,230 2,263
Office Depot 89,600 2,789
Premark International 59,660 1,976
Ross Stores 72,000 3,177
TJX 66,040 2,988
--------
17,371
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.1%
Novellus Systems 41,090 1,777
--------
STEEL & STEEL WORKS -- 2.3%
LTV 154,380 2,026
USX-U.S. Steel Group 45,700 1,725
--------
3,751
--------
WHOLESALE -- 2.5%
Super-Valu 44,400 2,070
Tech Data* 49,680 1,913
--------
3,983
--------
TOTAL COMMON STOCKS
(Cost $116,535) 156,375
--------
CASH EQUIVALENTS -- 0.6%
SEI Liquid Asset Trust
Government Portfolio $ 507 507
SEI Liquid Asset Trust
Treasury Portfolio 497 497
--------
TOTAL CASH EQUIVALENTS
(Cost $1,004) 1,004
--------
REPURCHASE AGREEMENT -- 1.0%
UBS SECURITIES
5.920%, dated 03/31/98,
matures 04/01/98, repurchase
price $1,604,012
(collateralized by FNMA
Obligation,
total market value:
$1,636,993) (1) 1,604 1,604
--------
TOTAL REPURCHASE AGREEMENT
(Cost $1,604) 1,604
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 25
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
VALUE EQUITY FUND
==========================================
DESCRIPTION VALUE (000)
- ------------------------------------------
TOTAL INVESTMENTS -- 98.9%
(Cost $119,143) $158,983
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.1% 1,692
--------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization --
no par value) based on
8,746,331 outstanding shares
of beneficial interest 100,780
FUND SHARES OF CLASS B
(unlimited authorization --
no par value) based on
739,294 outstanding shares
of beneficial interest 10,205
Accumulated net realized gain
on investments 9,854
Net unrealized appreciation
on investments 39,840
Distributions in excess of net
investment income (4)
--------
TOTAL NET ASSETS -- 100.0% $160,675
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $16.93
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($16.93 / 96.50%) $17.54
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (2) $16.99
========
- --------------------------------------------------------------------------------
*NON INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
(1) TRI-PARTY REPURCHASE AGREEMENT
(2) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
GROWTH EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
COMMON STOCKS -- 92.2%
AEROSPACE & DEFENSE -- 0.3%
Sci Systems* 3,315 $ 118
--------
AIRCRAFT -- 1.5%
Sundstrand 6,230 377
United Technologies 3,035 280
--------
657
--------
APPAREL/TEXTILES-- 2.1%
Cintas 7,340 380
Jones Apparel Group* 9,450 520
--------
900
--------
AUTOMOTIVE -- 1.3%
Federal Mogul 8,060 429
Harley-Davidson 3,480 115
--------
544
--------
BANKS -- 2.3%
Fifth Third Bancorp 1,265 108
First Tennessee
National 2,970 95
Northern Trust 1,460 109
Star Banc 4,360 258
State Street 2,085 142
Synovus Financial 7,905 293
--------
1,005
--------
BEAUTY PRODUCTS -- 0.9%
Colgate-Palmolive 4,580 397
--------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 1.5%
Clear Channel
Communications* 1,355 133
Interpublic Group 2,855 177
Omnicom Group 7,400 348
--------
658
--------
CHEMICALS -- 0.3%
Praxair 2,760 142
--------
COMMUNICATIONS EQUIPMENT -- 2.6%
ADC Telecommunications* 6,615 182
Molex 7,062 194
Northern Telecom 4,680 302
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
26 MARCH 31, 1998
<PAGE>
GROWTH EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
QUALCOMM 2,425 $ 130
Tellabs* 5,800 389
--------
1,197
--------
COMPUTERS & SERVICES-- 3.1%
Adobe Systems 5,065 229
Bay Networks* 5,165 140
Compaq Computer 17,585 455
Creative Technology
Limited* 5,730 129
Diebold 4,290 189
Hewlett Packard 2,065 131
Iomega* 6,660 46
--------
1,319
--------
CONTAINERS & PACKAGING -- 0.2%
Newell 1,990 96
--------
DRUGS -- 6.4%
Bristol-Myers Squibb 4,400 459
Eli Lilly 7,500 447
Merck 4,340 557
Pharmacia Upjohn ADR 3,800 166
Schering Plough 8,200 670
Warner Lambert 2,700 460
--------
2,759
--------
ENTERTAINMENT -- 0.3%
Walt Disney 1,435 153
--------
FINANCIAL SERVICES -- 4.8%
Alliance Capital
Management 2,640 137
American Express 2,545 234
Charles Schwab 2,305 88
FNMA 1,830 116
Franklin Resources 13,500 716
Price (T. Rowe)
Associates 5,585 393
Slm Holding 8,960 391
--------
2,075
--------
FOOD, BEVERAGE & TOBACCO -- 7.3%
Brown-Forman, Cl B 1,895 104
Campbell Soup 8,455 480
Coca-Cola Enterprises 5,540 203
Flowers Industries 7,980 187
H.J. Heinz 7,050 412
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
Hershey Foods 4,690 $ 336
Interstate Bakeries 8,795 284
Kellogg 4,885 211
Panamerican
Beverage, Cl A 3,430 138
PepsiCo 4,140 177
Quaker Oats 6,400 366
William Wrigley Jr. 3,335 273
--------
3,171
--------
HOTELS & LODGING-- 0.8%
Promus Hotel* 7,088 338
--------
HOUSEHOLD PRODUCTS-- 3.4%
Clorox 2,845 244
General Electric 6,200 534
Hubbell, Cl B 4,520 228
Illinois Tool Works 4,200 272
The Stanley Works 3,475 194
--------
1,472
--------
INDUSTRIAL -- 1.0%
Marriott International* 5,000 186
Marriott International,
Cl A* 5,000 179
Sodexho Marriott
Services* 1,250 33
Vlasic Foods
International* 845 22
--------
420
--------
INSURANCE -- 1.8%
American International
Group 2,257 284
MGIC Investment 4,600 302
SunAmerica 3,810 182
--------
768
--------
LEASING & RENTING-- 0.9%
Pitney Bowes 7,400 371
--------
LEISURE -- 0.5%
Callaway Golf 7,500 218
--------
MACHINERY -- 3.6%
Aeroquip-Vickers 4,415 255
Applied Materials* 5,290 187
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 27
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
GROWTH EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
Dover 4,250 $ 162
Dresser Industries 7,275 350
Flowserve 7,800 254
SPX 1,560 119
Tyco International
Limited 4,300 235
--------
1,562
--------
MARINE TRANSPORTATION -- 1.0%
Carnival, Cl A 6,170 430
--------
MEASURING DEVICES -- 0.8%
Perkin Elmer 3,090 223
Thermo Instrument
Systems* 4,100 136
--------
359
--------
MEDICAL PRODUCTS & SERVICES -- 4.3%
Biomet 4,000 120
Dentsply International 8,400 262
Guidant 4,325 317
HBO 6,000 362
Health Management
Associates, Cl A* 4,545 130
Healthsouth
Rehabilitation* 3,490 98
Johnson & Johnson 5,000 367
Sybron International* 7,260 190
--------
1,846
--------
MISCELLANEOUS BUSINESS SERVICES -- 6.0%
Adaptec* 5,305 104
Autodesk 5,400 233
BMC Software* 7,180 602
Cisco Systems* 1,672 114
Computer Associates
International 5,070 293
Microsoft* 5,840 523
Peoplesoft* 10,550 556
Shared Medical Systems 1,960 154
--------
2,579
--------
MISCELLANEOUS CONSUMER SERVICES -- 1.0%
Robert Half International* 8,960 430
--------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
MISCELLANEOUS MANUFACTURING -- 0.7%
Cognex* 6,545 $ 140
International Game
Technology 4,170 104
Kemet* 4,350 81
--------
325
--------
OFFICE FURNITURE & FIXTURES -- 0.5%
Hon Industries 5,630 207
--------
PETROLEUM & FUEL PRODUCTS -- 7.0%
BJ Services* 4,540 165
Cooper Cameron* 5,855 354
Ensco International 8,750 243
Halliburton 8,505 427
Marine Drilling* 12,160 263
Nabors Industries* 12,320 292
Newfield Exploration* 11,175 291
R & B Falcon* 5,330 158
Schlumberger 5,210 395
Smith International* 2,040 112
Transocean Offshore 6,040 311
--------
3,011
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.5%
Xerox 2,015 214
--------
PRINTING & PUBLISHING -- 3.8%
Gannett 4,720 339
McGraw Hill 3,420 260
Meredith 13,185 555
Time Warner 3,560 256
Tribune 3,565 251
--------
1,661
--------
PROFESSIONAL SERVICES -- 1.5%
Paychex 6,220 359
ServiceMaster 10,125 289
--------
648
--------
RETAIL -- 10.5%
Barnes & Noble* 3,040 119
Bed Bath and Beyond* 4,440 205
CompUSA* 7,400 192
Dayton Hudson 2,460 216
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
28 MARCH 31, 1998
<PAGE>
GROWTH EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
Dollar General 5,428 $ 210
Dollar Tree Stores* 3,715 197
Family Dollar Stores 3,380 128
Fred Meyer* 6,935 320
Gap 7,462 336
General Nutrition* 10,485 417
Home Depot 2,997 202
Kohls* 4,035 330
Kroger* 7,200 333
Ross Stores 4,710 208
Staples* 5,490 127
Tandy 2,255 106
TJX 10,000 453
Wal-Mart 2,480 126
Walgreen 8,260 291
--------
4,516
--------
RUBBER & PLASTIC-- 0.5%
Sealed Air* 3,100 203
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.7%
American Power
Conversion* 3,075 88
Amphenol* 4,013 232
Linear Technology 3,025 209
Vitesse Semiconductor* 4,162 196
--------
725
--------
TELEPHONES & TELECOMMUNICATION -- 5.0%
Airtouch
Communications* 2,480 121
Ameritech 2,930 145
AT&T 1,730 114
Bell Atlantic 3,000 308
BellSouth 5,300 358
Cincinnati Bell 6,200 221
Ericsson Telephone, ADR 4,355 207
Lucent Technologies 3,786 484
Southern New England
Telecom 985 71
U.S. West 2,625 144
--------
2,173
--------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ------------------------------------------
WHOLESALE -- 0.5%
Cardinal Health 1,205 $ 106
SYSCO 4,600 118
--------
224
--------
TOTAL COMMON STOCKS
(Cost $28,492) 39,891
--------
CASH EQUIVALENTS -- 4.5%
SEI Liquid Asset Trust
Government Portfolio $ 841 841
SEI Liquid Asset Trust
Treasury Portfolio 1,089 1,089
--------
TOTAL CASH EQUIVALENTS
(Cost $1,930) 1,930
--------
REPURCHASE AGREEMENT -- 2.5%
UBS SECURITIES
5.920%, dated 3/31/98,
matures 04/01/98, repurchase
price $1,083,220
(collateralized by
Resolution Funding
Corporation Obligation:
total market value:
$1,106,304) (1) 1,083 1,083
--------
TOTAL REPURCHASE AGREEMENT
(Cost $1,083) 1,083
--------
TOTAL INVESTMENTS -- 99.2%
(Cost $31,505) 42,904
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.8% 365
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 29
<PAGE>
STATEMENT OF NET ASSETS
(UNAUDITED)
GROWTH EQUITY FUND
==========================================
DESCRIPTION VALUE (000)
- ------------------------------------------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization --
no par value) based on
2,387,522 outstanding shares
of beneficial interest $29,272
FUND SHARES OF CLASS B
(unlimited authorization --
no par value) based on
134,812 outstanding shares
of beneficial interest 1,880
Accumulated net realized gain
on investments 721
Net unrealized appreciation
on investments 11,399
Distributions in excess of net
investment income (3)
-------
TOTAL NET ASSETS -- 100.0% $43,269
=======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $17.16
=======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($17.16 / 96.50%) $17.78
=======
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (2) $17.04
=======
- --------------------------------------------------------------------------------
*NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
(1) TRI-PARTY REPURCHASE AGREEMENT
(2) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
SMALL CAP EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
INVESTMENT COMPANY -- 105.4%
SEI Institutional Managed
Trust Small Cap
Growth Portfolio 294,379 $5,464
------
TOTAL INVESTMENT COMPANY
(Cost $4,953) 5,464
------
TOTAL INVESTMENTS-- 105.4%
(Cost $4,953) 5,464
------
OTHER ASSETS AND LIABILITIES,
NET -- (5.4%) (278)
------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization --
no par value) based on
383,557 outstanding shares
of beneficial interest 3,914
FUND SHARES OF CLASS B
(unlimited authorization --
no par value) based on 50,507
outstanding shares
of beneficial interest 510
Accumulated net realized gain
on investments 262
Net unrealized appreciation
on investments 511
Distributions in excess of net
investment income (11)
------
TOTAL NET ASSETS -- 100.0% $5,186
======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $11.96
======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($11.96 / 96.50%) $12.39
======
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (1) $11.87
======
- --------------------------------------------------------------------------------
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30 MARCH 31, 1998
<PAGE>
INTERNATIONAL EQUITY FUND
==========================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
INVESTMENT COMPANY -- 100.1%
SEI International Trust
International Equity
Portfolio 238,049 $2,521
------
TOTAL INVESTMENT COMPANY
(Cost $2,497) 2,521
------
TOTAL INVESTMENTS -- 100.1%
(Cost $2,497) 2,521
------
OTHER ASSETS AND LIABILITIES,
NET -- (0.1%) (3)
------
NET ASSETS
Fund Shares of Class A
(unlimited authorization --
no par value) based on
201,138 outstanding shares
of beneficial interest 2,218
Fund Shares of Class B
(unlimited authorization --
no par value) based on 29,738
outstanding shares
of beneficial interest 319
Accumulated net realized loss
on investments (41)
Net unrealized appreciation
on investments 24
Distributions in excess of net
investment income (2)
------
TOTAL NET ASSETS -- 100.0% $2,518
======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $10.91
======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($10.91 / 96.50%) $11.31
======
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (1) $10.85
======
- --------------------------------------------------------------------------------
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 31
<PAGE>
This Page Left Intentionally Blank
32 MARCH 31, 1998
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (000)
MARCH 31, 1998 (UNAUDITED)
--------------
STRATEGIC
INCOME BOND
FUND
--------------
<S> <C>
ASSETS:
Investments at Market Value
(Cost $15,376) $15,862
Accrued Income 199
Receivables for Capital Shares Sold 918
-------
Total Assets 16,979
-------
LIABILITIES:
Payables for Capital Shares Repurchased 2
Accrued Expenses 45
Distribution Payable 84
Other Liabilities 3
-------
Total Liabilities 134
-------
NET ASSETS:
Fund shares of Class A (unlimited authorization -- no par value)
based on 1,578,030 outstanding shares of beneficial interest 15,780
Fund shares of Class B (unlimited authorization -- no par value)
based on 58,864 outstanding shares of beneficial interest 589
Accumulated net realized loss on investments (10)
Net unrealized appreciation on investments 486
-------
TOTAL NET ASSETS $16,845
=======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS A $ 10.29
=======
MAXIMUM PUBLIC OFFERING PER SHARE -- CLASS A ($10.29 / 96.50%) $ 10.66
=======
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS B (1) $ 10.29
=======
<FN>
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 33
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (000)
(UNAUDITED)
TREASURY STRATEGIC LOUISIANA
INSTITUTIONAL SECURITIES TAX EXEMPT GOVERNMENT INCOME TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET SECURITIES BOND INCOME
FUND FUND FUND FUND FUND FUND
------------- ------------ ------------ ---------- ---------- ----------
10/1/97 10/1/97 10/1/97 10/1/97 10/1/97 10/1/97
TO 3/31/98 TO 3/31/98 TO 3/31/98 TO 3/31/98 TO 3/31/98 TO 3/31/98
------------- ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $1,822 $36,394 $2,481 $4,631 $561 $ 996
Dividend income -- -- -- -- -- --
------ ------- ------ ------ ---- ------
TOTAL INVESTMENT INCOME 1,822 36,394 2,481 4,631 561 996
------ ------- ------ ------ ---- ------
EXPENSES:
Administration fees 32 980 102 113 12 31
Less: waiver of administration fees -- (78) (24) (27) (3) (8)
Investment advisory fees 49 1,959 304 414 60 73
Less: waiver of investment
advisory fees (49) -- (3) (33) (23) (1)
Custodian fees 10 180 19 21 2 6
Transfer agent fees 17 34 12 18 13 21
Distribution fees (1) -- 1,430 169 4 2 7
Less: waiver of distribution fees (1) -- (378) (169) -- -- --
Professional fees 12 52 14 8 7 7
Registration fees 9 74 7 2 1 5
Trustee fees -- 9 1 1 -- --
Printing expense 1 26 2 4 1 --
Amortization of deferred
organization costs -- 14 1 3 -- --
Insurance and other fees 1 16 5 3 4 1
------ ------- ------ ------ ---- ------
TOTAL EXPENSES 82 4,318 440 531 76 142
------ ------- ------ ------ ---- ------
LESS:
Reimbursement by Administrator -- -- -- -- -- --
------ ------- ------ ------ ---- ------
NET INVESTMENT INCOME 1,740 32,076 2,041 4,100 485 854
------ ------- ------ ------ ---- ------
NET REALIZED GAIN (LOSS) ON SECURITIES SOLD -- -- -- 56 (10) --
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENT SECURITIES -- -- -- 1,577 247 327
------ ------- ------ ------ ---- ------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- -- -- 1,633 237 327
------ ------- ------ ------ ---- ------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,740 $32,076 $2,041 $5,733 $722 $1,181
====== ======= ====== ====== ==== ======
VALUE GROWTH SMALL CAP INTERNATIONAL
BALANCED EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
10/1/97 10/1/97 10/1/97 10/1/97 10/1/97
TO 3/31/98 TO 3/31/98 TO 3/31/98 TO 3/31/98 TO 3/31/98
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 1,915 $ 1,330 $ 89 $ -- $123
Dividend income 717 119 157 -- --
------- ------- ------ ---- ----
TOTAL INVESTMENT INCOME 2,632 1,449 246 -- 123
------- ------- ------ ---- ----
EXPENSES:
Administration fees 104 110 29 3 2
Less: waiver of administration fees (25) (9) (6) (3) (2)
Investment advisory fees 515 544 144 9 6
Less: waiver of investment
advisory fees (24) -- (1) (5) (3)
Custodian fees 18 21 6 1 --
Transfer agent fees 20 32 15 12 12
Distribution fees (1) 16 41 7 2 2
Less: waiver of distribution fees (1) -- -- -- -- --
Professional fees 6 16 3 -- --
Registration fees 1 15 3 1 --
Trustee fees 1 1 -- -- --
Printing expense 3 2 1 5 6
Amortization of deferred
organization costs 2 1 1 1 --
Insurance and other fees 2 1 -- -- --
------- ------- ------ ---- ----
TOTAL EXPENSES 639 775 202 (26) 23
------- ------- ------ ---- ----
LESS:
Reimbursement by Administrator -- -- -- (19) (18)
------- ------- ------ ---- ----
NET INVESTMENT INCOME 1,993 674 44 (7) 118
------- ------- ------ ---- ----
NET REALIZED GAIN (LOSS) ON SECURITIES SOLD 4,852 9,725 1,098 335 (3)
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENT SECURITIES 4,382 6,202 3,319 (318) (69)
------- ------- ------ ---- ----
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 9,234 15,927 4,417 17 (72)
------- ------- ------ ---- ----
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $11,227 $16,601 $4,461 $ 10 $ 46
======= ======= ====== ==== ====
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) ALL DISTRIBUTION FEES AND WAIVERS ARE INCURRED AT THE RETAIL CLASS LEVEL FOR REASURY SECURITIES MONEY MARKET
FUND AND THE CLASS B LEVEL FOR NON-DOLLAR FUNDS.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
34 & 35 MARCH 31, 1998
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (000)
(UNAUDITED)
INSTITUTIONAL TREASURY SECURITIES TAX EXEMPT GOVERNMENT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND SECURITIES FUND
---------------------- ------------------------ ------------------------ ----------------------
10/1/97 10/1/96 10/1/97 10/1/96 10/1/97 10/1/96 10/1/97 10/1/96
TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income (loss) $ 1,740 $ 2,995 $ 32,076 $ 56,781 $ 2,041 $ 2,368 $ 4,100 $ 8,587
Net realized gain (loss) on
securities sold -- -- -- 3 -- -- 56 (19)
Net unrealized appreciation
(depreciation) of investment
securities -- -- -- -- -- -- 1,577 3,734
--------- --------- --------- ----------- ------- --------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 1,740 2,995 32,076 56,784 2,041 2,368 5,733 12,302
--------- --------- --------- ----------- ------- --------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Income distribution Class A (1) (1,740) (2,995) (13,441) (30,423) (2,041) (2,368) (4,074) (8,550)
Income distribution Class B (2) -- -- (14,441) (24,421) -- -- (27) (37)
Income distribution Class C (3) -- -- (4,194) (1,937) -- -- -- --
Capital gain distribution
Class A (1) -- -- -- -- -- -- -- --
Capital gain distribution
Class B (2) -- -- -- -- -- -- -- --
--------- --------- --------- ----------- ------- --------- -------- --------
TOTAL DISTRIBUTIONS (1,740) (2,995) (32,076) (56,781) (2,041) (2,368) (4,101) (8,587)
--------- --------- --------- ----------- ------- --------- -------- --------
SHARE TRANSACTIONS:
Class A (1):
Shares issued 165,279 340,575 799,668 1,432,933 -- -- 18,519 38,560
Shares issued in lieu of
cash distribution -- -- 3 334 -- -- 1,830 4,088
Shares redeemed (108,445) (310,063) (947,230) (1,514,130) -- -- (22,343) (57,641)
--------- --------- --------- ----------- ------- --------- -------- --------
TOTAL CLASS A SHARE
TRANSACTIONS 56,834 30,512 (147,559) (80,863) -- -- (1,994) (14,993)
--------- --------- --------- ----------- ------- --------- -------- --------
Class B (2):
Shares issued -- -- 589,087 1,126,969 260,954 154,486 154 595
Shares issued in lieu of
cash distribution -- -- 8,255 12,486 841 1,280 23 34
Shares redeemed -- -- (591,777) (945,606) (202,733) (145,236) (106) (107)
--------- --------- --------- ----------- ------- --------- -------- --------
TOTAL CLASS B SHARE
TRANSACTIONS -- -- 5,565 193,849 59,062 10,530 71 522
--------- --------- --------- ----------- ------- --------- -------- --------
Class C (3):
Shares issued -- -- 249,386 312,106 -- -- -- --
Shares issued in lieu of
cash distribution -- -- -- -- -- -- -- --
Shares redeemed -- -- (248,548) (109,894) -- -- -- --
--------- --------- --------- ----------- ------- --------- -------- --------
TOTAL CLASS C SHARE
TRANSACTIONS -- -- 838 202,212 -- -- -- --
--------- --------- --------- ----------- ------- --------- -------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM SHAREHOLDER TRANSACTIONS 56,834 30,512 (141,156) 315,198 59,062 10,530 (1,923) (14,471)
--------- --------- --------- ----------- ------- --------- -------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 56,834 30,512 (141,156) 315,201 59,062 10,530 (291) (10,756)
--------- --------- --------- ----------- ------- --------- -------- --------
STRATEGIC INCOME LOUISIANA TAX-FREE VALUE
BOND FUND (4) INCOME FUND BALANCED FUND EQUITY FUND
- ------------------------ ------------------------ ------------------------- -------------------------
10/1/97 1/31/97 10/1/97 10/1/96 10/1/97 10/1/96 10/1/97 10/1/96
TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 485 $ 562 $ 854 $ 1,236 $ 1,993 $ 3,757 $ 674 $ 1,498
(10) -- -- -- 4,852 12,142 9,725 18,764
247 239 327 1,038 4,382 13,260 6,202 23,918
------- ------- ------ ------- -------- -------- -------- -------
722 801 1,181 2,274 11,227 29,159 16,601 44,180
------- ------- ------ ------- -------- -------- -------- -------
(470) (554) (823) (1,206) (1,946) (3,676) (664) (1,459)
(15) (8) (31) (30) (47) (68) (14) (39)
-- -- -- -- -- -- -- --
-- -- -- -- (10,469) (4,877) (17,387) (5,916)
-- -- -- -- (332) (98) (1,312) (269)
------- ------- ------ ------- -------- -------- -------- -------
(485) (562) (854) (1,236) (12,794) (8,719) (19,377) (7,683)
------- ------- ------ ------- -------- -------- -------- -------
2,460 17,068 7,260 21,750 9,690 15,119 23,502 32,366
217 261 406 546 11,495 7,838 9,577 3,882
(2,230) (1,996) (2,397) (5,774) (10,050) (22,355) (16,390) (30,068)
------- ------- ------ ------- -------- -------- -------- -------
447 15,333 5,269 16,522 11,135 602 16,689 6,180
------- ------- ------ ------- -------- -------- -------- -------
130 454 979 429 665 1,543 1,869 4,063
9 6 23 22 336 146 1,189 280
(10) -- (69) (67) (103) (231) (358) (456)
------- ------- ------ ------- -------- -------- -------- -------
129 460 933 384 898 1,458 2,700 3,887
------- ------- ------ ------- -------- -------- -------- -------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
------- ------- ------ ------- -------- -------- -------- -------
-- -- -- -- -- -- -- --
------- ------- ------ ------- -------- -------- -------- -------
576 15,793 6,202 16,906 12,033 2,060 19,389 10,067
------- ------- ------ ------- -------- -------- -------- -------
813 16,032 6,529 17,944 10,466 22,500 16,613 46,564
------- ------- ------ ------- -------- -------- -------- -------
GROWTH EQUITY SMALL CAP INTERNATIONAL
FUND EQUITY FUND (4) EQUITY FUND (4)
- ------------------------ ----------------------- ------------------------
10/1/97 10/1/96 10/1/97 1/31/97 10/1/97 1/31/97
TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97
- ---------- ---------- ---------- ---------- ---------- ----------
$ 44 $ 113 $ (7) $ (4) $ 118 $ (4)
1,098 818 335 (9) (3) 6
3,319 6,453 (318) 829 (69) 93
------- ------- ------ ------ ------- ------
4,461 7,384 10 816 46 95
------- ------- ------ ------ ------- ------
(46) (114) -- -- (104) --
-- -- -- -- (13) --
-- -- -- -- -- --
(1,066) -- (56) -- (38) --
(56) -- (8) -- (5) --
------- ------- ------ ------ ------- ------
(1,168) (114) (64) -- (160) --
------- ------- ------ ------ ------- ------
10,724 15,927 1,934 3,707 500 3,447
770 79 27 -- 24 --
(5,245) (9,836) (951) (803) (1,655) (96)
------- ------- ------ ------ ------- ------
6,249 6,170 1,010 2,904 (1,131) 3,349
------- ------- ------ ------ ------- ------
342 1,472 71 565 30 356
51 -- 7 -- 15 --
(74) (56) (118) (15) (75) (7)
------- ------- ------ ------ ------- ------
319 1,416 (40) 550 (30) 349
------- ------- ------ ------ ------- ------
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
------- ------- ------ ------ ------- ------
-- -- -- -- -- --
------- ------- ------ ------ ------- ------
6,568 7,586 969 3,454 (1,161) 3,698
------- ------- ------ ------ ------- ------
9,861 14,856 916 4,270 (1,275) 3,793
------- ------- ------ ------ ------- ------
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) TRUST CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(2) RETAIL CLASS FOR TREASURY SECURITIES MONEY MARKET FUND AND TAX EXEMPT MONEY MARKET FUND.
(3) CASH SWEEP CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(4) THE STRATEGIC INCOME BOND FUND, SMALL CAP EQUITY FUND AND INTERNATIONAL
EQUITY FUND COMMENCED OPERATIONS ON JANUARY 31, 1997.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 36 & 37
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (000)
(UNAUDITED)
INSTITUTIONAL TREASURY SECURITIES TAX EXEMPT GOVERNMENT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND SECURITIES FUND
---------------------- ------------------------ ------------------------ ----------------------
10/1/97 10/1/96 10/1/97 10/1/96 10/1/97 10/1/96 10/1/97 10/1/96
TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS:
Beginning of period $ 58,516 $ 28,004 $1,364,088 $ 1,048,887 $ 76,744 $ 66,214 $150,084 $160,840
--------- --------- ---------- ----------- --------- --------- -------- --------
End of period $ 115,350 $ 58,516 $1,222,932 $ 1,364,088 $ 135,806 $ 76,744 $149,793 $150,084
========= ========= ========== =========== ========= ========= ======== ========
SHARES ISSUED AND
REDEEMED:
Class A (1):
Issued 165,279 340,575 799,668 1,432,933 -- -- 1,842 3,925
Issued in lieu of cash
distribution -- -- 3 334 -- -- 182 416
Redeemed (108,445) (310,063) (947,230) (1,514,130) -- -- (2,220) (5,864)
--------- --------- ---------- ----------- --------- --------- -------- --------
TOTAL CLASS A SHARE
TRANSACTIONS 56,834 30,512 (147,559) (80,863) -- -- (196) (1,523)
--------- --------- ---------- ----------- --------- --------- -------- --------
Class B (2):
Issued -- -- 589,087 1,126,969 260,954 154,486 15 61
Issued in lieu of cash
distribution -- -- 8,255 12,486 841 1,280 2 3
Redeemed -- -- (591,777) (945,607) (202,733) (145,236) (10) (11)
--------- --------- ---------- ----------- --------- --------- -------- --------
TOTAL CLASS B SHARE
TRANSACTIONS -- -- 5,565 193,848 59,062 10,530 7 53
--------- --------- ---------- ----------- --------- --------- -------- --------
Class C (3):
Issued -- -- 249,386 312,106 -- -- -- --
Issued in lieu of cash
distribution -- -- -- -- -- -- -- --
Redeemed -- -- (248,548) (109,894) -- -- -- --
--------- --------- ---------- ----------- --------- --------- -------- --------
TOTAL CLASS C SHARE
TRANSACTIONS -- -- 838 202,212 -- -- -- --
--------- --------- ---------- ----------- --------- --------- -------- --------
NET INCREASE (DECREASE) IN
SHARE TRANSACTIONS 56,834 30,512 (141,156) 315,197 59,062 10,530 (189) (1,470)
========= ========= ========== =========== ========= ========= ======== ========
STRATEGIC INCOME LOUISIANA TAX-FREE VALUE
BOND FUND (4) INCOME FUND BALANCED FUND EQUITY FUND
------------------------ ------------------------ ------------------------- -------------------------
10/1/97 1/31/97 10/1/97 10/1/96 10/1/97 10/1/96 10/1/97 10/1/96
TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$16,032 $ -- $39,608 $21,664 $138,880 $116,380 $144,062 $ 97,498
------- ------- ------- ------- -------- -------- -------- --------
$16,845 $16,032 $46,137 $39,608 $149,346 $138,880 $160,675 $144,062
======= ======= ======= ======= ======== ======== ======== ========
237 1,710 710 2,204 752 1,283 1,430 2,231
22 26 40 55 940 676 634 294
(216) (201) (233) (593) (775) (1,891) (1,006) (2,070)
------- ------- ------- ------- -------- -------- -------- --------
43 1,535 517 1,666 917 68 1,058 455
------- ------- ------- ------- -------- -------- -------- --------
13 46 96 43 51 127 115 271
1 1 2 2 28 13 79 21
(1) -- (6) (7) (8) (19) (22) (32)
------- ------- ------- ------- -------- -------- -------- --------
13 47 92 38 71 121 172 260
------- ------- ------- ------- -------- -------- -------- --------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
------- ------- ------- ------- -------- -------- -------- --------
-- -- -- -- -- -- -- --
------- ------- ------- ------- -------- -------- -------- --------
56 1,582 609 1,704 988 189 1,230 715
======= ======= ======= ======= ======== ======== ======== ========
GROWTH EQUITY SMALL CAP INTERNATIONAL
FUND EQUITY FUND (4) EQUITY FUND (4)
- ------------------------ ----------------------- ------------------------
10/1/97 10/1/96 10/1/97 1/31/97 10/1/97 1/31/97
TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97 TO 3/31/98 TO 9/30/97
- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 33,408 $18,552 $4,270 $ -- $3,793 $ --
-------- ------- ------ ------ ------ ------
$ 43,269 $33,408 $5,186 $4,270 $2,518 $3,793
======== ======= ====== ====== ====== ======
669 1,198 168 380 48 322
52 6 3 -- 2 --
(332) (726) (83) (83) (162) (9)
-------- ------- ------ ------ ------ ------
389 478 88 297 (112) 313
-------- ------- ------ ------ ------ ------
22 106 7 55 3 33
4 -- 1 -- 1 --
(5) (4) (11) (1) (7) (1)
-------- ------- ------ ------ ------ ------
21 102 (3) 54 (3) 32
-------- ------- ------ ------ ------ ------
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
-------- ------- ------ ------ ------ ------
-- -- -- -- -- --
-------- ------- ------ ------ ------ ------
410 580 85 351 (115) 345
======== ======= ====== ====== ====== ======
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) TRUST CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(2) RETAIL CLASS FOR TREASURY SECURITIES MONEY MARKET FUND AND TAX EXEMPT MONEY MARKET FUND.
(3) CASH SWEEP CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(4) THE STRATEGIC INCOME BOND FUND, SMALL CAP EQUITY FUND AND INTERNATIONAL EQUITY FUND COMMENCED
OPERATIONS ON JANUARY 31, 1997.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
38 & 39 MARCH 31, 1998
<PAGE>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT THE SIX-MONTH PERIOD ENDED MARCH 31, 1998 AND
THE PERIODS ENDED SEPTEMBER 30.
<TABLE>
<CAPTION>
NET ASSET REALIZED DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT VALUE TOTAL END OF
OF PERIOD INCOME ON INVESTMENTS INCOME END OF PERIOD RETURN+ PERIOD (000)
- -----------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 $ 1.00 $0.03 -- $(0.03) $ 1.00 5.41%* $115,350
1997 1.00 0.05 -- (0.05) 1.00 5.29 58,516
1996 1.00 0.05 -- (0.05) 1.00 5.33 28,004
1995(4) 1.00 0.01 -- (0.01) 1.00 5.55* 31,314
- -----------------------------------------------------------------------------------------------------------------------------
TREASURY SECURITIES MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------
TRUST CLASS
1998 $ 1.00 $0.03 -- $(0.03) $ 1.00 5.16%* $409,395
1997 1.00 0.05 -- (0.05) 1.00 5.04 556,957
1996 1.00 0.05 -- (0.05) 1.00 5.06 637,819
1995 1.00 0.05 -- (0.05) 1.00 5.33 521,270
1994 1.00 0.03 -- (0.03) 1.00 3.22 403,778
RETAIL CLASS
1998 $ 1.00 $0.02 -- $(0.02) $ 1.00 4.95%* $610,485
1997 1.00 0.05 -- (0.05) 1.00 4.83 604,919
1996 1.00 0.05 -- (0.05) 1.00 4.86 411,068
1995 1.00 0.05 -- (0.05) 1.00 5.16 282,747
1994(1) 1.00 0.03 -- (0.03) 1.00 3.15* 86,848
- -----------------------------------------------------------------------------------------------------------------------------
SWEEP CLASS
1998 $ 1.00 $0.02 -- $(0.02) $ 1.00 4.60%* $203,052
1997(10) 1.00 0.03 -- (0.03) 1.00 4.46* 202,212
- -----------------------------------------------------------------------------------------------------------------------------
TAX EXEMPT MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL CLASS
1998 $ 1.00 $0.02 -- $(0.02) $ 1.00 3.17%* $135,806
1997 1.00 0.03 -- (0.03) 1.00 3.12 76,744
1996(5) 1.00 0.01 -- (0.01) 1.00 2.83* 66,214
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $ 9.94 $0.27 $ 0.11 $(0.27) $10.05 3.90% $148,648
1997 9.71 0.55 0.23 (0.55) 9.94 8.22 149,022
1996 9.87 0.55 (0.16) (0.55) 9.71 4.10 160,317
1995 9.41 0.54 0.46 (0.54) 9.87 10.84 124,404
1994 10.00 0.43 (0.59) (0.43) 9.41 (1.66) 97,562
CLASS B
1998 $ 9.99 $0.24 $ 0.11 $(0.24) $10.10 3.50% $ 1,145
1997 9.76 0.47 0.24 (0.48) 9.99 7.40 1,062
1996 9.92 0.46 (0.15) (0.47) 9.76 3.23 523
1995 9.46 0.46 0.47 (0.47) 9.92 10.10 244
1994(2) 10.04 0.31 (0.58) (0.31) 9.46 (2.84)* 147
- -----------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
RATIO OF NET EXPENSES TO INVESTMENT
RATIO OF INVESTMENT AVERAGE NET INCOME TO
EXPENSES TO INCOME TO ASSETS AVERAGE PORTFOLIO
AVERAGE AVERAGE (EXCLUDING NET ASSETS TURNOVER
NET ASSETS NET ASSETS WAIVERS) (EXCLUDING WAIVERS) RATE
- -----------------------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 0.25% 5.31% 0.40% 5.16% --
1997 0.25 5.19 0.36 5.08 --
1996 0.25 5.19 0.34 5.10 --
1995(4) 0.25* 5.56* 0.60* 5.21* --
- -----------------------------------------------------------------------------------------------
TREASURY SECURITIES MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------
TRUST CLASS
1998 0.50% 5.07% 0.53% 5.04% --
1997 0.50 4.92 0.50 4.92 --
1996 0.50 4.92 0.53 4.89 --
1995 0.50 5.23 0.57 5.16 --
1994 0.50 3.15 0.60 3.05 --
RETAIL CLASS
1998 0.70% 4.87% 0.78% 4.79% --
1997 0.70 4.73 0.75 4.68 --
1996 0.70 4.72 0.78 4.64 --
1995 0.68 5.12 0.82 4.98 --
1994(1) 0.59* 3.27* 0.83* 3.03* --
- -----------------------------------------------------------------------------------------------
SWEEP CLASS
1998 1.00% 4.57% 1.33% 4.24% --
1997(10) 1.00* 4.57* 1.25* 4.32* --
- -----------------------------------------------------------------------------------------------
TAX EXEMPT MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------
RETAIL CLASS
1998 0.65% 3.02% 0.94% 2.73% --
1997 0.65 3.07 0.95 2.77 --
1996(5) 0.65* 2.92* 1.12* 2.45* --
- -----------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUNd
- -----------------------------------------------------------------------------------------------
CLASS A
1998 0.70% 5.45% 0.78% 5.37% 3.20%
1997 0.70 5.54 0.76 5.48 11.88
1996 0.70 5.53 0.79 5.44 22.80
1995 0.70 5.63 0.84 5.49 18.33
1994 0.70 4.43 0.90 4.23 37.80
CLASS B
1998 1.45% 4.71% 1.53% 4.63% 3.20%
1997 1.45 4.81 1.51 4.75 11.88
1996 1.45 4.81 1.54 4.72 22.80
1995 1.45 4.86 1.59 4.72 18.33
1994(2) 1.45* 3.88* 1.69* 3.64* 37.80
- -----------------------------------------------------------------------------------------------
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
+ TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
* ANNUALIZED.
(1)COMMENCED OPERATIONS ON OCTOBER 19, 1993.
(2)COMMENCED OPERATIONS ON OCTOBER 22, 1993.
(3)COMMENCED OPERATIONS ON NOVEMBER 22, 1993.
(4)COMMENCED OPERATIONS ON AUGUST 10, 1995.
(5)COMMENCED OPERATIONS ON JUNE 7, 1996.
(6)COMMENCED OPERATIONS ON MARCH 1, 1996.
(7)COMMENCED OPERATIONS ON APRIL 19, 1996.
(8)COMMENCED OPERATIONS ON JANUARY 31, 1997.
(9)COMMENCED OPERATIONS ON FEBRUARY 3, 1997.
(10)COMMENCED OPERATIONS ON FEBRUARY 26, 1997.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
MARCH 31, 1998 40 & 41
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT THE SIX-MONTH PERIOD ENDED MARCH 31, 1998
AND THE PERIODS ENDED SEPTEMBER 30.
NET ASSET REALIZED DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET FROM NET ASSET
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE TOTAL
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS END OF PERIOD RETURN+
- ---------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1998 $10.14 $0.31 $ 0.15 $(0.31) -- $10.29 4.52%
1997 (8) 10.00 0.39 0.14 (0.39) -- 10.14 8.26*
CLASS B
1998 $10.14 $0.29 $ 0.13 $(0.27) -- $10.29 4.15%
1997(8) 10.00 0.33 0.16 (0.35) -- 10.14 7.57*
- ---------------------------------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $10.11 $0.21 $ 0.09 $(0.21) -- $10.20 2.95%
1997 9.79 0.43 0.32 (0.43) -- 10.11 7.77
1996 9.79 0.42 .-- (0.42) -- 9.79 4.48
1995 9.38 0.42 0.41 (0.42) -- 9.79 9.01
1994 10.00 0.36 (0.62) (0.36) -- 9.38 (2.68)
CLASS B
1998 $10.11 $0.16 $ 0.10 $(0.17) -- $10.20 2.59%
1997 9.79 0.34 0.33 (0.35) -- 10.11 6.99
1996 9.79 0.35 .-- (0.35) -- 9.79 3.60
1995 9.39 0.35 0.40 (0.35) -- 9.79 8.21
1994 (3) 9.87 0.27 (0.48) (0.27) -- 9.39 (2.58)*
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $13.25 $0.18 $ 0.82 $(0.18) $(1.04) $13.03 8.28%
1997 11.31 0.36 2.44 (0.36) (0.50) 13.25 26.10
1996 10.87 0.38 0.59 (0.38) (0.15) 11.31 9.11
1995 9.59 0.37 1.28 (0.37) -- 10.87 17.58
1994 10.00 0.31 (0.41) (0.31) -- 9.59 (1.02)
CLASS B
1998 $13.32 $0.13 $ 0.81 $(0.13) $(1.04) $13.09 7.78%
1997 11.37 0.26 2.47 (0.28) (0.50) 13.32 25.19
1996 10.93 0.30 0.59 (0.30) (0.15) 11.37 8.30
1995 9.64 0.30 1.29 (0.30) -- 10.93 16.75
1994 (2) 10.03 0.18 (0.39) (0.18) -- 9.64 (2.24)*
- ---------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
RATIO OF NET EXPENSES TO INVESTMENT
RATIO OF INVESTMENT AVERAGE NET INCOME TO
NET ASSETS EXPENSES TO INCOME TO ASSETS AVERAGE PORTFOLIO AVERAGE
END OF AVERAGE AVERAGE (EXCLUDING NET ASSETS TURNOVER COMMISSION
PERIOD (000) NET ASSETS NET ASSETS WAIVERS) (EXCLUDING WAIVERS) RATE RATE**
- -------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1998 $ 16,239 0.91% 5.97% 1.22% 5.66% 14.42% n/a
1997 (8) 15,562 0.90* 6.22* 1.43* 5.69* 1.34 n/a
CLASS B
1998 $ 606 1.66% 5.23% 1.97% 4.92% 14.42% n/a
1997(8) 470 1.65* 5.49* 2.13* 5.01* 1.34 n/a
- -------------------------------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $ 44,055 0.65% 4.12% 0.69% 4.08% 0.09% n/a
1997 38,471 0.61 4.35 0.65 4.31 0.77 n/a
1996 20,937 0.65 4.38 0.75 4.28 8.26 n/a
1995 11,705 0.65 4.51 0.95 4.21 2.31 n/a
1994 6,971 0.65 4.10 1.72 3.03 30.31 n/a
CLASS B
1998 $ 2,082 1.40% 3.38% 1.44% 3.34% 0.09% n/a
1997 1,137 1.36 3.61 1.40 3.57 0.77 n/a
1996 727 1.40 3.62 1.50 3.52 8.26 n/a
1995 567 1.40 3.77 1.70 3.47 2.31 n/a
1994 (3) 601 1.40* 3.35* 2.47* 2.28* 30.31 n/a
- -------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $144,548 0.90% 2.89% 0.97% 2.82% 11.53% $.0702
1997 134,941 0.90 3.05 0.96 2.99 40.97 .0796
1996 114,384 0.89 3.53 1.01 3.41 57.22 .0794
1995 87,076 0.85 3.70 1.04 3.51 55.06 n/a
1994 71,379 0.85 3.18 1.14 2.89 64.09 n/a
CLASS B
1998 $ 4,798 1.65% 2.15% 1.72% 2.08% 11.53% $.0702
1997 3,939 1.65 2.28 1.71 2.22 40.97 .0796
1996 1,996 1.64 2.80 1.76 2.68 57.22 .0794
1995 1,137 1.60 2.95 1.79 2.76 55.06 n/a
1994 (2) 868 1.60* 2.55* 1.94* 2.21* 64.09 n/a
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
+ TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
(1)COMMENCED OPERATIONS ON OCTOBER 19, 1993.
(2)COMMENCED OPERATIONS ON OCTOBER 22, 1993.
(3)COMMENCED OPERATIONS ON NOVEMBER 22, 1993.
(4)COMMENCED OPERATIONS ON AUGUST 10, 1995.
(5)COMMENCED OPERATIONS ON JUNE 7, 1996.
(6)COMMENCED OPERATIONS ON MARCH 1, 1996.
(7)COMMENCED OPERATIONS ON APRIL 19, 1996.
(8)COMMENCED OPERATIONS ON JANUARY 31, 1997.
(9)COMMENCED OPERATIONS ON FEBRUARY 3, 1997.
(10)COMMENCED OPERATIONS ON FEBRUARY 26, 1997.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
42 & 43 MARCH 31, 1998
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT THE SIX-MONTH PERIOD ENDED MARCH 31, 1998 AND
THE PERIODS ENDED SEPTEMBER 30.
NET ASSET REALIZED DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET FROM NET ASSET
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME GAINS END OF PERIOD RETURN+
- ----------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1998 $17.44 $ 0.08 $ 1.68 $(0.08) $(2.19) $16.93 11.69%
1997 12.93 0.19 5.32 (0.19) (0.81) 17.44 45.27
1996 11.81 0.25 1.30 (0.25) (0.18) 12.93 13.38
1995 9.65 0.24 2.16 (0.24) -- 11.81 25.13
1994 10.00 0.18 (0.35) (0.18) -- 9.65 (1.64)
CLASS B
1998 $17.50 $ 0.02 $ 1.68 $(0.02) $(2.19) $16.99 11.29%
1997 12.97 0.09 5.34 (0.09) (0.81) 17.50 44.31
1996 11.86 0.17 1.29 (0.17) (0.18) 12.97 12.49
1995 9.70 0.15 2.17 (0.16) -- 11.86 24.17
1994 (2) 9.95 0.08 (0.25) (0.08) -- 9.70 (1.82)*
- ----------------------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $15.81 $ 0.02 $ 1.80 $(0.02) $(0.45) $17.16 11.95%
1997 12.10 0.06 3.71 (0.06) -- 15.81 31.25
1996 (6) 11.00 0.05 1.10 (0.05) -- 12.10 10.46
CLASS B
1998 $15.74 $(0.03) $ 1.78 -- $(0.45) $17.04 11.55%
1997 12.07 0.03 3.64 -- -- 15.74 30.41
1996 (7) 11.14 0.01 0.93 $(0.01) -- 12.07 8.48
- ----------------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $12.21 $(0.01) $(0.09) -- $(0.15) $11.96 (0.58)%
1997 (9) 10.00 (0.01) 2.22 -- -- 12.21 33.61*
CLASS B
1998 $12.16 $(0.06) $(0.08) -- $(0.15) $11.87 (0.91)%
1997 (9) 10.00 (0.02) 2.18 -- -- 12.16 32.85*
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $10.98 $ 0.43 $0.08 $(0.42) $(0.16) $10.91 5.35%
1997 (9) 10.00 (0.01) 0.99 -- -- 10.98 14.90*
CLASS B
1998 $10.94 $ 0.35 $0.11 $(0.39) $(0.16) $10.85 4.97%
1997 (9) 10.00 (0.03) 0.97 -- -- 10.94 14.30*
- ----------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
RATIO OF NET EXPENSES TO INVESTMENT
RATIO OF INVESTMENT AVERAGE NET INCOME (LOSS)
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS TO AVERAGE PORTFOLIO AVERAGE
END OF AVERAGE TO AVERAGE (EXCLUDING NET ASSETS TURNOVER COMMISSION
PERIOD (000) NET ASSETS NET ASSETS WAIVERS) (EXCLUDING WAIVERS) RATE RATE**
- ------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1998 $148,113 1.00% 0.97% 1.01% 0.96% 30.46% $.0800
1997 134,117 1.00 1.33 1.00 1.33 97.91 .0798
1996 93,508 0.97 2.12 1.02 2.07 95.93 .0795
1995 58,854 0.90 2.40 1.07 2.23 97.88 n/a
1994 41,922 0.90 1.95 1.17 1.68 161.42 n/a
CLASS B
1998 $ 12,562 1.75% 0.23% 1.76% 0.22% 30.46% $.0800
1997 9,944 1.75 0.55 1.75 0.55 97.91 .0798
1996 3,990 1.73 1.37 1.77 1.33 95.93 .0795
1995 1,288 1.65 1.62 1.82 1.45 97.88 n/a
1994 (2) 389 1.65* 1.30* 1.93* 1.02* 161.42 n/a
- ------------------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $ 40,972 1.00% 0.26% 1.04% 0.22% 19.83% $.0583
1997 31,608 1.00 0.46 1.04 0.42 65.12 .0799
1996 (6) 18,400 1.00* 0.73* 1.12* 0.61* 91.09 .0797
CLASS B
1998 $ 2,297 1.75% (0.49)% 1.79% (0.53)% 19.83% $.0583
1997 1,800 1.75 (0.30) 1.79 (0.34) 65.12 .0799
1996 (7) 152 1.75* (0.02)* 1.87* (0.14)* 91.09 .0797
- ------------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $ 4,587 0.20% (0.20)% 1.43% (1.43)% 15.25% n/a
1997 (9) 3,616 0.20* (0.20)* 1.79* (1.79)* 29.56 n/a
CLASS B
1998 $ 599 0.95% (0.95)% 2.18% (2.18)% 15.25% n/a
1997 (9) 654 0.95* (0.95)* 2.61* (2.61)* 29.56 n/a
- ------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
1998 $ 2,195 0.27% 8.48% 1.69% 7.06% 23.95% n/a
1997 (9) 3,435 0.27* (0.27)* 2.21* (2.21)* 4.69 n/a
CLASS B
1998 $ 323 1.02% 7.15% 2.44% 5.73% 23.95% n/a
1997 (9) 358 1.02* (1.02)* 2.86* (2.86)* 4.69 n/a
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
+ TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
(1) COMMENCED OPERATIONS ON OCTOBER 19, 1993.
(2) COMMENCED OPERATIONS ON OCTOBER 22, 1993.
(3) COMMENCED OPERATIONS ON NOVEMBER 22, 1993.
(4) COMMENCED OPERATIONS ON AUGUST 10, 1995.
(5) COMMENCED OPERATIONS ON JUNE 7, 1996.
(6) COMMENCED OPERATIONS ON MARCH 1, 1996.
(7) COMMENCED OPERATIONS ON APRIL 19, 1996.
(8) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(9) COMMENCED OPERATIONS ON FEBRUARY 3, 1997.
(10) COMMENCED OPERATIONS ON FEBRUARY 26, 1997.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
44 & 45 MARCH 31, 1998
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
The Marquis Funds (the "Trust") was organized as a Massachusetts business trust
under a Declaration of Trust dated June 29, 1993. The Trust is registered under
the Investment Company Act of 1940, as amended, as an open-end management
company with eleven series funds: Institutional Money Market Fund, Treasury
Securities Money Market Fund, Tax Exempt Money Market Fund (the "Money Market
Funds"), Government Securities Fund, Strategic Income Bond Fund, Louisiana
Tax-Free Income Fund, Balanced Fund (formerly the "Growth and Income Fund"),
Value Equity Fund, Growth Equity Fund, Small Cap Equity Fund, and International
Equity Fund (the "Non-Dollar Funds"). Each Fund's prospectus provides a
description of the Fund's investment objectives, policies and strategies. The
assets of each Fund are segregated, and a shareholder's interest is limited to
the Fund in which shares are held. The Trust is registered to offer the
following classes of shares: Trust, Retail, and the Cash Sweep Class in the
Treasury Securities Money Market Fund, Retail and the Cash Sweep in the
Tax-Exempt Money Market and Class A and Class B in the Non-Dollar Funds. The
Small Cap Equity Fund and the International Equity Fund are currently "feeder"
funds in separate Corporate Master-Feeder(TM) structures. That is, the Small Cap
Equity Fund and International Equity Fund each currently invest in another
open-end management investment company with the same investment objectives and
hold as their only investment securities, shares of a single "master" fund, in
this case, the SEI Institutional Managed Trust Small Cap Growth Portfolio and
the SEI Institutional International Trust (formerly, the SEI International
Trust) International Equity Portfolio, respectively. However, in certain
instances the Funds are permitted to invest in securities other than a single
open-end management investment company.
2. SIGNIFICANT ACCOUNTING
POLICIES
The following is a summary of the significant accounting policies followed by
the Funds.
SECURITIES VALUATION -- Investments in equity securities that are traded on a
national securities exchange (or reported on the NASDAQ national market system)
are stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt obligations
exceeding sixty days to maturity for which market quotations are readily
available are valued at the most recently quoted bid price. Debt obligations
with sixty days or less remaining until
46 MARCH 31, 1998
<PAGE>
maturity may be valued at their amortized cost. Under this valuation method,
purchase discounts and premiums are accreted and amortized ratably to maturity
and are included in interest income. Restricted and illiquid securities for
which quotations are not readily available are valued at fair value using
methods determined in good faith as approved by the Board of Trustees.
The investments of the Small Cap Equity and International Equity Funds (the
"Feeder" funds) in the SEI Institutional Managed Trust Small Cap Growth
Portfolio and the SEI Institutional International Trust (formerly, the SEI
International Trust) International Equity Portfolio (the "Master Funds"),
respectively, are valued at the net asset value per share of each Master Fund
determined as of the close of the New York Stock Exchange.
FEDERAL INCOME TAXES -- It is each Fund's intention to continue to qualify as a
regulated investment company for federal income tax purposes by complying with
the appropriate provisions of the Internal Revenue Code of 1986, as amended, and
to distribute all of its taxable income and net capital gains. Accordingly, no
provision for federal income taxes has been made in the accompanying financial
statements.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend income
is recognized on the ex-dividend date, and interest income is recognized on the
accrual basis. Costs used in determining realized gains and losses on the sales
of investment securities are those of the specific securities sold adjusted for
the accretion and amortization of purchase discounts and premiums during the
respective holding period. Purchase discounts and premiums on securities held by
the Non-Dollar Funds are accreted and amortized to maturity using the scientific
interest method, which approximates the effective interest method.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value of
the collateral, including accrued interest thereon, is sufficient in the event
of default of the counterparty. The Funds also invest in tri-party repurchase
agreements. Securities held as collateral for tri-party repurchase agreements
are maintained in a segregated account by the broker's custodian bank until
maturity of the repurchase agreement. If the counterparty defaults and the value
of the collateral declines, or if the counter-party enters an insolvency
proceeding, realization of the collateral by the Funds may be delayed or
limited.
NET ASSET VALUE PER SHARE -- The net asset value per share of each Fund is
calculated each business day. In general, it is computed by dividing the assets
of each Fund, less its liabilities, by the number of outstanding shares of the
Fund.
MARCH 31, 1998 47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
EXPENSES -- Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses are prorated to the Funds on the
basis of relative net assets. Class specific expenses are borne by that class.
Income, expenses, and realized and unrealized gains/losses are allocated to the
respective classes on the basis of relative daily net assets.
DISTRIBUTIONS -- Distributions from net investment income are declared and paid
quarterly for the Balanced Fund, Value Equity Fund, Growth Equity Fund and Small
Cap Equity Fund. Distributions from net investment income are declared daily and
paid monthly for the Institutional Money Market Fund, Treasury Securities Money
Market Fund, and Tax Exempt Money Market Fund.
Distributions from net investment income are declared and paid monthly for the
Government Securities Fund, Strategic Income Bond Fund and Louisiana Tax-Free
Income Fund. Any net realized capital gains are declared and distributed to
shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with U.S. Federal income tax regulations, which may
differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are charged or
credited to paid in capital in the period that the differences arises.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The preparation
of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
3. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS
First National Bank of Commerce in New Orleans (the "Adviser") serves as
investment adviser to each Fund pursuant to an investment advisory agreement
(the "Advisory Agreement") with the Trust. For its services, the Adviser is
entitled to a fee, that is calculated daily and paid monthly, at an annual rate
based on the average daily net assets of each Fund as follows: Institutional
Money Market Fund -- .15%, Treasury Securities Money Market Fund -- .30%, Tax
Exempt Money Market Fund -- .45%, Government Securities Fund -- .55%, Strategic
Income Bond Fund -- .74%, Louisiana Tax-Free Income Fund -- .35%, Balanced Fund
- -- .74%, Value Equity Fund -- .74%, Growth Equity Fund -- .74%, Small Cap Equity
Fund -- .40%, and International Equity Fund -- .40%. The Adviser has voluntarily
agreed to waive a portion of its fee so that expenses of each Fund will not
exceed certain annual expense limitations. The Adviser reserves the
48 MARCH 31, 1998
<PAGE>
right to terminate its waiver at any time in its sole discretion.
Weiss, Peck & Greer, L.L.C. serves as the investment sub-adviser for the Tax
Exempt Money Market Fund pursuant to a sub-advisory agreement with the Adviser.
The sub-advisory fees are paid by the Adviser.
The Trust and SEI Fund Resources (the "Administrator") have entered into an
Administration Agreement. SEI Investments Management Corporation, a wholly-owned
subsidiary of SEI Investments, is the owner of all beneficial interest in the
Administrator. Under terms of the Administration Agreement, the Administrator is
entitled to a fee calculated daily and paid monthly at an annual rate of .10% of
the average daily net assets of the Institutional Money Market Fund and .15% of
the average daily net assets of the Treasury Securities Money Market Fund, Tax
Exempt Money Market Fund, Government Securities Fund, Strategic Income Bond
Fund, Louisiana Tax-Free Income Fund, Balanced Fund, Value Equity Fund, Growth
Equity Fund, Small Cap Equity Fund, and International Equity Fund. The
Administrator has voluntarily agreed to waive a portion of its fee so that
expenses of each Fund will not exceed certain annual expense limitations. The
Administrator reserves the right to terminate its waiver at any time in its sole
discretion.
The Trust and SEI Investments Distribution Co. (the "Distributor") have entered
into a Distribution Agreement. As provided in certain Distribution Plans adopted
under the Distribution Agreement, the Trust will pay a fee at an annual rate of
.25% of the average daily net assets of the Retail Class of the Treasury
Securities Money Market Fund and Tax Exempt Money Market Fund, and .75% of the
Class B shares of the Non-Dollar Funds and the Cash Sweep Class of the Treasury
Securities Money Market Fund to the Distributor as compensation for its
services. The Distributor has agreed to waive a portion of its fee from the
Treasury Securities Money Market Fund and the Tax Exempt Money Market Fund in
order to maintain a competitive expense ratio. The Distributor reserves the
right to terminate its waiver at any time in its sole discretion.
In addition to the fees paid at the feeder level for the Small Cap Equity and
International Equity Funds, each Feeder Fund's shareholders will bear indirectly
their prorata portion of the advisory, administrative, distribution and other
expenses of the respective Master Funds in which they invest.
The Class A shares of the Non-Dollar Funds are subject to a maximum sales load
of 3.50%.
There is a contingent deferred sales charge on the Class B shares of the
Non-Dollar Funds which varies depending on the number of years from time of
payment for the purchase of shares until the time of redemption of such shares
(the "holding period"). Solely for the purpose of determining the number of
years from the time of any payment for the purchase of shares, all payments
during the month are aggregated and deemed to have been made on the first day of
the month.
MARCH 31, 1998 49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEAR SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
------------ -------------------------
First 3.50%
Second 2.75%
Third 2.00%
Fourth 1.25%
Fifth 0.50%
Sixth None
4. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES
Organizational costs have been capitalized by the Funds and are being amortized
over sixty months commencing with operations. In the event any of the initial
shares of the Funds are redeemed by any holder thereof during the period that
the Funds are amortizing their organizational costs, the redemption proceeds
payable to the holder thereof will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption. These costs
include legal fees of approximately $54,278 for organizational work performed by
a law firm of which an officer and a trustee of the Trust are partners. Certain
officers and trustees of the Trust who are officers of the Administrator and the
Distributor received no compensation from the Trust.
5. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than short-term investments, for the period ended March 31, 1998 were as
follows:
STRATEGIC LOUISIANA
GOVERNMENT INCOME TAX-FREE
SECURITIES BOND INCOME BALANCED
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- ---------- ---------- ----------
PURCHASES:
U.S.
Government $ 2,463 $1,252 $ -- $10,202
Other 1,935 2,561 4,057 8,869
SALES:
U.S.
Government $ 7,879 $1,788 $ -- $ 1,163
Other 2,835 247 35 14,296
INTER-
VALUE GROWTH SMALL CAP NATIONAL
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- -------- --------- --------
PURCHASES:
U.S.
Government $ -- $ -- $ -- $ --
Other 43,578 11,669 2,154 638
SALES:
U.S.
Government $ -- $ -- $ -- $ --
Other 45,861 7,040 732 1,796
On March 31, 1998, the total cost of securities and the net realized gains or
losses on securities sold for federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation on securities at March 31, 1998,
for each Non-Dollar Fund are as follows:
50 MARCH 31, 1998
<PAGE>
STRATEGIC LOUISIANA
GOVERNMENT INCOME TAX-FREE
SECURITIES BOND INCOME BALANCED
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- ---------- ---------- ----------
Aggregate Gross
Unrealized
Appreciation $1,883 $495 $1,385 $26,597
Aggregate Gross
Unrealized
Depreciation (177) (9) (28) (1,106)
------- ------- ------- -------
Net Unrealized
Appreciation/
(Depreciation) $1,706 $486 $1,357 $25,491
======= ======= ======= =======
INTER-
VALUE GROWTH SMALL CAP NATIONAL
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- -------- --------- --------
Aggregate Gross
Unrealized
Appreciation $41,409 $12,203 $511 $24
Aggregate Gross
Unrealized
Depreciation (1,569) (804) -- --
------- ------- ------- -------
Net Unrealized
Appreciation/
(Depreciation) $39,840 $11,399 $511 $24
======= ======= ======= =======
6. CONCENTRATION OF CREDIT RISK
The Institutional Money Market Fund and the Treasury Securities Money Market
Fund invest primarily in a portfolio of money market instruments maturing in one
year or less whose ratings are within the highest ratings category assigned by a
nationally recognized statistical rating agency or, if not rated, are believed
to be of comparable quality.
The Tax Exempt Money Market Fund invests in debt instruments of municipal
issuers. The issuers' ability to meet their obligations may be affected by
economic developments in a specific state or region.
The Tax Exempt Money Market Fund invests in securities that include revenue
bonds, tax and revenue anticipation notes, and general obligation bonds. At
March 31, 1998, the percentages of portfolio investments by each revenue source
were as follows:
TAX EXEMPT
MONEY MARKET FUND
-----------------
Revenue Bonds 62%
Anticipation Notes 28%
General Obligations 7%
Tax-Exempt
Commercial Paper 3%
-----------------
Total 100%
=================
The Government Securities, Strategic Income Bond and Balanced Funds invest in
debt instruments.
The Louisiana Tax-Free Income Fund is more susceptible to factors adversely
affecting issuers of Louisiana municipal securities than a comparable municipal
bond fund that does not concentrate its investments in Louisiana municipal
securities.
The following table presents a summary of holdings in the Government Securities,
Strategic Income Bond and Louisiana Tax-Free Income Funds as of March 31, 1998.
MARCH 31, 1998 51
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
STRATEGIC LOUISIANA
GOVERNMENT INCOME TAX-FREE
SECURITIES BOND INCOME
RATING FUND FUND FUND
- --------- ---------- --------- ---------
AAA 89% 28% 80%
AA --% 5% --
A --% 40% 4%
BBB -- 24% --
Not Rated 11% 3% 16%
---------- --------- ---------
100% 100% 100%
========== ========= =========
These percentages are stated as a percentage of total investments. U.S.
Government Securities represent obligations issued or guaranteed by the U.S.
Government and its agencies or instrumentalities. Repurchase agreements are
collateralized by U.S. Government Securities and are included in Not Rated
above.
7. CAPITAL LOSS CARRYFORWARDS
The Funds had capital loss carryforwards and post-October deferred losses at
September 30, 1997, to the extent provided in the regulations for federal income
tax as follows:
POST
CAPITAL LOSS OCTOBER 31,
CARRYFORWARDS EXPIRING 1996
--------------------------- DEFERRED
FUNDS 2003 2004 2005 LOSSES
- -------- --------------------------- ---------
Government
Securities
Fund $679,660 $124,634 $ -- $19,540
Louisiana
Tax-Free
Income
Fund 32,125 2,083 19,720 --
Small Cap
Equity Fund -- -- -- 9,414
For tax purposes, capital losses can be carried forward for a maximum of eight
years to offset any future net realized capital gains. Post-October deferred
losses have been deferred to fiscal year 1998 for tax purposes.
8. MERGER
On October 20, 1997, First Commerce Corporation -- the parent of First National
Bank of Commerce in New Orleans, the Marquis Funds' investment adviser -- and
Banc One Corporation, the parent of Banc One, Louisiana, announced that they
have signed a definitive agreement for the merger of First Commerce with Banc
One. Subject to certain conditions being met, it is currently anticipated that
First Commerce will merge with Banc One by the end of June 1998.
It is expected that each of the Marquis Funds will eventually merge into a
comparable One Group Fund.
52 MARCH 31, 1998
<PAGE>
[LOGO OMITTED]
MARQUIS
FAMILY OF FUNDS
High Quality. High Standards. Highly Personal.
Investment Adviser
First National Bank of Commerce in New Orleans
201 St. Charles Avenue
New Orleans, LA 70170
Administrator
SEI Fund Resources
Oaks, PA 19456
Transfer Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Independent Public Accountants
Arthur Andersen LLP
1601 Market Street
Philadelphia, PA 19103
- --------------------------------------------------------------------------------
The Marquis Funds:
NOT FDIC INSURED [BULLET] NO BANK GUARANTEE [BULLET] MAY LOSE VALUE
- --------------------------------------------------------------------------------
The First NBC Trust Group is a department of First National Bank of Commerce
("First NBC"), a wholly owned subsidiary of First Commerce Corporation ("FCC").
First NBC serves as investment adviser and custodian for the Marquis Funds;
remuneration may be earned for such services. The Marquis Funds are distributed
by SEI Investments Distribution Co., which is not affiliated with FCC, First
NBC, Marquis Investments, LLC, or any affiliates thereof.
This material must be preceded or accompanied by a current prospectus.
(C) 1998 MRQ-F-005-05
<PAGE>
[ART OMITTED]
ANNUAL
REPORT
SEPTEMBER 30, 1997
[MARQUIS LOGO]
High Quality. High Standards. Highly Personal.
[ART OMITTED]
<PAGE>
TABLE OF CONTENTS
Letter to Shareholders 1
Investment Adviser's Report 3
Management's Discussion &
Analysis of Fund Performance 7
Report of Independent Public Accountants 20
Statements of Net Assets 21
Statements of Operations 50
Statements of Changes in Net Assets 52
Financial Highlights 56
Notes to Financial Statements 62
Notice to Shareholders 69
FUND PORTFOLIOS TRADING SYMBOLS
MONEY MARKET FUNDS TRUST RETAIL
Institutional Money Market Fund N/A N/A
Treasury Securities Money Market Fund MQTXX MQRXX
Tax Exempt Money Market Fund N/A MQEXX
FIXED INCOME FUNDS A SHARES B SHARES
Government Securities Fund MQGAX MFGSB
Strategic Income Bond Fund MSIAX N/A
Louisiana Tax-Free Income Fund MQLAX MFLTF
BALANCED FUNDS
Balanced Fund MQIAX MFGIB
EQUITY FUNDS
Value Equity Fund MQVAX MFVEB
Growth Equity Fund MNEUX N/A
Small Cap Equity Fund N/A N/A
International Equity Fund N/A N/A
<PAGE>
LETTER TO SHAREHOLDERS
DEAR SHAREHOLDER:
As we commemorate the fourth full year of the Marquis Family of Funds, we can
look back on significant accomplishments for the twelve months ended September
30, 1997.
A NEW MILESTONE: $2 BILLION IN ASSETS
First, we are pleased to report that the total assets in our fund family
recently reached $2 billion for the first time, making the Marquis Funds the
largest complex of its kind in the state of Louisiana. This is a remarkable
achievement for a family that began just four years ago with initial assets of
only $494 million. And it demonstrates that individual and institutional
shareholders value the convenience of investing through an institution they know
and trust. It also shows that they respect the prudent approach of our stable,
experienced investment management team.
THREE NEW FUNDS IN 1997
Second, we have increased the number of funds in our family to eleven in the
past year, with the addition of the Marquis International Equity Fund, the
Marquis Small Cap Equity Fund, and the Marquis Strategic Income Bond Fund. These
funds have brought new diversity and balance to our fund family. They enable
investors to plan for a full range of lifetime financial goals and to adopt the
investment strategy that best suits their needs at any point in the overall
market cycle.
THE NEW TAX LAW
Looking beyond our fund family, one of the most important events for our
investors during the past twelve months was the recent passage of the Federal
Taxpayer Relief Act of 1997. This act contains a number of provisions that are
potentially beneficial for investors, including:
[BULLET] LOWER CAPITAL GAINS TAX RATES: Beginning with the 1997 tax year, a new
set of capital gains tax rules establishes lower rates for those who
sell investments that have appreciated. We believe that these new rates
will allow individuals new opportunities in making investment decisions
and will enhance the overall health and liquidity of the markets.
[BULLET] NEW IRA RULES: The new law also relaxes the rules on IRA contributions
and withdrawals and establishes two new types of IRAs: The Roth IRA and
the Education IRA. With the exception of our tax-free portfolios, all
Marquis Funds are appropriate for use in these accounts. We hope you
will select our fund family for these potential new investments.
SEPTEMBER 30, 1997 1
<PAGE>
LETTER TO SHAREHOLDERS
[BULLET] CHANGES TO ESTATE TAXES: The new law gradually raises the amount that
is exempt from gift and estate taxes, starting with an increase to
$625,000 in 1998 and reaching $1 million in the year 2006. This is a
welcome change for a growing number of individuals, as rising values of
such commonly-held assets as investments and homes continue to push
more and more estates over the previous threshold of $600,000.
Due to the complexity of the Taxpayer Relief Act, we encourage all investors to
consult with their tax advisors, as well as their investment consultants,
regarding how to take advantage of the new provisions.
As we close fiscal 1997, we thank you, our investors, for enabling our fund
family to grow larger, stronger, and more diverse. We look forward to continuing
to serve your investment needs.
Sincerely,
/S/ SIGNATURE
Suzanne T. Mestayer
Executive Vice President
First National Bank of Commerce
2 SEPTEMBER 30, 1997
<PAGE>
INVESTMENT ADVISER'S REPORT
DEAR SHAREHOLDER:
For investors, fiscal 1997 was the best of times, and the best of times.
It was the best of times in the U.S. economy, where low inflation and moderate
growth fit the textbook definition of an ideal world.
And, it was the best of times in the financial markets, where all three asset
classes -- stocks, bonds, and money market instruments -- turned in solid
performances.
Of course, economies and markets are never truly perfect, and never move in
straight lines. Pockets of difficulty and concern were readily found in fiscal
1997. But seen in the context of recent decades, the year offered proof that
favorable factors could prevail.
The real test of this economy will be its staying power. The delicate balancing
act performed by growth and inflation is bound to falter, causing either a
"natural" recession brought on by changes in the business cycle, or a more
abrupt slowdown brought on by the actions of the Federal Reserve Board.
For investors, the distinction is more than academic. An ordinary recession may
still offer opportunities for individual companies to prosper through
exceptional products and services, or through productivity enhancements. But an
increase in rates could render all stocks less attractive in comparison to
bonds.
ECONOMIC OVERVIEW
For the fiscal year, the economy, as measured by the Gross Domestic Product,
grew at a rate of about 3.5%. While this pace is best described as moderate,
fears of higher inflation and higher interest rates were present throughout
fiscal 1997, primarily because unemployment was low and labor markets remained
tight. However, wages did not rise rapidly, and pricing power remained weak
for most industries.
In the final analysis, inflation as measured by the Consumer Price Index held to
a relatively low 2.2% for the twelve-month period, while wholesale prices as
measured by the Producer Price Index were flat. As a result, the only action
taken by the Federal Reserve Board was a modest quarter-percent hike in
short-term rates after its March meeting.
Among the key factors holding costs in check were global competition and excess
capacity, which suggested that supply would continue to meet or exceed demand.
In the United States, for example, manufacturing capacity grew at twice the pace
of the 1980s, and the current year-over-year gain is the highest in twenty
years.
Increasingly through 1997, the consensus view indicated that recession may not
be imminent. But there is growing concern that, as one economist put it,
"strange things are happening." Worldwide, for example, Europe is saddled with
high unemployment,
[PHOTO OF JOHN C. PORTWOOD OMITTED]
JOHN C. PORTWOOD, CFA CHIEF TRUST
INVESTMENT STRATEGIST
SEPTEMBER 30, 1997 3
<PAGE>
INVESTMENT ADVISER'S REPORT
Japan is mired in a no-growth economy, and the Pacific Rim countries have
experienced financial turmoil. Together, these events help to cloud the domestic
outlook and increase the chances that the "strange things" will produce a
negative surprise.
STOCK MARKET OVERVIEW
The stock market continued to defy gravity throughout fiscal 1997, turning in a
historic performance. And where the gains had once been concentrated among a few
of the very largest capitalization issues represented on the Standard & Poor's
500 Index, the market began to broaden during the fiscal year, bringing mid-cap
and small-cap issues back into the game. The big story in stocks continued to be
strong corporate profits. The years of painful restructuring have paid off in
rising productivity levels over a wide range of industries, making American
businesses highly competitive in the world markets. This, along with overall
economic growth, has produced a steady stream of good earnings reports -- even
from such laggard industries as airlines, hotels, and steel.
The year was also marked by an exceptional number of stock buyback programs, as
many companies opted to use excess earnings to purchase their own stocks, rather
than to increase dividends.
Occasionally during the year, stocks were shaken by interest rate fears, and by
the Federal Reserve's modest quarter-percent hike in March. However,
[LINE GRAPH OMITTED]
STEADY RATES, LOW INFLATION
10 Year Treasury 30 Year U.S. Treasury Consumer Price Index
10/93 5.427 5.966 2.8
12/93 5.794 6.347 2.7
3/94 6.637 7.016 2.5
6/94 7.210 7.522 2.5
9/94 7.604 7.818 3.0
12/94 7.829 7.877 2.7
3/95 7.194 7.431 2.9
6/95 6.205 6.619 3.0
9/95 6.180 6.506 2.5
12/95 5.572 5.950 2.5
3/96 6.325 6.670 2.8
6/96 6.716 6.895 2.8
9/96 6.675 6.906 3.0
12/96 6.289 6.538 3.3
3/97 6.907 7.090 2.8
6/97 6.453 6.746 2.3
9/97 6.079 6.365 2.2
REAL (INFLATION ADJUSTED) YIELDS ON BONDS SUGGEST GOOD VALUE
FOR FIXED INCOME INVESTORS. AS OF AUGUST 31, 1997, THE REAL
YIELD OF INTERMEDIATE TO LONG-TERM U.S. TREASURY BONDS WAS
MORE THAN FOUR PERCENT COMPARED TO AN AVERAGE OF TWO
PERCENT DURING THE 1960S, THE LAST TIME INFLATION WAS
AS LOW FOR AN EXTENDED PERIOD AS IT IS TODAY.
"THE REAL TEST OF THIS ECONOMY WILL BE ITS STAYING POWER."
JOHN C. PORTWOOD
4 SEPTEMBER 30, 1997
<PAGE>
the market showed remarkable resiliency and recovered quickly from each setback.
The greatest concern for the markets in fiscal 1997 continued to be the high
valuation levels for stocks. At fiscal year-end, the overall price-earnings
ratio for the S&P 500 stood at 24. Any level over 20 has historically been
followed by a significant correction.
BOND MARKET OVERVIEW
After a tepid performance in fiscal 1996, bonds returned to more normal behavior
in 1997, generally returning their coupon yields along with modest capital
gains.
The bellwether 30-year Treasury Bond began the year with a yield of 6.8%, and
ended with a yield of 6.4%.
Mortgage-backed issues and corporate bonds also performed well, although the
narrowing yield spreads between the two led some investors to choose the
relative safety of government-guaranteed mortgage bonds over their corporate
counterparts.
In the municipal markets, stable rates and the absence of any potential "flat
tax" legislation resulted in a favorable environment for tax-conscious
investors.
MONEY MARKET OVERVIEW
The stable interest rate environment was also a positive for taxable and
tax-free money market instruments, which delivered a solid performance during
fiscal 1997. For much of the year, there was little reward for venturing
S&P 500 VALUATION
[LINE GRAPH OMITTED]
THE EXTRAORDINARY RETURNS FROM COMMON STOCKS FOR THE YEAR ENDED
SEPTEMBER 30, 1997 WERE DRIVEN PRIMARILY BY A CHANGE IN
VALUATION. EARNINGS FOR COMPANIES IN THE S&P 500 COMMON STOCK
INDEX, FOR EXAMPLE, ROSE ABOUT 15%. THE MARKETPLACE PUT A
HIGHER VALUE ON THOSE EARNINGS AT THE END OF THE PERIOD COMPARED
TO 12 MONTHS EARLIER, AS SHOWN BY THE RISE IN THE PRICE-TO-EARNINGS
MULTIPLE FROM APPROXIMATELY 19 IN SEPTEMBER 1996 TO 24
IN SEPTEMBER 1997 -- AN INCREASE OF 25%.
[PHOTO OF CHRISTINE C. MONTZ OMITTED]
CHRISTINE C. MONTZ,
DIRECTOR OF TRUST AND INVESTMENTS
SEPTEMBER 30, 1997 5
<PAGE>
INVESTMENT ADVISER'S REPORT
out on the yield curve, leading many investors to remain in short-term
instruments such as overnight repurchase agreements.
OUTLOOK FOR FISCAL 1998
Viewed against the last one hundred years of market history, the recent
resilience of the stock market is remarkable. However, if history is any guide,
it won't always be this way.
While a positive attitude toward the long-term outlook of the economy and
financial markets is appropriate, we believe that the potential for economic
disappointment is growing.
Unforeseen market shocks may come from any direction, whether a resurgence of
inflation, a domestic recession, or a world crisis. With valuations that are
above historical highs, the markets are ill-prepared for any hint of bad news.
Therefore, we recommend that our investors exercise caution and carefully
re-examine their tolerance for risk. In particular, those with greater-
than-normal equity positions should consider trimming back to more conservative
allocations.
Having said that, we believe that the growth of the domestic and global
economies will continue to offer significant opportunities for investors who
adopt a long-term outlook and who are willing to endure any short-term
volatility.
In addition, we pledge that we will continue to manage our stock, bond, and
money market funds with particular attention to valuations, avoiding those
investments that could leave our portfolios vulnerable to sudden changes in
market psychology. And while we cannot immunize ourselves against market
downturns, we can make every effort to select issues with enduring value.
Overall, it remains a very good time to be an investor. We thank you for
choosing to invest in the future through the Marquis Family of Funds.
Sincerely,
/S/ SIGNATURE
John C. Portwood, CFA
Chief Investment Strategist
First National Bank of Commerce
/S/ SIGNATURE
Christine C. Montz
Director of Trust and Investments
First National Bank of Commerce
"THE GROWTH OF THE DOMESTIC AND GLOBAL ECONOMIES WILL CONTINUE TO OFFER
SIGNIFICANT OPPORTUNITIES FOR INVESTORS WHO ADOPT A LONG-TERM OUTLOOK AND WHO
ARE WILLING TO ENDURE ANY SHORT-TERM VOLATILITY."
CHRISTINE C. MONTZ
6 SEPTEMBER 30, 1997
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FUND PERFORMANCE
TREASURY SECURITIES
MONEY MARKET FUND
For the twelve months ended September 30, 1997, the Treasury Securities Money
Market Fund generated a total return of 5.04% for Trust shares and 4.83% for
Retail shares from which a 12b-1 charge has been deducted. From inception on
February 26, 1997, the Cash Sweep Class of the Treasury Securities Money Market
Fund generated a total return on an annualized basis of 4.46%. This compares to
a 4.84% return for the IBC/Donoghue U.S. Treasury and Repo Index. The Fund's net
assets increased from $1.049 billion to $1.364 billion over the fiscal year.
For much of the year, the Fund's largest sector weighting consisted of overnight
repurchase agreements collateralized by U.S. Treasury securities. This strategy
was designed to take advantage of a pattern in the yield curve that offered
little reward for venturing out into longer maturities. In addition, it provides
shareholders with an adequate degree of liquidity.
Looking ahead, we do not foresee a near-term slowdown in economic growth that
would cause the Federal Reserve Board to lower interest rates. On the contrary,
we feel there remains a possibility that money market rates could stay stable or
rise. Should this occur, we believe we are well positioned to take advantage of
higher rates by converting our cash assets into longer-term instruments.
TAX EXEMPT
MONEY MARKET FUND
For the twelve months ended September 30, 1997, the Tax Exempt Money Market Fund
generated a total return of 3.12%. This compares to a 3.08% return for the
IBC/Donoghue Tax-Free Index. The Fund's net assets increased from $66.2 million
to $76.7 million over the fiscal year.
Short-term interest rates were stable during most of the fiscal year, except for
a quarter-percent hike by the Federal Reserve Board ("the Fed") in March 1997.
Other fundamental factors in the short-term municipal securities market remained
favorable as well, including steady demand coupled with a declining supply.
In this environment, the Fund was able to follow up on its strong performance of
1996 with another excellent year.
Looking ahead, we see a continuation of current conditions, as moderate economic
growth and low inflation add up to an ideal environment for stability in the
short-term municipal markets. However, any imbalance in such factors as
employment, consumer and producer prices, or consumer sentiment could spur the
Fed to push short-term rates higher.
[PHOTO OF GERALD S. DUGAL OMITTED]
GERALD S. DUGAL, VICE PRESIDENT,
TRUST AND
INVESTMENTS
SEPTEMBER 30, 1997 7
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FUND PERFORMANCE
GOVERNMENT SECURITIES FUND
For the twelve months ended September 30, 1997, the Government Securities Fund
generated a total return of 8.22% for Class A shares without a sales load, 4.46%
for Class A shares from which a sales charge has been deducted, and 3.90% for
Class B shares from which a sales charge has been deducted. This compares to a
7.83% return for the Lehman Intermediate Government Bond Index.
The Fund's holdings, which consist primarily of obligations issued or guaranteed
as to principal and interest by the U.S. Government and its agencies or
instrumentalities, ended the fiscal year with an average weighted maturity of
6.0 years, and a weighted average duration of 3.7 years.
The Fund's strong performance for the fiscal year was attributable to a
favorable economic environment, along with portfolio strategies that enhanced
yields.
The domestic economy continued to benefit from low inflation, despite moderate
economic growth and the lowest unemployment levels in decades. As a result, the
Federal Reserve Board found little cause to increase interest rates. Outside of
a modest hike in short-term rates in March 1997, bonds enjoyed a relatively
stable environment for most of the fiscal year.
Throughout the year, the Fund maintained its strategy of overweighting the
non-callable sector of the government market, with Treasury and agency
securities representing over half of the portfolio. The balance of the portfolio
was composed primarily of mortgage-backed instruments and collateralized
mortgage obligations, which provided incremental yield without compromising
quality. The short-term portion of the portfolio was held to only about 4%
during most of the period.
Looking ahead, we see a continuation of the favorable economic trends that have
prevailed over the past year. Long-term interest rates are declining worldwide,
while the domestic economy continues to experience moderate growth with low
inflation. We believe that good values are plentiful in the government bond
markets and that real rates are attractive relative to historical norms.
In light of these conditions, we plan to continue our strategy of pursuing high
quality and above-average yields. We will view any cyclical upswings in yields
as buying opportunities.
[PHOTO OF CAPITOL OMITTED]
[PHOTO OF KEVIN P. REED OMITTED]
KEVIN P. REED,
SENIOR VICE PRESIDENT, TRUST AND
INVESTMENTS
8 SEPTEMBER 30, 1997
<PAGE>
[PHOTO OF MAN OMITTED]
- -----------------------------------------------
AVERAGE AVERAGE AVERAGE
ANNUAL ANNUAL ANNUAL
CLASS ONE YEAR 3 YEAR 5 YEAR 10 YEAR
OF SHARES RETURN RETURN RETURN RETURN
- -----------------------------------------------
CLASS A WITHOUT
LOAD 8.22% 7.69% 5.50% 7.93%
- -----------------------------------------------
CLASS A WITH
LOAD 4.46 6.42 4.75 7.54
- -----------------------------------------------
CLASS B WITHOUT
LOAD 7.40 6.87 4.89 7.61
- -----------------------------------------------
CLASS B WITH
LOAD 3.90 6.28 4.81 7.61
- -----------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
SHARES WERE OFFERED BEGINNING OCTOBER 1, 1993. CLASS B SHARES WERE OFFERED
BEGINNING OCTOBER 22, 1993. PERFORMANCE OF THE CLASS A SHARES REFLECTS THE
MAXIMUM FRONT END SALES CHARGE OF 3.50%. PERFORMANCE OF THE CLASS B SHARES
REFLECTS THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 1.25% FOR THE FOUR-YEAR
HOLDING PERIOD. THE PERFORMANCE QUOTED INCLUDES PAST PERFORMANCE OF THE COMMON
TRUST FUND MANAGED BY FIRST NATIONAL BANK OF COMMERCE, ADJUSTED FOR FEES AND
EXPENSES, FOR THE PERIODS PRIOR TO THE INCEPTION OF THE GOVERNMENT SECURITIES
FUND. THE COMMON TRUST FUND WAS NOT REGISTERED UNDER THE 1940 ACT AND THEREFORE
WAS NOT SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS WHICH MAY HAVE ADVERSELY
AFFECTED PERFORMANCE. THE PERFORMANCE OF THE LEHMAN INTERMEDIATE GOVERNMENT BOND
INDEX AND THE LIPPER INTERMEDIATE U.S. GOVERNMENT AVERAGE DOES NOT INCLUDE
ANNUAL OPERATING EXPENSES WHICH ARE EXPERIENCED BY THE FUND.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE GOVERNMENT SECURITIES FUND
VERSUS THE LEHMAN INTERMEDIATE GOVERNMENT BOND
INDEX AND THE LIPPER INTERMEDIATE U.S. GOVERNMENT AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Government Government Lehman Intermediate Lipper Intermediate
Securities Securities Fund, Government Bond U.S. Government
Fund w/load Index Average
9/87 10000 9650 10000 10000
9/88 11095 10707 11062 11140
9/89 11990 11571 12127 12185
9/90 12852 12403 13168 13076
9/91 14660 14146 14956 14925
9/92 16401 15827 16818 16699
9/93 17897 17270 18105 18068
9/94 17602 16986 17833 17400
9/95 19510 18827 19727 19345
9/96 20309 19599 20733 20088
9/97 21439 20689 22356 21729
[LINE GRAPH OMITTED]
CLASS B
Government Government Lehman Intermediate Lipper Intermediate
Securities Securities Fund, Government Bond U.S. Government
Fund w/load Index Average
9/87 10000 10000 10000 10000
9/88 11095 11095 11062 11140
9/89 11990 11990 12127 12185
9/90 12852 12852 13168 13076
9/91 14660 14660 14956 14925
9/92 16401 16401 16818 16699
9/93 17457 17457 18105 18068
9/94 17059 17059 17833 17400
9/95 18782 18782 19727 19345
9/96 19389 19389 20733 20088
9/97 20824 20824 22356 21729
SEPTEMBER 30, 1997 9
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FUND PERFORMANCE
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE STRATEGIC
INCOME BOND FUND VERSUS THE SALOMON BROAD BOND INDEX, AND THE LIPPER CORPORATE
DEBT BBB RATED AVERAGE, AND THE LEHMAN AGGREGATE BOND INDEX
[LINE GRAPH OMITTED]
CLASS A
Strategic Strategic Salomon Lipper Lehman
Income Income Broad Corporate Aggregate
Bond Bond Fund Bond Debt BBB Bond
Fund w/load Index Rated Average Index
1/97 10000 9650 10000 10000 10000
2/97 9935 9587 10011 10046 10025
3/97 9765 9423 9910 9900 9914
4/97 9927 9580 10052 10041 10062
5/97 10009 9658 10146 10149 10158
6/97 10146 9791 10267 10294 10279
7/97 10506 10138 10545 10638 10556
8/97 10363 10000 10454 10505 10467
9/97 10550 10180 10608 10682 10622
[LINE GRAPH OMITTED]
CLASS B
Strategic Strategic Salomon Lipper Lehman
Income Income Broad Corporate Aggregate
Bond Bond Fund Bond Debt BBB Bond
Fund w/load Index Rated Average Index
1/97 10000 10000 10000 10000 10000
2/97 9939 9939 10011 10046 10025
3/97 9766 9766 9910 9900 9914
4/97 9913 9913 10052 10041 10062
5/97 10000 10000 10146 10149 10158
6/97 10120 10120 10267 10294 10279
7/97 10473 10473 10545 10638 10556
8/97 10335 10335 10454 10505 10467
9/97 10504 10154 10608 10682 10622
- -------------------------------------------------------
CLASS ANNUALIZED INCEPTION CUMULATIVE INCEPTION
OF SHARES TO DATE TO DATE
- -------------------------------------------------------
CLASS A WITHOUT
LOAD 8.26% 5.50%
- -------------------------------------------------------
CLASS A WITH
LOAD 2.77 1.83
- -------------------------------------------------------
CLASS B WITHOUT
LOAD 7.57 5.04
- -------------------------------------------------------
CLASS B WITH
LOAD 2.33 1.54
- -------------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
AND B SHARES WERE OFFERED BEGINNING JANUARY 31, 1997. PERFORMANCE OF THE CLASS A
SHARES REFLECTS THE MAXIMUM FRONT END SALES CHARGE OF 3.50%. PERFORMANCE OF THE
CLASS B SHARES REFLECTS THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 3.50%
FOR THE ONE-YEAR HOLDING PERIOD. THE PERFORMANCE OF THE SALOMON BROAD BOND
INDEX, THE LIPPER CORPORATE DEBT BBB RATED AVERAGE, AND THE LEHMAN AGGREGATE
BOND INDEX DOES NOT INCLUDE ANNUAL OPERATING EXPENSES WHICH ARE EXPERIENCED BY
THE FUND.
STRATEGIC INCOME BOND FUND
From its inception on January 31, 1997, the Strategic Income Bond Fund generated
a total return on an annualized basis of 8.26% for Class A shares without a
sales load, 2.77% for Class A shares from which a sales charge has been
deducted, and 2.33% for Class B shares from which a sales charge has been
deducted. This compares to a 9.74% return for the Lehman Aggregate Bond Index
and 9.70% for the Salomon Broad Bond Index. The Fund's net assets reached $16.0
million by the end of the fiscal year.
During fiscal 1997, the Fund increased its weighting in high-quality corporate
bonds, which at year-end represented nearly two-thirds of the total portfolio.
The balance of the portfolio was composed primarily of Federal agency
mortgage-backed instruments. This approach allowed us to capture the higher
yields currently available in corporate issues.
Looking ahead, we believe that the current interest rate environment offers good
opportunities for fixed income investors, with our forecasts showing stable
interest rates for the near-term future.
However, we remain concerned that an unforeseen event, such as the economy
running at full capacity -- and any inflationary side effects of this
scenario -- or an upward spike in oil prices, could have an adverse impact on
the fixed income markets.
10 SEPTEMBER 30, 1997
<PAGE>
LOUISIANA TAX-FREE
INCOME FUND
For the twelve months ended September 30, 1997, the Louisiana Tax-Free Income
Fund generated a total return of 7.77% for Class A shares without a sales load,
3.95% for Class A shares from which a sales charge has been deducted, and 3.49%
for Class B shares from which a sales charge has been deducted. This compares to
a 7.22% return for the Lipper Intermediate Municipal Fund Index and a 9.03%
return for the Lehman Municipal Bond Index. The Fund's net assets increased from
$21.6 million to $39.6 million over the fiscal year.
The Fund's holdings, consisting primarily of securities which are exempt from
federal and state income tax to Louisiana residents, ended the fiscal year with
an average weighted maturity of 8.5 years, an average duration of 6.4 years, and
a weighted average quality rating of AAA.
Throughout the fiscal year, the Fund benefited from a stable interest rate
environment, as economic growth and inflation remained low. These conditions set
the stage for a period in which the fund was able to deliver its full coupon
yields, as well as some modest capital gains.
For most of the year, the Fund was overweighted in the highest quality sectors
of the Louisiana bond market. This somewhat defensive posture was designed to
shield against any fallout from the recent closing of a major
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
LOUISIANA TAX-FREE INCOME FUND VERSUS THE LIPPER INTERMEDIATE MUNICIPAL
FUND INDEX, THE LEHMAN MUNICIPAL BOND INDEX,
AND THE LEHMAN 10-YEAR MUNICIPAL BOND INDEX
[LINE GRAPH OMITTED]
CLASS A
Louisiana Louisiana Lipper Lehman Lehman
Tax-Free Tax-Free Income Intermediate Municipal 10-Year
Income Fund Municipal Bond Municipal
Fund w/load Fund Index Index Bond Index
10/93 10000 9650 10000 10000 10000
3/94 9564 9229 9707 9566 9592
9/94 9719 9379 9861 9738 9801
3/95 10138 9784 10251 10276 10314
9/95 10597 10226 10723 10827 10958
3/96 10823 10445 10954 11138 11228
9/96 11071 10684 11192 11482 11488
3/97 11317 10921 11420 11747 11812
9/97 11932 11514 11998 12519 12580
[LINE GRAPH OMITTED]
CLASS B
Louisiana Louisiana Lipper Lehman Lehman
Tax-Free Tax-Free Income Intermediate Municipal 10-Year
Income Fund Municipal Bond Municipal
Fund w/load Fund Index Index Bond Index
10/93 10000 10000 10000 10000 10000
3/94 9642 9642 9769 9650 9671
9/94 9753 9753 9925 9824 9882
3/95 10136 10136 10317 10367 10399
9/95 10554 10554 10792 10923 11049
3/96 10741 10741 11024 11237 11321
9/96 10934 10934 11264 11584 11583
3/97 11147 11147 11493 11851 11910
9/97 11698 11573 12075 12630 12684
- ----------------------------------------------------
AVERAGE ANNUAL AVERAGE ANNUAL
CLASS ONE YEAR 3 YEAR RETURN INCEPTION
OF SHARES RETURN RETURN TO DATE
- ----------------------------------------------------
CLASS A WITHOUT
LOAD 7.77% 7.07% 4.55%
- ----------------------------------------------------
CLASS A WITH
LOAD 3.95 5.81 3.63
- ----------------------------------------------------
CLASS B WITHOUT
LOAD 6.99 6.25 4.23
- ----------------------------------------------------
CLASS B WITH
LOAD 3.49 5.65 3.94
- ----------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
SHARES WERE OFFERED BEGINNING OCTOBER 1, 1993. CLASS B SHARES WERE OFFERED
BEGINNING OCTOBER 22, 1993. PERFORMANCE OF THE CLASS A SHARES REFLECTS THE
MAXIMUM FRONT END SALES CHARGE OF 3.50%. PERFORMANCE OF THE CLASS B SHARES
REFLECTS THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 1.25% FOR THE FOUR-YEAR
HOLDING PERIOD. THE PERFORMANCE OF THE LIPPER INTERMEDIATE MUNICIPAL FUND INDEX,
THE LEHMAN MUNICIPAL BOND INDEX, AND THE LEHMAN 10-YEAR MUNICIPAL BOND INDEX
DOES NOT INCLUDE ANNUAL OPERATING EXPENSES WHICH ARE EXPERIENCED BY THE FUND.
SEPTEMBER 30, 1997 11
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FUND PERFORMANCE
LOUISIANA TAX-FREE INCOME FUND (CONTINUED)
casino in New Orleans. Ultimately, however, increased tax revenues from the
ongoing boom in the energy industry have far outweighed the casino-related
losses.
Looking ahead, we remain positive about the future of Louisiana-based municipal
issues, as the state's economy continues to grow and supply/demand factors
point to relatively stable prices. However, we plan to maintain our bias toward
the highest quality issues. We will stay alert to signs of inflationary
pressures that could impact total returns.
BALANCED FUND
For the twelve months ended September 30, 1997, the Balanced Fund generated a
total return of 26.10% for Class A shares without a sales load, 21.69% for Class
A shares from which a sales charge has been deducted, and 21.69% for Class B
shares from which a sales charge has been deducted. This compares to a 24.03%
return for the Lipper Balanced Funds Average, a 40.43% return for the S&P 500
Composite Index, and a 7.83% return for the Lehman Intermediate Govern-ment Bond
Index. The Fund's net assets increased from $116.4 million to $138.9 million
over the fiscal year.
During the year, the Fund shifted to a somewhat more aggressive position,
increasing its proportion of stocks to about 55% of the portfolio, while bond
holdings represented about 40% and cash about 5%. This ratio reflected our
increasing confidence in the economy, which continued to demonstrate a
surprising combination of moderate growth and low inflation. The Fund's
proportions proved to be justified, as stocks outperformed bonds by a
significant margin.
The bond portion of the Fund produced solid gains through a combination of
coupon yields and capital appreciation. Bonds benefited from a relatively stable
environment in which rates actually declined somewhat over the course of the
fiscal year.
The Fund continued to emphasize intermediate-term government bonds for their
relative safety and stability. In
[PHOTO OF GREG W. HODLEWSKY OMITTED]
GREG W. HODLEWSKY,
VICE PRESIDENT, TRUST AND
INVESTMENTS
12 SEPTEMBER 30, 1997
<PAGE>
addition, we increased the proportion of mortgage-backed securities in order to
take advantage of incremental yield opportunities. Mortgage-backed instruments
were favored over corporate bonds, due to the fact that they offered a superior
risk/return profile in the market at that time.
The stock portion of the Balanced Fund, which pursues a strategy that combines
value and growth issues, with a value emphasis, also produced positive results
as the value and growth sectors exchanged leadership positions during the course
of the year.
The stock portfolio maintained a relatively defensive posture, with a bias
toward issues in the banking, consumer nondurables, and energy industries, where
price-earnings ratios tend to be below average. Among the better performers in
the portfolio were Parker-Hannifin, Tech Data Corp, SLM Holding Corp, and
Compaq.
Looking ahead, we believe the Balanced Fund remains well positioned for the
current environment, which offers the potential for strong returns from both
bonds and stocks. We anticipate a continuation of the favorable economic
climate, as global competition serves to prevent sharp price increases, while
productivity improvements help to boost corporate profits.
Still, we remain alert to the possibility of inflationary pressures which could
lead the Federal Reserve Board to hike interest rates. Therefore, we do not
currently anticipate any major changes in the Fund's proportions or in its
underlying investment strategies.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE
BALANCED FUND VERSUS THE WILSHIRE MID-CAP VALUE INDEX, THE S&P 500 COMPOSITE
INDEX, THE LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX AND THE LIPPER BALANCED
FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Wilshire Lehman Lipper
Balanced Mid-Cap S&P 500 Intermediate Balanced
Balanced Fund Value Composite Government Funds
Fund w/load Index Index Bond Index Average
10/93 10000 9650 10000 10000 10000 10000
3/94 9752 9411 9605 9646 9807 9712
9/94 9859 9514 9870 10159 9827 9882
3/95 10365 10002 10342 11145 10227 10396
9/95 11593 11188 12469 13176 10871 11767
3/96 12272 11843 13611 14718 11158 12579
9/96 12649 12207 13823 15853 11426 13224
3/97 13303 12838 15146 17635 11686 13946
9/97 15950 15393 18888 22264 12321 16396
[LINE GRAPH OMITTED]
CLASS B
Wilshire Lehman Lipper
Balanced Mid-Cap S&P 500 Intermediate Balanced
Balanced Fund Value Composite Government Funds
Fund w/load Index Index Bond Index Average
10/93 10000 10000 10000 10000 10000 10000
3/94 9726 9726 9605 9646 9807 9712
9/94 9788 9788 9870 10159 9827 9882
3/95 10250 10250 10342 11145 10227 10396
9/95 11428 11428 12469 13176 10871 11767
3/96 12052 12052 13611 14718 11158 12579
9/96 12376 12376 13823 15853 11426 13224
3/97 12969 12969 15146 17635 11686 13946
9/97 15494 15369 18888 22264 12321 16396
- ----------------------------------------------
AVERAGE AVERAGE
ANNUAL ANNUAL RETURN
CLASS ONE YEAR 3 YEAR INCEPTION
OF SHARES RETURN RETURN TO DATE
- ----------------------------------------------
CLASS A WITHOUT
LOAD 26.10% 17.40% 12.50%
- ----------------------------------------------
CLASS A WITH
LOAD 21.69 16.00 11.51
- ----------------------------------------------
CLASS B WITHOUT
LOAD 25.19 16.54 11.76
- ----------------------------------------------
CLASS B WITH
LOAD 21.69 16.05 11.53
- ----------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
SHARES WERE OFFERED BEGINNING OCTOBER 1, 1993. CLASS B SHARES WERE OFFERED
BEGINNING OCTOBER 22, 1993. PERFORMANCE OF THE CLASS A SHARES REFLECTS THE
MAXIMUM FRONT END SALES CHARGE OF 3.50%. PERFORMANCE OF THE CLASS B SHARES
REFLECTS THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 1.25% FOR THE FOUR-YEAR
HOLDING PERIOD. THE PERFORMANCE OF THE WILSHIRE MID-CAP VALUE INDEX, THE S&P 500
COMPOSITE INDEX, THE LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX, AND THE LIPPER
BALANCED FUNDS AVERAGE DOES NOT INCLUDE ANNUAL OPERATING EXPENSES WHICH ARE
EXPERIENCED BY THE FUND.
SEPTEMBER 30, 1997 13
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FUND PERFORMANCE
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE VALUE EQUITY FUND VERSUS THE WILSHIRE MID-CAP VALUE INDEX,
THE S&P 500 COMPOSITE INDEX, AND THE LIPPER EQUITY INCOME AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Value Wilshire S&P Lipper
Value Equity Mid-Cap 500 Equity
Equity Fund, Value Composite Income
Fund w/load Index Index Average
9/87 10000 9650 10000 10000 10000
9/88 8865 8555 10068 8760 9624
9/89 10844 10464 12730 11646 12026
9/90 9862 9517 9476 10571 10470
9/91 12669 12226 14086 13858 13427
9/92 13068 12611 16888 15395 14930
9/93 15650 15103 21625 17387 17612
9/94 15395 14857 21126 18029 17959
9/95 19264 18590 26688 23383 21588
9/96 21842 21077 29589 28135 25289
9/97 31730 30619 40431 39510 33925
[LINE GRAPH OMITTED]
CLASS B
Value Wilshire S&P Lipper
Value Equity Mid-Cap 500 Equity
Equity Fund, Value Composite Income
Fund w/load Index Index Average
9/87 10000 10000 10000 10000 10000
9/88 8865 8865 10068 8760 9624
9/89 10844 10844 12730 11646 12026
9/90 9862 9862 9476 10571 10470
9/91 12669 12669 14086 13858 13427
9/92 13068 13068 16888 15395 14930
9/93 15650 15650 21625 17387 17612
9/94 15305 15305 21126 18029 17959
9/95 19004 19004 26688 23383 21588
9/96 21377 21377 29589 28135 25289
9/97 30850 30850 40431 39510 33925
- ---------------------------------------------------------
AVERAGE AVERAGE AVERAGE
CLASS ONE YEAR ANNUAL 3 ANNUAL 5 ANNUAL 10
OF SHARES RETURN YEAR RETURN YEAR RETURN YEAR RETURN
- ---------------------------------------------------------
CLASS A WITHOUT
LOAD 45.27% 27.26% 19.41% 12.24%
- ---------------------------------------------------------
CLASS A WITH
LOAD 40.17 25.76 18.59 11.83
- ---------------------------------------------------------
CLASS B WITHOUT
LOAD 44.31 26.32 18.74 11.92
- ---------------------------------------------------------
CLASS B WITH
LOAD 40.81 25.90 18.69 11.92
- ---------------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
SHARES WERE OFFERED BEGINNING OCTOBER 1, 1993. CLASS B SHARES WERE OFFERED
BEGINNING OCTOBER 22, 1993. PERFORMANCE OF THE CLASS A SHARES REFLECTS THE
MAXIMUM FRONT END SALES CHARGE OF 3.50%. PERFORMANCE OF THE CLASS B SHARES
REFLECTS THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 1.25% FOR THE FOUR-YEAR
HOLDING PERIOD. THE PERFORMANCE QUOTED INCLUDES PAST PERFORMANCE OF THE COMMON
TRUST FUND MANAGED BY FIRST NATIONAL BANK OF COMMERCE ADJUSTED FOR FEES AND
EXPENSES. THE COMMON TRUST FUND WAS NOT REGISTERED UNDER THE 1940 ACT AND
THEREFORE WAS NOT SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS WHICH MAY HAVE
ADVERSELY AFFECTED PERFORMANCE. THE PERFORMANCE OF THE WILSHIRE MID-CAP VALUE
INDEX, THE S&P 500 COMPOSITE INDEX, AND THE LIPPER EQUITY INCOME AVERAGE DOES
NOT INCLUDE ANNUAL OPERATING EXPENSES WHICH ARE EXPERIENCED BY THE FUND.
VALUE EQUITY FUND
For the twelve months ended September 30, 1997, the Value Equity Fund generated
a total return of 45.27% for Class A shares without a sales load, 40.17% for
Class A shares from which a sales charge has been deducted, and 40.81% for Class
B shares from which a sales charge has been deducted. This compares to a 36.64%
return for the Wilshire Mid-Cap Value Index and a 40.43% return for the S&P 500
Composite Index. The Fund's net assets increased from $97.5 million to $144.1
million over the fiscal year.
The Fund's strong performance is attributable to a resurgence in the "value"
sector of the market and to portfolio decisions made throughout the year.
For the first half of fiscal 1997, the markets were dominated by a small group
of large multinational companies represented in the upper echelon of the S&P 500
Composite Index. However, as the increasingly high valuations of these issues
began to raise eyebrows among even the most optimistic investors, market
sentiment shifted somewhat toward stocks with more reasonable multiples,
particularly in the long-dormant small- and mid-cap sectors.
Throughout the year, the Fund maintained its relatively defensive posture,
emphasizing large- and mid-cap issues whose price-earnings ratios were well
below the market average.
14 SEPTEMBER 30, 1997
<PAGE>
One goal of this strategy is to protect the portfolio against the full impact of
any downturns in the market. And when put to the test in March 1997 by a ten
percent drop in the overall market, our strategy did in fact result in a lesser
decline.
The portfolio continued to be heavily weighted in a variety of industries where
multiples tend to remain lower, such as banking, consumer nondurables, selective
technology companies, and energy/minerals. However, we have deliberately avoided
any attempt to focus on broad sectors of the market, preferring to select issues
based on their individual merits.
Among the strongest performers in our portfolio during the past twelve months
were SCI Systems, Transocean Offshore, BankAmerica, and Cummins Engine.
Looking ahead, we plan to continue our emphasis on undervalued stocks that offer
above-average growth prospects and the chance for positive earnings surprises.
We believe that these issues will continue to offer a favorable combination of
capital appreciation potential and below-average risk.
GROWTH EQUITY FUND
For the twelve months ended September 30, 1997, the Growth Equity Fund generated
a total return of 31.25% for Class A shares without a sales load, 26.64% for
Class A shares from which a sales charge has been deducted, and 26.91% for Class
B shares from which a sales charge has been deducted. This compares to a 41.48%
return for the S&P 500/BARRA Growth Index and a 25.95% return for the Wilshire
Mid-Cap Growth Index. While the Fund has characteristics in common with both
indices, it more closely reflects the capitalization levels of the Wilshire
Mid-Cap Growth Index. The Fund's net assets increased from $18.5 million to
$33.4 million over the fiscal year.
Coming off a very strong fiscal 1996, the Fund continued to benefit from a surge
in enthusiasm for growth-oriented companies. Along with the overall stock
market, this sector has benefited from the favorable combination of moderate
economic growth, low inflation, and strong inflows of investor funds. Moreover,
growth companies have enjoyed special attention as the source of products and
services that boost productivity, making today's economic environment possible.
With significant holdings in the technology sector, as well as in healthcare,
manufacturing, and consumer nondurables, the Fund participated fully in this
ongoing rally.
"WITH SIGNIFICANT HOLDINGS IN THE TECHNOLOGY SECTOR, AS WELL AS IN HEALTHCARE,
MANUFACTURING, AND CONSUMER NONDURABLES, THE GROWTH EQUITY FUND PARTICIPATED
FULLY IN THIS ONGOING RALLY."
JOHN C. PORTWOOD
SEPTEMBER 30, 1997 15
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FUND PERFORMANCE
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE GROWTH EQUITY
FUND VERSUS THE WILSHIRE MID-CAP GROWTH INDEX, THE S&P 500/BARRA GROWTH INDEX,
AND THE LIPPER GROWTH FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Growth Wilshire S&P 500/ Lipper
Growth Equity Mid-Cap BARRA Growth
Equity Fund Growth Growth Funds
Fund w/load Index Index Average
3/96 10000 9650 10000 10000 10000
6/96 10496 10129 10315 10701 10456
9/96 10966 10583 10599 11078 10765
12/96 11368 10970 10736 11883 11340
3/97 11165 10755 10176 12308 11207
6/97 13034 12578 11790 14804 12985
9/97 14393 13889 13351 15674 14363
[LINE GRAPH OMITTED]
CLASS B
Growth Wilshire S&P 500/ Lipper
Growth Equity Mid-Cap BARRA Growth
Equity Fund Growth Growth Funds
Fund w/load Index Index Average
4/96 10000 10000 10000 10000 10000
6/96 10232 10232 9738 10498 10128
9/96 10658 10658 10005 10867 10427
12/96 11037 11037 10135 11657 10984
3/97 10825 10825 9607 12073 10856
6/97 12609 12609 11130 14522 12577
9/97 13898 13898 12604 15376 13912
- ---------------------------------------------
CLASS ONE YEAR AVERAGE ANNUAL RETURN
OF SHARES RETURN INCEPTION TO DATE
- ---------------------------------------------
CLASS A WITHOUT
LOAD 31.25% 26.43%
- ---------------------------------------------
CLASS A WITH
LOAD 26.64 23.61
- ---------------------------------------------
CLASS B WITHOUT
LOAD 30.41 27.04
- ---------------------------------------------
CLASS B WITH
LOAD 26.91 25.34
- ---------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
SHARES WERE OFFERED BEGINNING MARCH 1, 1996. CLASS B SHARES WERE OFFERED
BEGINNING APRIL 19, 1996. PERFORMANCE OF THE CLASS A SHARES REFLECTS THE MAXIMUM
FRONT END SALES CHARGE OF 3.50%. PERFORMANCE OF THE CLASS B SHARES REFLECTS THE
MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 2.00% FOR THE THREE-YEAR HOLDING
PERIOD. THE PERFORMANCE OF THE WILSHIRE MID-CAP GROWTH INDEX, THE S&P 500/BARRA
GROWTH INDEX AND THE LIPPER GROWTH FUNDS AVERAGE DOES NOT INCLUDE ANNUAL
OPERATING EXPENSES WHICH ARE EXPERIENCED BY THE FUND.
GROWTH EQUITY FUND (CONTINUED)
Among the best performers in the portfolio for the fiscal year were computer
issues such as Compaq Corporation, Dell Computer, and Gateway 2000, as well as
healthcare leaders such as Eli Lilly, Merck, and Schering-Plough.
Looking ahead, we are concerned that the level of optimism about the economy in
general and growth stocks in particular may be reaching the level of excess.
Therefore, we continue to manage the Growth Equity Fund in a conservative
manner. We have trimmed our technology holdings in recent months and continue to
avoid those issues whose prices reflect overconfidence in the future. And while
we believe there are still many opportunities available to growth-oriented
investors, we are keenly aware of the risks that are inherent in today's
superheated market.
16 SEPTEMBER 30, 1997
<PAGE>
SMALL CAP EQUITY FUND
For the twelve months ended September 30, 1997, the Small Cap Equity Fund
generated a return of 20.60% for Class A shares without a sales load, 16.35% for
Class A shares from which a sales charge has been deducted, and 16.32% for Class
B shares from which a sales charge has been deducted. This compares to a 23.36%
return for the Russell 2000 Growth Index for the same period. The Fund's net
assets reached $4.3 million by the end of the fiscal year.
Small-cap growth stocks generally underperformed for much of the fiscal year, as
large-cap issues continued to dominate the equity markets. However, as the final
quarter approached, the small-cap sector began to gain momentum and appeared to
be poised for a sustainable revival.
The Marquis Small Cap Equity Fund currently invests substantially all of its
assets in the SEI Institutional Managed Trust Small Cap Growth Portfolio.
The portfolio was hampered somewhat by weakness in individual technology and
pharmaceutical issues. However, favorable stock selection in the producer goods
and energy sectors helped to compensate for these weaknesses.
Among the portfolio's best performers for the year were Cliffs Drilling and
Patterson Energy in the oil services sector, Imperial Credit Industries and
Astoria Financial Corp. in the financial services sector, and Medaphys in the
healthcare sector.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE SMALL CAP EQUITY FUND VERSUS THE
RUSSELL 2000 GROWTH INDEX AND THE LIPPER SMALL CAP FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
Small Small Cap Russell Lipper
Cap Equity 2000 Small Cap
Equity Fund, Growth Funds
Fund w/load Index Average
4/92 10000 9650 10000 10000
9/92 10664 10291 9522 9895
3/93 12496 12059 10937 11734
9/93 14663 14150 12301 13161
3/94 14574 14064 12110 13121
9/94 14663 14150 12408 13441
3/95 15921 15364 12992 14193
9/95 20731 20005 15904 17328
3/96 22273 21493 17067 18764
9/96 26180 25263 17910 20586
3/97 22135 21360 16074 19656
9/97 31573 30468 22092 26828
[LINE GRAPH OMITTED]
CLASS B
Small Small Cap Russell Lipper
Cap Equity 2000 Small Cap
Equity Fund, Growth Funds
Fund w/load Index Average
4/92 10000 10000 10000 10000
9/92 10610 10610 9522 9895
3/93 12389 12389 10937 11734
9/93 14490 14490 12301 13161
3/94 14357 14357 12110 13121
9/94 14377 14377 12408 13441
3/95 15540 15540 12992 14193
9/95 20171 20171 15904 17328
3/96 21604 21604 17067 18764
9/96 25263 25263 17910 20586
3/97 21309 21309 16074 19656
9/97 30272 30272 22092 26828
- ----------------------------------------------------------
AVERAGE
AVERAGE AVERAGE ANNUAL RETURN
CLASS ONE YEAR ANNUAL 3 ANNUAL 5 INCEPTION
OF SHARES RETURN YEAR RETURN YEAR RETURN TO DATE
- ----------------------------------------------------------
CLASS A WITHOUT
LOAD 20.60% 29.13% 24.24% 23.50%
- ----------------------------------------------------------
CLASS A WITH
LOAD 16.35 27.63 23.39 22.71
- ----------------------------------------------------------
CLASS B WITHOUT
LOAD 19.82 28.17 23.33 22.59
- ----------------------------------------------------------
CLASS B WITH
LOAD 16.32 27.76 23.29 22.59
- ----------------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
AND B SHARES WERE OFFERED BEGINNING JANUARY 31, 1997. PERFORMANCE OF THE CLASS A
SHARES REFLECTS THE MAXIMUM FRONT END SALES CHARGE OF 3.50%. CLASS B SHARES
REFLECT THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 3.50% FOR THE ONE-YEAR
HOLDING PERIOD. THE PERFORMANCE QUOTED FOR THE MARQUIS SMALLCAP EQUITY FUND
REPRESENTS INFORMATION RELATING TO THE SEI INSTITUTIONAL MANAGED TRUST SMALL CAP
GROWTH PORTFOLIO. THE MARQUIS SMALL CAP EQUITY FUND INVESTS SUBSTANTIALLY ALL OF
ITS ASSETS IN THE SEI INSTITUTIONAL MANAGED TRUST SMALLCAP GROWTH PORTFOLIO. THE
PERFORMANCE INFORMATION CONTAINED HEREIN HAS BEEN ADJUSTED TO REFLECT THE ACTUAL
FEES AND EXPENSES OF THE MARQUIS SMALLCAP EQUITY FUND, WHOSE FEES AND EXPENSES
ARE HIGHER THAN THOSE OF THE SEIINSTITUTIONAL MANAGED TRUST SMALL CAP GROWTH
PORTFOLIO. THE SEI INSTITUTIONAL MANAGED TRUST SMALL CAP GROWTH PORTFOLIO SHARES
WERE OFFERED BEGINNING APRIL 20, 1992. THE PERFORMANCE OF THE RUSSELL 2000
GROWTH INDEX AND THE LIPPER SMALL CAP FUNDS AVERAGE DOES NOT INCLUDE ANNUAL
OPERATING EXPENSES WHICH ARE EXPERIENCED BY THE FUND.
SEPTEMBER 30, 1997 17
<PAGE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FUND PERFORMANCE
SMALL CAP EQUITY FUND (CONTINUED)
Looking ahead, we see strong signs of continued strength in small-cap issues,
and are pleased to note that growth stocks have begun to close the gap on the
value stocks, which had been in the lead during much of fiscal 1997.
In light of these positive trends, we plan to maintain sector weightings and
market capitalization levels that are fundamentally the same as those of the
Russell 2000 Growth Index. We believe that this strategy will allow investors to
add a representative sampling of the small-cap growth sector to their overall
portfolios.
INTERNATIONAL EQUITY FUND
For the twelve months ended September 30, 1997, the International Equity Fund
generated a return of 9.71% for Class A shares without a sales load, 5.84% for
Class A shares from which a sales charge has been deducted, and 5.52% for Class
B shares from which a sales charge has been deducted. This compares to a 12.19%
return for the MSCI EAFE Index for the same period. The Fund's net assets
reached $3.8 million by the end of the fiscal year.
The Marquis International Equity Fund invests substantially all of its assets in
the SEI International Trust International Equity Portfolio.
A robust economy in the United Kingdom, along with modest gains in France and
Germany, led to strong performance for the portfolio's European holdings. This
stood in sharp contrast to the Asian markets, which continued to suffer from
ongoing economic malaise in Japan and currency crises in the emerging markets
of Malaysia and Thailand.
The portfolio's performance was also dampened somewhat by its small-cap
holdings, which comprise roughly 20% of the portfolio, at a time when the
small-cap sector has been out of favor in both Europe and Asia.
Looking ahead, we believe that the recent setbacks in Asia and the global
small-cap sector will be temporary in nature, and represent normal cycles in a
global investment strategy. Further, we remain optimistic that the world-
"WE SEE STRONG SIGNS OF CONTINUED STRENGTH IN SMALL-CAP ISSUES."
KEVIN P. REED
18 SEPTEMBER 30, 1997
<PAGE>
wide economic expansion will continue to provide significant opportunities for
investors who seek diversification beyond U.S. borders.
[PHOTO OF WOMAN OMITTED]
- ---------------------------------------------------
AVERAGE AVERAGE AVERAGE
ANNUAL ANNUAL ANNUAL RETURN
CLASS ONE YEAR 3 YEAR 5 YEAR INCEPTION
OF SHARES RETURN RETURN RETURN TO DATE
- ---------------------------------------------------
CLASS A WITHOUT
LOAD 9.71% 7.68% 9.76% 5.06%
- ---------------------------------------------------
CLASS A WITH
LOAD 5.84 6.40 8.99 4.58
- ---------------------------------------------------
CLASS B WITHOUT
LOAD 9.01 6.87 8.93 4.25
- ---------------------------------------------------
CLASS B WITH
LOAD 5.52 6.32 8.86 4.25
- ---------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1997.
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS A
AND B SHARES WERE OFFERED BEGINNING JANUARY 31, 1997. PERFORMANCE OF THE CLASS A
SHARES REFLECTS THE MAXIMUM FRONT END SALES CHARGE OF 3.50%. CLASS B SHARES
REFLECT THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 3.50% FOR THE ONE-YEAR
HOLDING PERIOD. THE PERFORMANCE QUOTED FOR THE MARQUIS INTERNATIONAL EQUITY FUND
REPRESENTS INFORMATION RELATING TO THE SEI INTERNATIONAL TRUST INTERNATIONAL
EQUITY PORTFOLIO. THE MARQUIS INTERNATIONAL EQUITY FUND INVESTS SUBSTANTIALLY
ALL ITS ASSETS IN THE SEI INTERNATIONAL TRUST INTERNATIONAL EQUITY PORTFOLIO.
THE PERFORMANCE INFORMATION CONTAINED HEREIN HAS BEEN ADJUSTED TO REFLECT THE
ACTUAL FEES AND EXPENSES OF THE MARQUIS INTERNATIONAL EQUITY FUND, WHOSE FEES
AND EXPENSES ARE HIGHER THAN THOSE OF THE SEIINTERNATIONAL TRUST INTERNATIONAL
EQUITY PORTFOLIO. THE SEI INTERNATIONAL TRUST INTERNATIONAL EQUITY PORTFOLIO
SHARES WERE OFFERED BEGINNING DECEMBER 20, 1989. THE PERFORMANCE OF THE MSCI
EAFE INDEX AND LIPPER INTERNATIONAL FUNDS AVERAGE DOES NOT INCLUDE ANNUAL
OPERATING EXPENSES WHICH ARE EXPERIENCED BY THE FUND.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE INTERNATIONAL EQUITY FUND VERSUS THE
MSCI EAFE INDEX AND THE LIPPER INTERNATIONAL FUNDS AVERAGE
[LINE GRAPH OMITTED]
CLASS A
International Lipper
International Equity MSCI International
Equity Fund EAFE Funds
Fund w/load Index Average
12/89 10000 9650 10000 10000
9/90 8336 8045 6927 8455
9/91 9376 9048 8443 9872
9/92 9165 8844 7842 9726
9/93 11028 10642 9908 11931
9/94 11693 11284 10883 13522
9/95 12156 11731 11514 13965
9/96 13309 12843 12507 15320
9/97 14601 14090 14032 18168
[LINE GRAPH OMITTED]
CLASS B
International Lipper
International Equity MSCI International
Equity Fund EAFE Funds
Fund w/load Index Average
12/89 10000 10000 10000 10000
9/90 8286 8286 6927 8455
9/91 9248 9248 8443 9872
9/92 8969 8969 7842 9726
9/93 10715 10715 9908 11931
9/94 11269 11269 10883 13522
9/95 11617 11617 11514 13965
9/96 12619 12619 12507 15320
9/97 13756 13756 14032 18168
SEPTEMBER 30, 1997 19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of the Marquis Funds:
We have audited the accompanying statements of net assets of the Institutional
Money Market, Treasury Securities Money Market, Tax Exempt Money Market,
Government Securities, Strategic Income Bond, Louisiana Tax-Free Income,
Balanced, Value Equity, Growth Equity, SmallCap Equity and International Equity
Funds of the Marquis Funds (the "Trust") as of September 30, 1997, and the
related statements of operations, changes in net assets and financial highlights
for the periods presented. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Institutional Money Market, Treasury Securities Money Market, Tax Exempt Money
Market, Government Securities, Strategic Income Bond, Louisiana Tax-Free Income,
Balanced, Value Equity, Growth Equity, SmallCap Equity and International Equity
Funds of the Marquis Funds as of September 30, 1997, the results of their
operations, changes in their net assets, and financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
November 7, 1997
20 SEPTEMBER 30, 1997
<PAGE>
STATEMENT OF NET ASSETS
INSTITUTIONAL MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
U.S. TREASURY OBLIGATIONS -- 26.9%
U.S. Treasury Bills
5.400%, 10/16/97 $14,000 $13,974
5.840%, 03/05/98 1,800 1,757
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $15,731) 15,731
-------
REPURCHASE AGREEMENTS -- 73.6%
AUBREY G. LANSTON
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$2,700,000 (collateralized
by U.S. Treasury Note, par
value $1,915,000, 13.750%,
08/15/04, market value:
$2,759,000) 2,700 2,700
DEUTSCHE BANK
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$867,000 (collateralized by
U.S. Treasury Note, par
value $862,000, 5.875%,
10/31/98, market value:
$885,000) (1) 867 867
HSBC
6.030%, dated 09/30/97, matures
10/01/97, repurchase price
$2,700,000 (collateralized by
U.S. Treasury Note, par value
$1,900,000, 12.000%, 08/15/13,
market value:
$2,768,000) 2,700 2,700
J.P. MORGAN
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$13,502,000 (collateralized by
U.S. Treasury STRIPS, par value
$39,626,000, 0.000%, 02/15/14,
market value:
$13,814,000) 13,500 13,500
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
LEHMAN BROTHERS
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$13,502,000 (collateralized by
U. S. Treasury STRIPS, par
value $40,685,000, 0.000%,
08/15/14, market
value: $13,779,000) $13,500 $13,500
MERRILL LYNCH
5.900%, dated 09/30/97, matures
10/01/97, repurchase price
$1,133,000 (collateralized by
U.S. Treasury Bond, par value
$795,000, 12.750%, 11/15/10,
market value:
$1,160,000) (1) 1,132 1,132
MORGAN STANLEY
5.880%, dated 09/30/97, matures
10/01/97, repurchase price
$1,133,000 (collateralized by
U.S. Treasury Note, par value
$1,150,000, 6.250%, 02/15/07,
market value:
$1,167,000) (1) 1,132 1,132
NOMURA SECURITIES
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$1,183,000 (collateralized by
U.S. Treasury Note, par value
$1,179,000, 5.875%, 11/15/99,
market value:
$1,206,000) (1) 1,183 1,183
PRUDENTIAL SECURITIES
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$2,700,000 (collateralized by
U.S. Treasury Note, par value
$2,700,000, 5.875%, 11/15/99,
market value:
$2,762,000) 2,700 2,700
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 21
<PAGE>
STATEMENT OF NET ASSETS
INSTITUTIONAL MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
UBS SECURITIES
6.01%, dated 09/30/97, matures
10/01/97, repurchase price
$958,000 (collateralized by U.S.
Treasury Note, par value
$960,000, 6.000%, 06/30/99,
market value:
$978,000) (1) $ 958 $ 958
WACHOVIA
6.140%, dated 09/30/97, matures
10/01/97, repurchase price
$2,700,000 (collateralized by
U.S. Treasury Note, par value
$2,690,000, 6.125%, 05/15/98,
market value:
$2,762,000) 2,700 2,700
-------
TOTAL REPURCHASE AGREEMENTS
(Cost $43,072) 43,072
-------
TOTAL INVESTMENTS -- 100.5%
(Cost $58,803) 58,803
-------
OTHER ASSETS AND LIABILITIES,
NET -- (0.5%) (287)
-------
NET ASSETS:
FUND SHARES
(unlimited authorization -- no
par value) based on 58,515,538
outstanding shares of
beneficial interest 58,516
-------
TOTAL NET ASSETS -- 100.0% $58,516
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
=======
- ------------------------------------------
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST
AND PRINCIPAL OF SECURITIES
(1) TRI-PARTY REPURCHASE AGREEMENT
TREASURY SECURITIES MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
U.S. TREASURY OBLIGATIONS -- 11.6%
U.S. Treasury Bills
5.400%, 10/16/97 $100,000 $ 99,817
5.840%, 03/05/98 60,000 58,573
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $158,390) 158,390
--------
REPURCHASE AGREEMENTS -- 88.8%
AUBREY G. LANSTON
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$63,011,000 (collateralized by
various U.S. Treasury Obligations,
par value $66,992,000,
0.000%-5.625%, 07/23/98-
11/30/98, market value:
$64,332,000) 63,000 63,000
DEUTSCHE BANK
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$62,727,000 (collateralized by
various U.S. Treasury Notes,
par value $61,657,000,
6.000%-8.875%, 08/15/99-
01/31/02, market value:
$63,972,000) (1) 62,717 62,717
HSBC
6.030%, dated 09/30/97, matures
10/01/97, repurchase price
$63,011,000 (collateralized by
U.S. Treasury Note, par value
$44,350,000, 12.000%, 08/15/13,
market value:
$64,605,000) 63,000 63,000
J.P. MORGAN
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$310,052,000 (collateralized
by various U.S. Treasury
Obligations, par value
$974,789,000, 0.000%-12.000%,
05/15/98-02/15/19,
market value:
$317,875,000) 310,000 310,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
22 SEPTEMBER 30, 1997
<PAGE>
TREASURY SECURITIES MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
J.P. MORGAN
6.000%, dated 09/30/97, matures
10/01/97, repurchase price
$6,001,000 (collateralized by U.S.
Treasury Bill, par value
$6,451,000, 0.000%, 09/17/98,
market value:
$6,121,000) (1) $ 6,000 $ 6,000
LEHMAN BROTHERS
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$315,053,000 (collateralized
by various U.S. Treasury
Obligations, par value
$732,047,000, 0.000%, 11/15/00-
08/15/17, market value:
$321,992,000) 315,000 315,000
LEHMAN BROTHERS
5.9500%, dated 09/30/97, matures
10/01/97, repurchase price
$6,001,000 (collateralized by
U.S. Treasury STRIP,
par value $12,490,000,
0.000%, 02/15/99, market
value: $6,120,000) (1) 6,000 6,000
MERRILL LYNCH
5.900%, dated 09/30/97, matures
10/01/97, repurchase price
$64,821,000 (collateralized by
U.S. Treasury Bond, par value
$45,290,000, 12.75%,
11/15/10, market value:
$66,109,000) (1) 64,811 64,811
MORGAN STANLEY
5.880%, dated 09/30/97, matures
10/01/97, repurchase price
$64,215,000 (collateralized by
U.S. Treasury Bond, par value
$65,093,000, 6.375%, 08/15/27,
market value:
$65,545,000) (1) 64,205 64,205
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
NOMURA SECURITIES
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$65,057,000 (collateralized
by U.S. Treasury Obligations,
par value $93,040,000,
0.000%-8.500%, 06/30/99-
08/15/16, market value:
$66,347,000) (1) $65,045 $ 65,045
PRUDENTIAL SECURITIES
6.050%, dated 09/30/97, matures
10/01/97, repurchase price
$63,011,000 (collateralized by
various U.S. Treasury Notes,
par value $62,105,000, 5.875%-
12.000%, 11/15/99-08/15/13,
market value:
$64,454,000) 63,000 63,000
UBS SECURITIES
6.010%, dated 09/30/97, matures
10/01/97, repurchase price
$65,092,000 (collateralized by
various U.S. Treasury obligations,
par value $65,230,000, 6.000%-
9.125%, 05/15/99-06/30/99,
market value:
$66,386,000) (1) 65,081 65,081
WACHOVIA
6.140%, dated 09/30/97, matures
10/01/97, repurchase price
$63,011,000 (collateralized by
various U.S. Treasury Notes,
par value $62,705,000, 6.125%,
05/15/98, market value:
$64,380,000) 63,000 63,000
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $1,210,859) 1,210,859
----------
TOTAL INVESTMENTS -- 100.4%
(Cost $1,369,249) 1,369,249
----------
OTHER ASSETS AND LIABILITIES,
NET -- (0.4%) (5,161)
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 23
<PAGE>
STATEMENT OF NET ASSETS
TREASURY SECURITIES MONEY MARKET FUND
DESCRIPTION VALUE (000)
- ------------------------------------------
NET ASSETS:
FUND SHARES OF TRUST CLASS
(unlimited authorization --
no par value) based on
556,939,790 outstanding
shares of beneficial interest $ 556,940
FUND SHARES OF RETAIL CLASS
(unlimited authorization --
no par value) based on
604,910,633 outstanding
shares of beneficial interest 604,911
FUND SHARES OF CASH SWEEP CLASS
(unlimited authorization --
no par value) based
on 202,212,417 outstanding
shares of beneficial interest 202,212
Accumulated net realized gain
on investments 17
Undistributed net investment income 8
----------
TOTAL NET ASSETS -- 100.0% $1,364,088
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- TRUST CLASS $1.00
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- RETAIL CLASS $1.00
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CASH SWEEP CLASS $1.00
==========
- ------------------------------------------
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
(1) TRI-PARTY REPURCHASE AGREEMENT
TAX EXEMPT MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
MUNICIPAL BONDS -- 99.6%
ALABAMA -- 0.7%
Alabama State, Housing
Finance Authority, Multi-
Family Residential
Development, Ser B,
VRDN, RB (A) (B) (C)
4.100%, 10/01/97 $ 500 $ 500
--------
ARIZONA -- 0.2%
Tuscon Industrial
Development Authority,
Tuscon City Center Parking,
VRDN, RB (A) (B) (C)
4.175%, 10/02/97 125 125
--------
CALIFORNIA -- 0.1%
Union City, Multi-Family
Housing - Sierra Green
Apartments, VRDN,
RB (A) (B) (C)
3.700%, 10/15/97 100 100
--------
COLORADO -- 6.5%
Eagle County, Smith Creek
Metropolitan District Project,
Ser 95, VRDN,
RB (A) (B) (C)
3.850%, 10/02/97 1,000 1,000
Housing Financial Authority,
Cambray Park Project,
VRDN, RB (A) (B) (C)
4.200%, 10/02/97 2,150 2,150
Housing Financial Authority,
Woodstream Project,
VRDN (A) (B) (C)
4.200%, 10/02/97 1,860 1,860
--------
5,010
--------
CONNECTICUT -- 0.1%
Housing Finance Authority,
Housing Mortgage Finance,
Ser A, RB
7.000%, 11/15/97 75 75
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
24 SEPTEMBER 30, 1997
<PAGE>
TAX EXEMPT MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
DISTRICT OF COLUMBIA -- 0.5%
Washington, DC, George
Washington University
(A) (B)
4.250%, 10/01/97 $ 350 $ 350
--------
FLORIDA -- 6.0%
Brevard County Housing
Finance Authority, Park
Village & Malobar Lakes
Project, VRDN, RB (A) (B)
4.200%, 10/01/97 1,425 1,425
Florida Housing Finance
Agency, Lakeside South
Association, VRDN,
RB (A) (B)
4.175%, 10/02/97 430 430
Jacksonville, University
Hospital Center Project,
VRDN, RB (A) (B) (C)
4.250%, 10/02/97 1,000 1,000
Lee Industrial Development
Authority, Christian
Mission Shell Point Village,
VRDN, RB (A) (B) (C)
3.925%, 10/02/97 825 825
Orange County, Industrial
Development Authority,
Orlando Hawaiian Motel,
VRDN, RB (A) (B)
3.800%, 10/01/97 545 545
Pinellas County, Health
Facilities Authority,
Hospital Program, VRDN,
RB (A) (B) (C)
3.800%, 10/01/97 400 400
--------
4,625
--------
GEORGIA -- 4.4%
Dekalb County, Industrial
Development Authority,
VRDN, RB (A) (B) (C)
4.250%, 10/02/97 700 700
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Effingham County,
Development Authority
Pollution Control, Savannah
Electric and Power,
VRDN, RB (A) (B)
4.100%, 10/01/97 $ 200 $ 200
Marietta Housing Finance
Authority, Multi-Family
Housing, Franklin Walk
Apartments Project,
VRDN, RB (A) (B) (C)
3.925%, 10/02/97 2,500 2,500
--------
3,400
--------
IDAHO -- 1.3%
Nez Perce County, Pollution
Control, VRDN,
RB (A) (B) (C)
4.050%, 10/02/97 1,025 1,025
--------
ILLINOIS -- 10.4%
Elgin, Illinois, Ser A, GO
7.125%, 01/01/98 295 297
Glenview, Illinois, Park
District, GO
4.050%, 12/01/97 1,120 1,120
Illinois Development Financial
Authority, Village of Oak
Park Residence, VRDN,
RB (A) (B) (C)
4.300%, 10/02/97 1,000 1,000
Illinois Development Financial
Authority, Ser 84, VRDN,
RB (A) (B) (C)
4.165%, 10/29/97 1,300 1,300
Illinois Educational Facilities
Authority
3.750%, 10/24/97 1,000 1,000
Illinois Health Facilities
Authority, Advocate
Healthcare Network,
Ser B, VRDN (A) (B)
4.150%, 10/01/97 1,700 1,700
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 25
<PAGE>
STATEMENT OF NET ASSETS
TAX EXEMPT MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Kendall and Kane Counties,
Illinois Community School
Districts Number 115, TAN
4.400%, 01/21/98 $ 750 $ 751
Orland Hills Mortgage
Authority, Ser 88-A,
VRDN, RB (A) (B) (C)
4.200%, 10/01/97 600 600
Riverside Health Facility,
Ser A, RB (MBIA)
4.000%, 11/15/97 245 245
--------
8,013
--------
INDIANA -- 9.3%
Indiana Bond Bank, Advance
Funding Note, RB
4.000%, 01/21/98 819 819
Indiana Health Facilities,
Hartsfield Village, Project B,
VRDN, RB (A) (B)
4.250%, 10/02/97 2,000 2,000
Indiana Residential
Apartments, Ser A,
VRDN, RB (A) (B)
4.250%, 10/02/97 2,000 2,000
North Adams, Community
Schools, TAW, GO
4.250%, 12/26/97 1,050 1,051
Perry Township, Multiple
School Building, BAN
4.000%, 06/25/98 1,000 1,000
Purdue University, Student
Fee, Ser B, RB
6.100%, 07/01/98 250 254
--------
7,124
--------
IOWA -- 1.8%
Des Moines, Drake University
Project, Ser B, Pre-Refunded
12/1/97 @ 102, RB
6.800%, 12/01/01 425 436
6.800%, 12/01/02 450 461
6.800%, 12/01/03 485 497
--------
1,394
--------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
KANSAS -- 2.0%
Shawnee County,
Ser 1, TAN
4.250%, 02/01/98 $ 940 $ 941
Topeka Multi-Family
Housing Revenue, Ser 85,
VRDN, RB (A) (B)
3.900%, 10/02/97 600 600
--------
1,541
--------
KENTUCKY -- 1.6%
Covington Industrial
Building, Atkins & Pearce
Inc., Ser 1995, VRDN,
RB (A) (B) (C)
4.000%, 10/02/97 455 455
Louisville, Industrial
Development Revenue
Referendum - Zeochem
Project, VRDN,
RB (A) (B) (C)
4.150%, 10/01/97 750 750
--------
1,205
--------
LOUISIANA -- 3.6%
State Recovery, District Sales
Tax Revenue, RB (MBIA)
4.250%, 07/01/98 500 501
New Orleans Industrial
Development Board,
Spectrum Control
Technology, RB (A) (B) (C)
4.100%, 10/02/97 2,300 2,300
--------
2,801
--------
MAINE -- 0.4%
Baileyville, Pollution Control,
Georgia Pacific Corporation,
VRDN, RB (A) (B) (C)
4.175%, 10/02/97 300 300
--------
MASSACHUSETTS -- 2.4%
Brockton, Massachusetts,
RB, RAN
4.500%, 06/30/98 800 802
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
26 SEPTEMBER 30, 1997
<PAGE>
TAX EXEMPT MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
New England Education
Loan Marketing
Corporation, Student
Loans Ser C, RB (C)
4.750%, 07/01/98 $1,000 $ 1,005
--------
1,807
--------
MICHIGAN -- 1.1%
Grand Rapids, Water Supply
Revenue, Ser 88,
Pre-Refunded 01/01/98
@ 102, RB
7.875%, 01/01/18 105 108
Job Development Authority,
Pollution Control, Mazda
Motor Manufacturing,
RB (A) (B) (C)
4.050%, 10/02/97 125 125
Oakland County, Economic
Development, Corners
Shopping Center, VRDN,
RB (A) (B) (C)
3.650%, 02/01/98 620 620
--------
853
--------
MINNESOTA -- 0.4%
Hutchinson, Economic
Development Authority,
VRDN, RB (A) (B) (C)
3.850%, 02/15/98 325 325
--------
MISSOURI -- 2.6%
Kansas City Industrial
Development, Hospital
Authority, Baptist Health
System, Ser A, VRDN,
RB (A) (B) (C)
3.850%, 10/02/97 1,965 1,965
--------
NEBRASKA -- 1.3%
Hamilton County, Industrial
Development, Iams
Corporation Project,
VRDN, RB (A) (B) (C)
4.150%, 10/02/97 1,020 1,020
--------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
NEVADA -- 0.5%
Henderson, Public
Improvement Trust,
Pueblo Verde I+II
Apartment Project,
Ser 95a/95b #1071,
VRDN, RB (A) (B) (C)
4.150%, 10/02/97 $ 375 $ 375
--------
NEW JERSEY -- 1.3%
Ventnor City, New Jersey,
Ser A, BAN
4.250%, 04/30/98 1,000 1,000
--------
NEW MEXICO -- 0.7%
Villa Hermosa, Affordable
Housing, Multi-Family
Villa Hermosa Apartments
Project, VRDN (A) (B) (C)
4.300%, 10/07/97 500 500
--------
NEW YORK -- 4.5%
Freeport, New York, Unified
Freeport School District,
TAN (C)
4.250%, 06/29/98 500 501
Lindenhurst, New York,
Unified School District,
TAN (C)
4.250%, 06/24/98 500 501
Nassau County, New York,
Ser A, RAN
4.250%, 03/10/98 700 701
North Hempstead, New
York, Ser A, BAN
4.000%, 01/29/98 1,000 1,000
North Hempstead, New
York, Ser C, BAN
4.375%, 05/06/98 750 751
--------
3,454
--------
NORTH CAROLINA -- 2.0%
Beaufort, Industrial Facility,
Pollution Control Revenue,
VRDN, RB (A) (B) (C)
4.150%, 10/02/97 1,525 1,525
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 27
<PAGE>
STATEMENT OF NET ASSETS
TAX EXEMPT MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
OHIO -- 4.6%
Bellevue, Bellevue Hospital
Project, VRDN, RB (A) (B)
3.850%, 03/01/98 $ 380 $ 380
Cadiz, Ohio, BAN
4.450%, 12/18/97 1,575 1,577
Clermont County, Economic
Development, Eastmark
Center Association Project,
VRDN, RB (A) (B)
4.000%, 12/01/97 270 270
Columbus, Electrical Systems
Revenue, VRDN,
RB (A) (B) (C)
3.500%, 10/03/97 1,300 1,300
--------
3,527
--------
OKLAHOMA -- 7.1%
Muskogee, Industrial Trust
Revenue, VRDN,
RB (A) (B) (C)
4.250%, 10/01/97 1,100 1,100
Oklahoma City, Industrial
Development Authority,
Baptist General Convention
Refunding, Ser 89, VRDN,
RB (A) (B) (C)
3.850%, 12/01/97 1,770 1,770
Oklahoma City, University
City Project, Ser 85,
VRDN, RB (A) (B) (C)
4.300%, 10/04/97 600 600
Tulsa City, Industrial
Authority Health Care,
Laureate Psychiatric Project,
VRDN, RB (A) (B)
3.850%, 02/16/98 2,000 2,000
--------
5,470
--------
OREGON -- 1.6%
Hillsboro, Graduate Institute,
VRDN, (A) (B) (C)
4.200%, 10/02/97 1,200 1,200
--------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
PENNSYLVANIA -- 6.9%
Allegheny County, Hospital
Development Authority,
Ser C, VRDN,
RB (A) (B) (C)
4.050%, 10/01/97 $ 500 $ 500
Bucks County Industrial
Development Authority,
Edgcomb Metals Project,
VRDN, RB (A) (B) (C)
3.800%, 10/02/97 300 300
Clarion County, Industrial
Development Authority,
Meritcare Project,
Ser A, (A) (B)
4.100%, 10/02/97 1,100 1,100
Emmaus General Authority,
VRDN, RB (A) (B) (FSA)
4.050%, 10/01/97 100 100
Higher Education Facilities
Authority, Carnegie
Mellon University Project,
Ser B, VRDN, RB (A) (B)
3.900%, 10/01/97 250 250
Higher Education Facilities
Authority, Thomas
Jefferson University Ser B,
VRDN (A) (B) (C)
3.800%, 10/30/97 1,200 1,200
Philadelphia, School District
Authority, TRAN (C)
4.500%, 06/30/98 750 753
Schuylkill County, Resource
Recovery Authority,
Northeastern Power
Series A, VRDN,
RB (A) (B) (C)
3.800%, 10/01/97 1,100 1,100
--------
5,303
--------
SOUTH CAROLINA -- 2.3%
Charleston Center, Tax
Exempt Mortgage Bond
Trust #5, VRDN (A) (B) (C)
3.750%, 10/02/97 1,000 1,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
28 SEPTEMBER 30, 1997
<PAGE>
TAX EXEMPT MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Lexington, Water and Sewer
Revenue, Ser 1997, BAN
4.750%, 10/01/97 $ 750 $ 750
--------
1,750
--------
TENNESSEE -- 2.6%
Franklin County, Health &
Education Facilities Board,
University of South Sewanee,
Credit Enhancement
Project, VRDN, RB (A) (B)
3.800%, 10/01/97 360 360
Germantown, Tennessee, GO
3.800%, 01/01/98 505 505
Jefferson County Industrial
Development, Economic
Development, Ball
Corporation Project,
RB (A) (B) (C)
4.250%, 10/02/97 1,000 1,000
Maury County, Tennessee
Hillview Health Care
Center, Ser 86, VRDN, (A) (B)
4.000%, 10/01/97 155 155
--------
2,020
--------
TEXAS -- 2.2%
Bexar County, Detention
Facilities, GO
7.250%, 06/15/98 200 205
Corpus Christi, Industrial
Development Authority
Air Inventory
Project, VRDN, (A) (B)
3.900%, 10/01/97 125 125
San Antonio, River Channel
Improvement Authority,
RB (FSA)
6.550%, 07/01/98 290 296
Texas School District,
Limited Tax Obligation
Texas Association of School
Boards, Ser D, GO
4.000%, 02/15/98 825 825
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Water Development Board,
Ser A, VRDN,
RB (A) (B) (C)
3.900%, 10/01/97 $ 200 $ 200
--------
1,651
--------
UTAH -- 1.0%
West Valley, Industrial
Development Authority,
Johnson Matthey Project,
VRDN, RB (A) (B)
3.950%, 10/01/97 800 800
--------
WEST VIRGINIA -- 1.5%
Mingo County, Board of
Education, GO (AMBAC)
9.700%, 10/01/97 340 340
Wood County, Industrial
Development, Aga Gas
Project, VRDN,
RB (A) (B) (C)
3.750%, 10/01/97 800 800
--------
1,140
--------
WISCONSIN -- 3.4%
Clinton, Community School
District, TRAN
4.240%, 08/31/98 475 475
Fox Point and Bayside,
Joint School District,
BAN, GO
4.200%, 04/10/98 775 775
Janesville, Water Utility
Improvements, PN,
GO (FSA)
4.800%, 06/01/98 380 382
Oregon, Wisconsin, School
District, TRAN
4.220%, 09/16/98 1,000 1,001
--------
2,633
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 29
<PAGE>
STATEMENT OF NET ASSETS
TAX EXEMPT MONEY MARKET FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------
WYOMING -- 0.7%
Cheyenne County, Economic
Development, Holiday
Inn Project, VRDN,
RB (A) (B)
3.800%, 04/01/98 $235 $ 235
University of Wyoming,
VRDN, RB (A) (B) (MBIA)
4.000%, 06/01/98 265 265
--------
500
--------
TOTAL MUNICIPAL BONDS
(Cost $76,406) 76,406
--------
TOTAL INVESTMENTS -- 99.6%
(Cost $76,406) 76,406
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.4% 338
--------
NET ASSETS:
FUND SHARES
(unlimited authorization --
no par value) based on
76,743,813 outstanding
shares of beneficial interest 76,744
--------
TOTAL NET ASSETS -- 100.0% $76,744
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
========
DESCRIPTION
- ------------------------------------------
(A) VARIABLE RATE INSTRUMENT. THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON SEPTEMBER 30, 1997.
(B) PUT AND DEMAND FEATURES EXIST ALLOWING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY. THE MATURITY SHOWN IS THE LESSER OF THE PUT
DATE OR THE MATURITY DATE.
(C) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT OR OTHER CREDIT
SUPPORT.
BAN--BOND ANTICIPATION NOTE
GO--GENERAL OBLIGATION
PN--PROMISSORY NOTE
RAN--REVENUE ANTICIPATION NOTE
RB--REVENUE BOND
SER--SERIES
TAN--TAX ANTICIPATION NOTE
TAW--TAX ANTICIPATION WARRANT
TRAN--TAX AND REVENUE ANTICIPATION NOTE
VRDN--VARIABLE RATE DEMAND NOTE
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR
CERTAIN SECURITIES AS DEFINED IN THE STATEMENT OF NET ASSETS:
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30 SEPTEMBER 30, 1997
<PAGE>
GOVERNMENT SECURITIES FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 10.0%
Farmer MAC
7.560%, 05/28/02 $ 500 $ 528
FFCB
7.510%, 02/13/98 250 252
8.650%, 10/01/99 255 268
FHLB
5.370%, 11/03/00 500 491
7.500%, 08/10/04 500 533
FHLMC
6.300%, 03/15/03 135 133
6.280%, 07/15/03 250 246
7.930%, 01/20/05 250 272
FICO STRIPS
0.000%, 10/05/05 180 108
0.000%, 12/27/05 334 197
0.000%, 10/06/06 500 280
0.000%, 11/11/06 1,000 557
0.000%, 12/27/06 500 276
FNMA
9.550%, 12/10/97 1,075 1,082
9.150%, 04/10/98 1,175 1,196
9.550%, 03/10/99 255 268
5.875%, 02/02/06 5,000 4,838
SBA Ser 1988-10-C
9.350%, 07/01/98 7 7
TVA
6.250%, 08/01/99 400 400
8.375%, 10/01/99 3,000 3,131
--------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $15,118) 15,063
--------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 39.1%
FHLMC
7.000%, 04/01/00 14 15
9.000%, 11/01/05 717 751
9.000%, 05/01/06 1,013 1,061
7.250%, 05/01/07 44 45
9.000%, 08/01/09 708 737
9.000%, 12/01/09 1,039 1,105
9.500%, 04/01/16 4 5
6.500%, 11/15/22 5,200 5,079
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
FHLMC CMO
7.500%, 11/15/01 $4,312 $4,417
6.700%, 05/15/05 1,925 1,931
7.000%, 09/15/07 3,425 3,372
6.500%, 04/15/08 4,850 4,743
7.750%, 01/15/20 800 803
FNMA
8.500%, 03/01/98 124 129
7.000%, 09/01/02 183 186
6.500%, 04/01/04 65 63
8.000%, 05/25/05 100 106
6.250%, 02/25/07 150 150
7.000%, 09/01/07 3,069 3,099
6.250%, 01/25/09 1,000 981
6.550%, 12/25/21 150 149
FNMA REMIC
7.350%, 06/25/07 2,000 1,982
6.250%, 10/25/22 64 65
GNMA
10.500%, 06/15/98 2 3
9.000%, 07/15/02 9 10
6.500%, 07/15/08 1,142 1,141
6.500%, 03/15/09 110 110
6.500%, 05/15/09 2,826 2,824
9.000%, 06/15/16 15 16
9.000%, 07/15/16 506 540
9.000%, 09/15/16 291 310
9.000%, 10/15/16 93 100
9.000%, 11/15/16 247 264
9.000%, 02/15/17 25 27
9.500%, 08/15/17 441 479
10.000%, 04/15/19 165 181
10.000%, 05/15/19 33 37
10.000%, 06/15/19 5 6
9.500%, 12/15/19 354 384
7.500%, 06/15/23 3,891 3,958
7.000%, 03/15/24 2,182 2,183
7.000%, 04/15/24 3,007 3,008
8.500%, 10/15/24 1,270 1,329
7.500%, 06/15/25 224 228
8.000%, 06/15/25 205 212
8.000%, 07/15/25 2,122 2,194
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 31
<PAGE>
STATEMENT OF NET ASSETS
GOVERNMENT SECURITIES FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------
7.000%, 01/15/26$ 4,744 $ 4,744
7.500%, 03/15/26 167 171
8.000%, 08/15/26 241 250
7.500%, 03/15/27 2,963 3,014
--------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $58,447) 58,697
--------
U.S. TREASURY OBLIGATIONS -- 43.1%
Treasury LINCS
6.000%, 08/15/09 2,500 2,362
U.S. Treasury Bill
5.447%, 12/11/97 100 99
U.S. Treasury Bonds
6.125%, 05/15/98 200 201
5.625%, 02/15/06 12,500 12,051
9.375%, 02/15/06 1,000 1,209
7.125%, 02/15/23 2,500 2,694
U.S. Treasury Notes
5.125%, 04/30/98 1,800 1,796
9.000%, 05/15/98 1,550 1,582
5.125%, 06/30/98 2,650 2,643
8.250%, 07/15/98 100 102
9.250%, 08/15/98 2,500 2,575
8.875%, 11/15/98 50 52
5.625%, 11/30/98 3,000 2,997
6.375%, 01/15/99 1,500 1,512
8.000%, 08/15/99 100 104
7.125%, 09/30/99 3,000 3,073
6.000%, 10/15/99 1,500 1,507
7.875%, 11/15/99 1,400 1,456
6.375%, 01/15/00 150 152
8.500%, 02/15/00 2,850 3,013
5.500%, 04/15/00 650 645
6.000%, 08/15/00 7,500 7,523
8.750%, 08/15/00 2,775 2,981
6.375%, 08/15/02 5,425 5,506
6.250%, 02/15/03 150 151
5.750%, 08/15/03 2,150 2,116
5.875%, 02/15/04 1,500 1,484
6.500%, 08/15/05 3,000 3,063
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $64,709) 64,649
--------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
CORPORATE OBLIGATIONS -- 1.9%
Anheuser Busch
8.750%, 12/01/99 $600 $ 632
General Foods
6.000%, 06/15/01 500 492
Lehman Brothers Holdings
6.375%, 06/01/98 500 502
New England Telephone &
Telegraph
6.250%, 12/15/97 700 702
Pepsico
7.625%, 12/18/98 500 509
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $2,843) 2,837
--------
CASH EQUIVALENT -- 1.7%
SEI Liquid Asset Trust
Government Portfolio 2,568 2,568
--------
TOTAL CASH EQUIVALENT
(Cost $2,568) 2,568
--------
REPURCHASE AGREEMENT -- 3.5%
UBS SECURITIES
6.01%, dated 09/30/97, matures
10/01/97, repurchase price
$5,185,000 (collateralized by
various FNMA obligations,
par value $6,464,000,
0.000%-6.500%, 02/01/04-
10/01/25, market value:
$5,288,000) 5,184 5,184
--------
TOTAL REPURCHASE AGREEMENT
(Cost $5,184) 5,184
--------
TOTAL INVESTMENTS -- 99.3%
(Cost $148,869) 148,998
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.7% 1,086
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32 SEPTEMBER 30, 1997
<PAGE>
GOVERNMENT SECURITIES FUND
DESCRIPTION VALUE (000)
- -------------------------------------------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on 14,994,367
outstanding shares of
beneficial interest $149,750
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on 106,315
outstanding shares of
beneficial interest 1,051
Accumulated net realized loss
on investments (846)
Net unrealized appreciation
on investments 129
--------
TOTAL NET ASSETS -- 100.0% $150,084
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A $9.94
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($9.94/96.50%) $10.30
========
NET ASSET VALUE AND OFFERING PRICE
PER SHARE -- CLASS B (1) $9.99
========
- ------------------------------------------
CMO--COLLATERALIZED MORTGAGE OBLIGATION
FARMER MAC--FEDERAL AGRICULTURAL MORTGAGE CORPORATION
FFCB--FEDERAL FARM CREDIT BANK
FHLB--FEDERAL HOME LOAN BANK
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FICO--FINANCING CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
LINCS--SYNTHETIC-LINKED COUPON SECURITIES
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SBA--SMALL BUSINESS ADMINISTRATION
SER--SERIES
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
TVA--TENNESSEE VALLEY AUTHORITY
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
STRATEGIC INCOME BOND FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------
CORPORATE OBLIGATIONS -- 62.2%
FINANCIAL SERVICES -- 34.2%
Aetna Services
7.625%, 08/15/26 $250 $ 259
American Express
5.500%, 12/12/97 575 569
Bankers Trust NY
7.250%, 10/15/11 250 254
Ford Motor Credit
6.250%, 12/08/05 250 243
General Electric Capital
5.530%, 02/11/98 500 490
Korea Development
Bank, Ser B
8.140%, 05/04/99 250 257
Lehman Brothers
8.500%, 08/01/15 295 328
Loew's
7.625%, 06/01/23 300 299
Merrill Lynch
5.580%, 05/12/98 600 579
Nationsbank
7.800%, 09/15/16 500 533
Paine Webber
5.650%, 11/13/97 550 546
Sunamerica
8.125%, 04/28/23 419 450
Torchmark
7.875%, 05/15/23 400 410
US West Capital Funding
7.300%, 01/15/07 250 258
--------
5,475
--------
GENERAL UTILITIES -- 17.5%
Canadian Pacific Limited
9.450%, 08/01/21 280 341
Commonwealth Edison
8.375%, 09/15/22 300 315
Florida Power
8.000%, 12/01/22 500 530
GTE
7.900%, 02/01/27 400 420
MCI Communications
8.250%, 01/20/23 400 432
Minnesota Power & Light
7.500%, 08/01/07 200 206
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 33
<PAGE>
STATEMENT OF NET ASSETS
STRATEGIC INCOME BOND FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Pacificorp, Ser F
7.240%, 08/16/23 $250 $ 249
United Telephone Florida
8.375%, 01/15/25 270 309
--------
2,802
--------
INDUSTRIAL -- 10.5%
Brunswick
7.375%, 09/01/23 400 403
Eastman Chemical
7.600%, 02/01/27 250 259
IBM
7.000%, 10/30/25 250 248
Phillip Morris
7.200%, 02/01/07 250 254
Weyerhaeuser
7.500%, 03/01/13 500 524
--------
1,688
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $9,778) 9,965
--------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 30.9%
FHLMC
7.500%, 02/01/27 966 984
8.000%, 02/01/27 476 492
FNMA
8.000%, 09/01/26 471 487
7.500%, 10/01/26 473 481
7.500%, 02/01/27 483 492
GNMA
7.500%, 02/15/27 497 505
7.750%, 02/15/27 492 504
8.000%, 02/15/27 493 509
8.000%, 03/20/27 491 505
--------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $4,907) 4,959
--------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- --------------------------------------------
CASH EQUIVALENT -- 0.3%
SEI Liquid Asset Trust
Government Portfolio $ 50 $ 50
--------
TOTAL CASH EQUIVALENT
(Cost $50) 50
--------
REPURCHASE AGREEMENT -- 6.3%
UBS SECURITIES
6.010%, dated 09/30/97,
matures 10/01/97, repurchase
price $1,006,000 (collateralized
by U.S. Treasury Bond, par
value $675,000, 11.25%,
02/15/15, market value:
$1,028,000) (1) 1,006 1,006
--------
TOTAL REPURCHASE AGREEMENT
(Cost $1,006) 1,006
--------
TOTAL INVESTMENTS -- 99.7%
(Cost $15,741) 15,980
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.3% 52
--------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on
1,535,306 outstanding
shares of beneficial interest 15,333
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on 46,309
outstanding shares of
beneficial interest 460
Net unrealized appreciation
on investments 239
--------
TOTAL NET ASSETS -- 100.0% $16,032
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE --
CLASS A $10.14
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
34 SEPTEMBER 30, 1997
<PAGE>
STRATEGIC INCOME BOND FUND
DESCRIPTION VALUE (000)
- -------------------------------------------
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($10.14 / 96.50%) $10.51
========
NET ASSET VALUE AND OFFERING PRICE
PER SHARE -- CLASS B (2) $10.14
========
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
SER--SERIES
(1) TRI-PARTY REPURCHASE AGREEMENT
(2) CLASS B HAS A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
LOUISIANA TAX-FREE INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------
MUNICIPAL BONDS -- 93.8%
LOUISIANA -- 93.8%
Alexandria, Louisiana
Utilities, RB (FGIC)
5.250%, 05/01/11 $100 $101
Alexandria, Louisiana
Utilities, Ser B, RB
4.650%, 05/01/04 150 151
Ascension Parish, Louisiana
Parish Wide School District,
GO (AMBAC)
4.900%, 03/01/09 150 151
Baton Rouge, Louisiana
Sales & Use Tax, RB (FSA)
6.000%, 08/01/08 200 211
Bossier City, Louisiana
Utility, RB (FGIC)
4.800%, 10/01/05 500 508
Caddo Parish, GO (MBIA)
5.000%, 02/01/05 350 359
East Baton Rouge Parish,
Louisiana Sales & Use
Tax, RB (FGIC)
4.800%, 02/01/06 650 658
5.900%, 02/01/16 500 526
East Baton Rouge Parish,
Louisiana Sales & Use Tax,
Ser A, RB (FGIC)
4.800%, 02/01/09 340 337
East Baton Rouge, Louisiana
Mortgage Financing
Authority, Ser B
4.350%, 10/01/00 75 75
5.300%, 10/01/14 85 83
Ernest N. Morial Exhibition
Hall Special Tax,
RB (MBIA)
4.700%, 07/15/05 115 116
4.900%, 07/15/07 515 524
Gretna, Louisiana
Refunding - Sales Tax
Revenue (AMBAC)
5.200%, 06/01/06 225 230
Iberville School District
District (FSA)
5.750%, 10/01/03 250 268
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 35
<PAGE>
STATEMENT OF NET ASSETS
LOUISIANA TAX-FREE INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Jefferson Parish, Louisiana
Ad Valorem Property Tax,
Ser A, GO (FGIC)
5.250%, 09/01/05 $250 $261
Jefferson Parish, Louisiana
Hospital Services (FGIC)
5.100%, 01/01/05 300 309
5.300%, 01/01/07 100 104
Jefferson Parish, Louisiana
Sales & Use Tax,
RB (AMBAC)
5.000%, 02/01/08 130 132
5.000%, 02/01/13 700 690
Jefferson Parish, Louisiana
School District Sales &
Use Tax, RB (MBIA)
6.250%, 02/01/08 300 325
Kenner, Louisiana Sales
Tax, RB (FGIC)
5.750%, 06/01/06 100 107
Lafayette Parish, Louisiana
School Board Sales Tax,
RB (FSA)
4.875%, 04/01/04 575 586
Lafayette, Public Improvement
Sales Tax Revenue (FGIC)
5.500%, 03/01/07 200 210
Lafayette, Public Improvement,
Ser A, RB (FGIC)
4.900%, 03/01/03 505 516
Lafayette, Louisiana Public
Improvement Sales Tax
Revenue (FGIC)
4.625%, 05/01/05 300 300
Lafayette, Louisiana Public
Power Authority,
RB (AMBAC)
5.000%, 11/01/06 250 256
5.250%, 11/01/09 250 255
Lafayette, Louisiana Utilities,
RB (AMBAC)
4.100%, 11/01/99 275 275
4.700%, 11/01/04 125 126
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------
Lafayette, Public Power
Electric Authority,
RB (AMBAC)
5.300%, 11/01/07 $ 510 $ 525
Louisiana Housing Finance
Agency Mortgage Single
Family, Ser B, RB
6.000%, 06/01/15 830 856
Louisiana Public Facilities
Authority, Department of
Public Safety, RB (AMBAC)
4.900%, 08/01/04 500 509
5.000%, 08/01/05 400 409
Louisiana Public Facility
Authority, Ser A-1
(AMBAC)
5.000%, 12/01/15 1,500 1,534
Louisiana State, Alton
Ochsner Medical Foundation
Ser PJ-B (MBIA)
6.000%, 05/15/17 100 103
Louisiana State Energy &
Power Authority, RB (FGIC)
6.000%, 01/01/13 500 513
Louisiana State Miscellaneous
Taxes Refunding Bond, Ser A
5.700%, 08/01/08 500 542
Louisiana State Mississippi
River Bridge Authority, RB
6.625%, 11/01/06 1,130 1,254
Louisiana State Public
Facilities Authority,
Jefferson Parish Eastbank
Project (FGIC)
4.850%, 08/01/06 250 254
Louisiana State Public
Facilities Authority, Special
Insurance Assessment
4.400%, 10/01/00 120 121
Louisiana State Public
Facilities Authority, Alton
Ochsner Medical Foundation
Project, Ser A, RB (MBIA)
6.000%, 05/15/01 100 106
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36 SEPTEMBER 30, 1997
<PAGE>
LOUISIANA TAX-FREE INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Louisiana State Public
Facilities Authority,
Loyola University Project,
RB (MBIA)
4.900%, 10/01/05 $1,000 $1,021
Louisiana State Public
Facilities Authority,
Our Lady of Lake
Regional Center, RB (MBIA)
5.900%, 12/01/06 390 414
Louisiana State Public
Facilities Authority,
Ser A, RB (FSA)
5.100%, 03/01/01 250 257
Louisiana State Refunding
Bonds, Ad Valorem Property
Tax, GO (MBIA)
6.250%, 08/01/99 250 259
Louisiana State Refunding
Bonds, GO (MBIA)
5.375%, 08/01/05 400 421
Louisiana State Refunding,
Ser A, GO (MBIA)
5.100%, 08/01/01 250 257
5.300%, 08/01/04 250 262
Louisiana State University
Agricultural & Mechanical
College (FGIC)
5.400%, 07/01/05 150 158
5.500%, 07/01/06 250 265
5.750%, 07/01/14 500 519
Louisiana State University
Agricultural & Mechanical
College (MBIA)
6.000%, 07/01/07 580 639
Louisiana State Unlimited
Tax, GO (FGIC)
5.125%, 04/15/08 1,000 1,027
Louisiana State Unlimited
Tax, GO (MBIA)
5.600%, 08/01/07 250 268
5.600%, 08/01/08 250 269
Louisiana State Unlimited
Tax, Ser A, GO (AMBAC)
6.000%, 05/01/07 1,000 1,089
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------
Louisiana State Unlimited
Tax, Ser A, GO (FGIC)
5.500%, 04/15/02 $1,750 $1,834
Louisiana State Unlimited
Tax, Ser A, GO (MBIA)
6.000%, 05/15/99 950 981
Louisiana State, GO (FGIC)
6.000%, 08/01/04 1,000 1,088
Louisiana State, Greater
New Orleans
Expressway, RB
4.800%, 11/01/97 25 25
Louisiana State, Ser A,
GO (MBIA)
5.500%, 05/15/05 500 530
5.600%, 05/15/07 750 803
Louisiana State, Ser A,
GO (MBIA)
5.700%, 05/15/08 250 268
Mandeville, Louisiana
Water Utility Improvements,
Ad Valorem Property Tax
5.150%, 02/01/10 100 101
Monroe, Louisiana Special
School District, GO (FGIC)
5.350%, 03/01/09 500 514
Natchitoches Parish,
Louisiana School
District #7, GO (FSA)
4.900%, 03/01/07 190 193
New Orleans, Louisiana
Home Mortgage Special
Obligation
6.250%, 01/15/11 500 551
New Orleans, Louisiana
Sewer Service, RB (FGIC)
6.250%, 06/01/07 1,215 1,362
5.250%, 06/01/11 1,000 1,014
New Orleans, Louisiana
Unlimited, GO (FGIC)
5.850%, 11/01/09 350 373
Orleans Parish School Board,
Louisiana Public School
Capital Refinancing,
RB (MBIA)
6.000%, 06/01/09 555 614
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 37
<PAGE>
STATEMENT OF NET ASSETS
LOUISIANA TAX-FREE INCOME FUND
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------
Orleans Parish School
Board, Louisiana Unlimited,
GO (FGIC)
5.300%, 09/01/10 $250 $255
Orleans Parish, Louisiana
School Board Public School
Capital Refinancing (MBIA)
5.000%, 12/01/05 250 257
Saint Bernard Parish, Louisiana
School Board Refunding,
GO (MBIA) (A)
4.550%, 05/01/06 200 199
4.600%, 05/01/07 200 198
4.700%, 05/01/08 200 198
4.800%, 05/01/09 200 198
4.900%, 05/01/10 200 198
Saint Charles Parish, Louisiana
Public Improvement Sales
Tax, Ser St-96 (MBIA)
5.000%, 12/01/06 500 514
Saint James Parish, Louisiana
General Obligation Unlimited
Ad Valorem Property Tax
4.800%, 03/01/05 85 86
5.200%, 03/01/08 75 76
Saint Tammany Parish Sales
& Use Tax Revenue (FGIC)
5.750%, 04/01/06 250 265
Saint Tammany Parish,
Louisiana School Board
Sales & Use Tax (FGIC)
5.750%, 04/01/03 250 266
Saint Tammany Parish,
Louisiana School
District #12 (FGIC)
6.500%, 03/01/05 200 212
Shreveport, Louisiana
Public Improvements
Ad Valorem Property Tax
4.750%, 12/01/09 200 195
Shreveport, Louisiana
Unlimited Tax,
GO (AMBAC)
5.150%, 02/01/09 265 269
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
Slidell, Louisiana Sales &
Use Tax Revenue Public
Improvement, Ser B, RB
5.400%, 10/01/07 $200 $ 209
Slidell, Louisiana Unlimited,
GO (AMBAC)
4.900%, 03/01/09 200 200
5.000%, 03/01/13 400 394
Slidell, Louisiana, Sales &
Use Tax Revenue Public
Improvement, Ser B
5.200%, 10/01/05 100 104
--------
37,145
--------
TOTAL MUNICIPAL BONDS
(Cost $36,115) 37,145
--------
CASH EQUIVALENTS -- 7.6%
SEI Tax Exempt Trust Institutional
Trust Tax Free
Portfolio 1,516 1,516
SEI Tax Exempt Trust Tax
Free Portfolio 1,514 1,514
--------
TOTAL CASH EQUIVALENTS
(Cost $3,030) 3,030
--------
TOTAL INVESTMENTS -- 101.4%
(Cost $39,145) 40,175
--------
OTHER ASSETS AND LIABILITIES,
NET -- (1.4%) (567)
--------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on
3,804,658 outstanding shares
of beneficial interest 37,501
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on
112,465 outstanding
shares of beneficial interest 1,131
Accumulated net realized loss
on investments (54)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
38 SEPTEMBER 30, 1997
<PAGE>
LOUISIANA TAX-FREE INCOME FUND
DESCRIPTION VALUE (000)
- -------------------------------------------
Net unrealized appreciation
on investments $ 1,030
-------
TOTAL NET ASSETS -- 100.0% $39,608
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE --
CLASS A $10.11
=======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($10.11 / 96.50%) $10.48
=======
NET ASSET VALUE AND OFFERING PRICE
PER SHARE -- CLASS B (1) $10.11
=======
- ------------------------------------------
(A) WHEN ISSUED SECURITIES.
GO--GENERAL OBLIGATION
RB--REVENUE BOND
SER--SERIES
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT
SUPPORT FOR CERTAIN SECURITIES AS DEFINED IN THE STATEMENT OF NET ASSETS:
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
FGIC--FINANCIAL GUARANTY INSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
(1) CLASS B HAS A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF
A POSSIBLE SALES CHARGE, SEE NOTES TO FINANCIAL STATEMENTS.
BALANCED FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
COMMON STOCKS -- 54.7%
AEROSPACE & DEFENSE -- 1.9%
Sci Systems* 32,400 $ 1,606
Thiokol 11,780 1,013
--------
2,619
--------
AIR TRANSPORTATION -- 0.7%
British Airways,
PLC, ADR 9,200 1,005
--------
APPAREL/TEXTILES -- 0.9%
Tommy Hilfiger* 10,000 499
VF 7,900 732
--------
1,231
--------
AUTOMOTIVE -- 2.1%
Chrysler 26,500 976
Ford Motor 26,350 1,192
TRW 13,600 746
--------
2,914
--------
BANKS -- 2.8%
Citicorp 6,400 857
First Union 21,400 1,071
J.P. Morgan 9,900 1,125
PNC Bank 17,800 869
--------
3,922
--------
BUILDING & CONSTRUCTION -- 0.8%
Lennar 25,600 1,088
--------
CHEMICALS -- 2.8%
Dow Chemical 7,000 635
E.I. du Pont
de Nemours 18,140 1,117
Lubrizol 22,800 958
Vulcan Materials 13,950 1,214
--------
3,924
--------
COMPUTERS & SERVICES-- 3.7%
Applied Materials* 8,500 810
Compaq Computer* 17,500 1,308
Computer Associates
International 13,800 991
Quantum* 27,360 1,048
Tektronix 14,000 944
--------
5,101
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 39
<PAGE>
STATEMENT OF NET ASSETS
BALANCED FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
CONSUMER PRODUCTS -- 0.7%
International Game
Technology 21,000 $ 478
Nine West Group* 11,000 432
--------
910
--------
DRUGS -- 1.3%
Merck 9,830 982
Schering Plough 16,400 845
--------
1,827
--------
ELECTRICAL SERVICES -- 4.8%
Baltimore Gas
& Electric 18,000 500
Consolidated Edison
New York 29,100 989
Duke Power 13,600 672
GPU 27,500 987
New England Electric
System 19,300 758
Nipsco Industries 18,300 771
OGE Energy 15,400 727
Pacific Enterprises 19,600 664
Southern 27,100 611
--------
6,679
--------
FINANCIAL SERVICES -- 3.2%
Bear Stearns 38,256 1,683
Greenpoint Financial 17,400 1,103
Slm Holding 10,600 1,638
--------
4,424
--------
FOOD, BEVERAGE & TOBACCO -- 1.8%
IBP 28,400 671
Philip Morris 20,100 835
Quaker Oats 20,660 1,041
--------
2,547
--------
HOUSEHOLD PRODUCTS -- 1.3%
Armstrong World
Industries 12,470 836
Maytag 30,000 1,024
--------
1,860
--------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
INSURANCE -- 3.3%
AMBAC 34,600 $ 1,408
Conseco 21,840 1,066
Equitable 32,340 1,328
Providian Financial* 18,400 730
--------
4,532
--------
LEISURE -- 0.4%
Callaway Golf 16,000 558
--------
LUMBER & WOOD PRODUCTS -- 0.8%
Plum Creek Timber 32,000 1,084
--------
MACHINERY -- 3.5%
Caterpillar 20,400 1,100
Crane 19,500 802
Cummins Engine 14,000 1,093
Deere 13,800 742
Parker Hannifin 25,275 1,137
--------
4,874
--------
MEDICAL PRODUCTS & SERVICES -- 1.3%
HBO 25,010 944
Lincare Holdings* 15,700 792
--------
1,736
--------
MISCELLANEOUS MANUFACTURING -- 1.2%
Harsco 22,800 1,035
Wolverine Tube* 20,800 653
--------
1,688
--------
PETROLEUM & FUEL PRODUCTS -- 4.1%
Ensco International 31,480 1,241
Noble Drilling* 36,000 1,161
Phillips Petroleum 18,200 940
Union Texas Petroleum 50,000 1,175
USX-Marathon Group 33,000 1,227
--------
5,744
--------
PETROLEUM REFINING -- 1.4%
British Petroleum ADR 11,960 1,086
Mobil 12,000 888
--------
1,974
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
40 SEPTEMBER 30, 1997
<PAGE>
BALANCED FUND
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------
PROFESSIONAL SERVICES -- 1.3%
Moore 41,590 $ 790
Tech Data* 23,000 1,058
--------
1,848
--------
RAILROADS -- 0.7%
Illinois Central 26,700 981
--------
RETAIL -- 4.6%
American Stores 34,600 843
BJ Wholesale Club* 27,700 808
Dayton Hudson 16,010 960
Homebase * 27,700 249
Limited 26,000 635
Lone Star Steakhouse
& Saloon* 20,000 418
Ross Stores 34,260 1,169
TJX 40,400 1,235
--------
6,317
--------
STEEL & STEEL WORKS -- 0.7%
USX-U.S. Steel Group 28,530 991
--------
TELEPHONES & TELECOMMUNICATION -- 1.9%
Ameritech 12,700 845
Century Telephone
Enterprises 25,750 1,133
SBC Communications 10,800 663
--------
2,641
--------
TRUCKING -- 0.7%
Werner Enterprises 41,550 1,008
--------
TOTAL COMMON STOCKS
(Cost $54,977) 76,027
--------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 3.5%
FNMA
5.875%, 02/02/06 $ 5,000 4,838
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $4,886) 4,838
--------
DESCRIPTION PAR (000) VALUE (000)
- ---------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 15.5%
FHLMC
7.000%, 04/01/00 $ 5 $ 5
9.000%, 05/01/06 82 87
9.000%, 08/01/09 368 383
6.500%, 11/15/22 1,486 1,451
FHLMC REMIC
7.150%, 01/15/23 2,000 1,978
FNMA
7.000%, 09/01/07 1,188 1,200
FNMA CMO
7.000%, 01/25/03 1,863 1,854
GNMA
7.500%, 08/15/07 480 495
6.500%, 07/15/08 571 571
7.000%, 07/15/08 449 456
6.500%, 03/15/09 55 55
6.500%, 05/15/09 1,413 1,412
13.500%, 05/15/11 16 19
12.500%, 10/15/13 2 3
12.000%, 03/15/14 18 21
13.500%, 09/15/14 12 15
9.000%, 12/15/16 78 83
10.000%, 07/15/18 114 125
10.000%, 03/15/19 82 90
7.000%, 04/15/24 1,135 1,136
7.500%, 06/15/25 1,760 1,791
7.000%, 02/15/26 6,910 6,910
7.500%, 05/15/26 703 716
8.000%, 05/15/26 659 682
--------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $21,536) 21,538
--------
U.S. TREASURY OBLIGATIONS -- 19.7%
U.S. Treasury Bonds
5.625%, 02/15/06 3,000 2,892
6.500%, 08/15/05 1,500 1,531
7.125%, 02/15/23 1,000 1,078
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 41
<PAGE>
STATEMENT OF NET ASSETS
BALANCED FUND
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------
U.S. Treasury Notes
9.000%, 05/15/98 $2,000 $ 2,042
9.250%, 08/15/98 2,000 2,060
6.375%, 01/15/99 1,000 1,008
7.000%, 04/15/99 3,000 3,053
6.375%, 07/15/99 1,500 1,515
8.000%, 08/15/99 2,000 2,076
8.500%, 02/15/00 500 529
6.250%, 10/31/01 2,000 2,017
6.250%, 08/31/02 2,000 2,017
6.250%, 02/15/03 4,000 4,039
5.750%, 08/15/03 1,500 1,476
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $27,228) 27,333
--------
CASH EQUIVALENTS -- 4.2%
SEI Liquid Asset Trust
Government
Portfolio 2,876 2,876
SEI Liquid Asset Trust
Treasury Portfolio 2,926 2,926
--------
TOTAL CASH EQUIVALENTS
(Cost $5,802) 5,802
--------
REPURCHASE AGREEMENT -- 3.4%
UBS SECURITIES
6.01%, dated 09/30/97, matures
10/01/97, repurchase price
$4,743,000 (collateralized by
U.S. Treasury Note, par
value $4,840,000, 5.75%,
09/30/99, market value:
$4,837,000) 4,742 4,742
--------
TOTAL REPURCHASE AGREEMENT
(Cost $4,742) 4,742
--------
TOTAL INVESTMENTS -- 101.0%
(Cost $119,171) 140,280
--------
OTHER ASSETS AND LIABILITIES,
NET -- (1.0%) (1,400)
--------
DESCRIPTION VALUE (000)
- ------------------------------------------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on
10,180,487 outstanding
shares of beneficial
interest $103,672
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on
295,648 outstanding
shares of beneficial
interest 3,299
Accumulated net realized gain
on investments 10,800
Net unrealized appreciation
on investments 21,109
--------
TOTAL NET ASSETS -- 100.0% $138,880
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A $13.25
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($13.25 / 96.50%) $13.73
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (1) $13.32
========
- ------------------------------------------
* NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
CMO--COLLATERALIZED MORTGAGE OBLIGATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
PLC--PUBLIC LIMITED COMPANY
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A
DESCRIPTION OF A POSSIBLE SALES CHARGE, SEE NOTES TO THE
FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
42 SEPTEMBER 30, 1997
<PAGE>
VALUE EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
COMMON STOCKS -- 99.1%
AEROSPACE & DEFENSE -- 3.4%
Sci Systems* 61,600 $ 3,053
Thiokol 21,400 1,840
--------
4,893
--------
AIR TRANSPORTATION -- 4.6%
Airborne Freight 43,520 2,636
Federal Express* 26,420 2,114
Southwest Airlines 58,640 1,873
--------
6,623
--------
APPAREL/TEXTILES -- 2.1%
Russell 42,000 1,236
VF 20,000 1,853
--------
3,089
--------
AUTOMOTIVE -- 2.3%
Chrysler 39,800 1,465
Ford Motor 41,000 1,855
--------
3,320
--------
BANKS -- 6.8%
Bank of New York 35,360 1,697
BankAmerica 28,600 2,097
Citicorp 14,500 1,942
First Union 25,000 1,252
J.P. Morgan 13,500 1,534
Republic New York 10,800 1,227
--------
9,749
--------
BUILDING & CONSTRUCTION -- 1.4%
Centex 35,060 2,047
--------
CHEMICALS -- 5.0%
Dexter 48,800 1,955
Dow Chemical 17,300 1,569
Lubrizol 41,850 1,758
Vulcan Materials 21,760 1,893
--------
7,175
--------
COMPUTERS & SERVICES -- 6.9%
Applied Materials* 26,900 2,562
Compaq Computer* 46,000 3,440
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
Computer Associates
International 29,110 $ 2,090
Quantum* 49,720 1,905
--------
9,997
--------
CONCRETE & MINERAL PRODUCTS -- 2.5%
Lafarge 63,000 2,032
Phelps Dodge 19,540 1,517
--------
3,549
--------
DRUGS -- 2.5%
Eli Lilly 12,500 1,505
Perrigo* 132,320 2,084
--------
3,589
--------
ELECTRICAL SERVICES -- 8.9%
Baltimore Gas
& Electric 51,500 1,429
Consolidated Edison
New York 41,000 1,394
Duke Power 58,098 2,872
Enova 70,100 1,770
GPU 40,000 1,435
New England Electric
System 24,300 954
PP&L Resources 57,000 1,247
Southern 74,500 1,681
--------
12,782
--------
ENTERTAINMENT -- 1.4%
King World Productions 46,000 1,990
--------
FINANCIAL SERVICES -- 5.6%
AG Edwards 30,000 1,541
Bear Stearns 48,582 2,138
Painewebber Group 53,300 2,482
Slm Holding 12,530 1,936
--------
8,097
--------
FOOD, BEVERAGE & TOBACCO -- 4.5%
Adolph Coors, Cl B 75,730 2,868
Dean Foods 42,400 1,961
Universal 43,600 1,581
--------
6,410
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 43
<PAGE>
STATEMENT OF NET ASSETS
VALUE EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
GAS/NATURAL GAS -- 1.8%
National Fuel & Gas 37,000 $ 1,628
Peoples Energy 26,500 999
--------
2,627
--------
INSURANCE -- 5.4%
AMBAC 41,000 1,668
Conseco 36,300 1,772
Equitable 49,800 2,045
Travelers 33,000 2,252
--------
7,737
--------
MACHINERY -- 7.4%
Aeroquip-Vickers 34,890 1,710
Caterpillar 38,200 2,060
Cummins Engine 22,000 1,717
Deere 31,000 1,666
Ingersoll Rand 36,000 1,550
Parker Hannifin 42,330 1,905
--------
10,608
--------
MEDICAL PRODUCTS & SERVICES -- 1.2%
Tenet Healthcare* 61,650 1,796
--------
MISCELLANEOUS MANUFACTURING -- 2.5%
Arvin Industries 49,130 1,928
Magna International,
Cl A 24,150 1,669
--------
3,597
--------
MISCELLANEOUS TRANSPORTATION -- 0.8%
Fleetwood Enterprises 36,000 1,208
--------
PETROLEUM & FUEL PRODUCTS -- 4.4%
Noble Drilling* 70,300 2,267
Transocean Offshore 45,380 2,175
USX-Marathon Group 50,000 1,859
--------
6,301
--------
PETROLEUM REFINING -- 3.7%
British Petroleum ADR 21,740 1,974
Chevron 22,000 1,830
Mobil 20,800 1,539
--------
5,343
--------
PRINTING & PUBLISHING -- 1.2%
Washington Post, Cl B 3,980 1,784
--------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------
PROFESSIONAL SERVICES -- 1.6%
Tech Data* 49,680 $ 2,285
--------
RETAIL -- 8.0%
American Stores 47,800 1,165
Consolidated Stores* 51,250 2,146
Mac Frugals
Bargains Close* 59,110 1,803
Premark International 59,660 1,909
Ross Stores 72,000 2,457
TJX 66,040 2,018
--------
11,498
--------
RUBBER & PLASTIC -- 0.9%
Goodyear Tire & Rubber 19,000 1,306
--------
STEEL & STEEL WORKS -- 1.1%
USX-U.S. Steel Group 45,700 1,588
--------
WHOLESALE -- 1.2%
Super-Valu 44,400 1,743
--------
TOTAL COMMON STOCKS
(Cost $109,093) 142,731
--------
CASH EQUIVALENT -- 0.8%
SEI Liquid Asset Trust
Government Portfolio $ 1,216 1,216
--------
TOTAL CASH EQUIVALENT
(Cost $1,216) 1,216
--------
TOTAL INVESTMENTS -- 99.9%
(Cost $110,309) 143,947
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.1% 115
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
44 SEPTEMBER 30, 1997
<PAGE>
VALUE EQUITY FUND
DESCRIPTION VALUE (000)
- ------------------------------------------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on 7,688,754
outstanding shares of
beneficial interest $ 84,091
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on
568,282 outstanding shares
of beneficial interest 7,505
Accumulated net realized gain
on investments 18,698
Net unrealized appreciation
on investments 33,638
Undistributed net investment income 130
--------
TOTAL NET ASSETS -- 100.0% $144,062
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A $17.44
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($17.44 / 96.50%) $18.07
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (1) $17.50
========
- -------------------------------------------
* NON-INCOME PRODUCING SECURITY
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
GROWTH EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
COMMON STOCKS -- 92.3%
AGRICULTURE -- 1.7%
Dekalb Genetics, Cl B 6,790 $ 301
Pioneer Hi-Bred
International 3,010 274
--------
575
--------
AIRCRAFT -- 1.3%
Sundstrand 3,365 194
United Technologies 2,835 230
--------
424
--------
APPAREL/TEXTILES -- 1.3%
Jones Apparel Group* 8,000 432
--------
AUTOMOTIVE -- 0.6%
Federal Mogul 5,415 201
--------
BANKS -- 1.5%
Star Banc 4,360 200
State Street 2,085 127
Synovus Financial 7,905 180
--------
507
--------
BEAUTY PRODUCTS -- 2.1%
Avon Products 6,000 372
Colgate-Palmolive 4,580 319
--------
691
--------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 0.8%
Omnicom Group 3,700 269
--------
CHEMICALS -- 2.6%
Betzdearborn 3,240 222
E.I. du Pont de Nemours 6,000 369
Monsanto 3,380 132
Praxair 2,760 141
Solutia* 676 14
--------
878
--------
COMMUNICATIONS EQUIPMENT -- 2.3%
ADC Telecommunications* 6,615 215
Northern Telecom 2,340 243
Tellabs* 5,800 299
--------
757
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 45
<PAGE>
STATEMENT OF NET ASSETS
GROWTH EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
COMPUTERS & SERVICES -- 5.3%
Compaq Computer* 8,000 $ 598
Creative Technology
Limited* 5,730 146
Dell Computer* 3,040 295
Diebold 4,290 203
Hewlett Packard 2,065 144
IBM 2,035 216
Western Digital* 4,040 162
--------
1,764
--------
CONTAINERS & PACKAGING -- 0.2%
Newell 1,990 80
--------
DRUGS -- 6.9%
Alza, Cl A* 2,830 82
American Home Products 1,860 136
Bristol-Myers Squibb 4,400 364
Eli Lilly 3,750 452
Merck 3,300 330
Pharmacia Upjohn ADR 3,800 139
Schering Plough 8,200 422
Warner Lambert 2,700 364
--------
2,289
--------
ENTERTAINMENT -- 0.3%
Walt Disney 1,435 116
--------
FINANCIAL SERVICES -- 3.9%
American Express 1,325 108
Franklin Resources 6,750 629
Price (T. Rowe)
Associates 4,060 273
Slm Holding 1,900 294
--------
1,304
--------
FOOD, BEVERAGE & TOBACCO -- 6.4%
Campbell Soup 6,400 314
Coca Cola Company 5,500 335
Coca Cola Enterprises 3,540 95
Flowers Industries 5,100 104
H.J. Heinz 5,875 271
Hershey Foods 4,690 265
Panamerican
Beverage, Cl A 3,430 134
PepsiCo 4,140 168
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
Philip Morris 7,800 $ 324
Ralston Purina Group 1,530 135
--------
2,145
--------
GLASS PRODUCTS -- 0.5%
Corning 3,380 160
--------
HOTELS & LODGING -- 1.5%
Marriott International 5,000 355
Promus Hotel* 3,400 152
--------
507
--------
HOUSEHOLD PRODUCTS -- 3.0%
Clorox 2,000 148
General Electric 6,200 422
Hubbell, Cl B 4,520 209
Illinois Tool Works 4,200 210
--------
989
--------
INDUSTRIAL -- 0.4%
Choicepoint* 680 25
Viad 5,195 99
--------
124
--------
INSURANCE -- 1.5%
American International
Group 2,257 233
MGIC Investment 4,600 264
--------
497
--------
LEASING & RENTING-- 0.9%
Pitney Bowes 3,700 308
--------
LEISURE -- 0.8%
Callaway Golf 7,500 262
--------
LUMBER & WOOD PRODUCTS -- 0.6%
Plum Creek Timber 6,200 210
--------
MACHINERY -- 3.7%
Aeroquip-Vickers 4,415 216
Crane 4,375 180
Dover 2,125 144
Dresser Industries 4,830 208
Flowserve 7,800 233
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
46 SEPTEMBER 30, 1997
<PAGE>
GROWTH EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
SPX 1,560 $ 91
Tyco International
Limited 2,150 176
--------
1,248
--------
MARINE TRANSPORTATION -- 0.7%
Carnival, Cl A 5,000 231
--------
MEASURING DEVICES -- 1.1%
Perkin Elmer 3,090 226
Thermo Instrument
Systems* 3,280 138
--------
364
--------
MEDICAL PRODUCTS & SERVICES -- 3.8%
Becton Dickinson 1,525 73
Dentsply International 4,200 235
HBO 6,000 227
Health Management
Associates, Cl A* 3,030 96
Healthsouth
Rehabilitation* 3,490 93
Johnson & Johnson 5,000 288
Oxford Health Plan* 1,155 87
Sybron International* 3,630 156
--------
1,255
--------
MISCELLANEOUS BUSINESS SERVICES -- 5.2%
Adaptec* 5,305 248
Altera* 4,145 212
BMC Software* 5,600 363
Equifax 6,800 214
Microsoft* 2,140 283
Netscape Communications* 39 1
Newbridge Networks* 1,730 104
Peoplesoft* 5,275 315
--------
1,740
--------
MISCELLANEOUS CONSUMER SERVICES -- 0.8%
Robert Half
International* 6,375 264
--------
MISCELLANEOUS MANUFACTURING -- 2.0%
Belden 9,000 339
Cognex* 6,545 215
Kemet* 4,350 132
--------
686
--------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------
OFFICE FURNITURE & FIXTURES -- 2.0%
Hon Industries 2,815 $ 163
Miller Herman 9,290 497
--------
660
--------
PETROLEUM & FUEL PRODUCTS -- 8.8%
BJ Services* 2,270 169
Cooper Cameron* 4,465 321
Ensco International 8,750 345
Falcon Drilling* 5,330 188
Halliburton 6,545 340
Marine Drilling* 9,090 284
Nabors Industries* 4,820 188
Newfield Exploration* 11,175 314
Schlumberger 4,000 337
Smith International* 2,040 159
Transocean Offshore 6,040 290
--------
2,935
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.5%
Xerox 2,015 170
--------
PRINTING & PUBLISHING-- 3.1%
Gannett 1,340 145
McGraw Hill 3,420 232
Meredith 10,100 335
Time Warner 3,560 193
Tribune 2,500 133
--------
1,038
--------
PROFESSIONAL SERVICES -- 0.9%
Servicemaster Limited
Partnership 10,125 289
--------
RETAIL -- 6.8%
Bed Bath and Beyond* 4,440 156
Dayton Hudson 2,460 147
Dollar General 4,343 148
Dollar Tree Stores* 3,715 156
General Nutrition* 10,485 305
Home Depot 2,997 156
Kohls* 2,450 174
Kroger* 7,200 217
Quality Food Centers* 3,650 149
Ross Stores 4,710 161
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 47
<PAGE>
STATEMENT OF NET ASSETS
GROWTH EQUITY FUND
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ------------------------------------------
TJX 10,000 $ 306
Walgreen 8,260 212
--------
2,287
--------
RUBBER & PLASTIC -- 0.5%
Sealed Air* 3,100 170
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 2.1%
American Power
Conversion* 5,125 144
Amphenol* 4,013 173
Intel 2,756 254
Vitesse Semiconductor* 2,992 148
--------
719
--------
TELEPHONES & TELECOMMUNICATION -- 3.6%
Ameritech 1,465 97
Bell Atlantic 3,000 241
BellSouth 5,300 245
Cincinnati Bell 6,200 176
Ericsson Telephone ADR 3,020 145
Lucent Technologies 2,566 209
U.S. West 2,625 101
--------
1,214
--------
WHOLESALE -- 0.3%
Cardinal Health 1,205 86
--------
TOTAL COMMON STOCKS
(Cost $22,765) 30,845
--------
CASH EQUIVALENT -- 3.0%
SEI Liquid Asset Trust
Government Portfolio $ 1,002 1,002
--------
TOTAL CASH EQUIVALENT
(Cost $1,002) 1,002
--------
REPURCHASE AGREEMENT -- 4.3%
UBS SECURITIES
6.010%, dated 9/30/97,
matures 10/1/97, repurchase
price $1,433,000
(collateralized by U.S.
Treasury Note, par
value $1,465,000,
5.750%, 9/30/99,
market value:
$1,464,000) 1,432 1,432
--------
DESCRIPTION VALUE (000)
- ------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $1,432) $ 1,432
--------
TOTAL INVESTMENTS -- 99.6%
(Cost $25,199) 33,279
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.4% 129
--------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on
1,999,203 outstanding
shares of
beneficial interest 23,023
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on
114,347 outstanding shares of
beneficial interest 1,561
Accumulated net realized gain
on investments 745
Net unrealized appreciation
on investments 8,080
Distributions in excess of net
investment income (1)
--------
TOTAL NET ASSETS -- 100.0% $33,408
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A $15.81
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($15.81 / 96.50%) $16.38
========
NET ASSET VALUE AND OFFERING PRICE
PER SHARE -- CLASS B (1) $15.74
========
- -------------------------------------------
* NON-INCOME PRODUCING SECURITY
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
48 SEPTEMBER 30, 1997
<PAGE>
SMALL CAP EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
INVESTMENT COMPANY -- 98.1%
SEI Institutional Managed
Trust Small Cap
Growth Portfolio 216,893 $4,190
------
TOTAL INVESTMENT COMPANY
(Cost $3,361) 4,190
------
TOTAL INVESTMENTS -- 98.1%
(Cost $3,361) 4,190
------
OTHER ASSETS AND LIABILITIES,
NET -- 1.9% 80
------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on
296,227 outstanding shares of
beneficial interest 2,904
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on 53,767
outstanding shares of
beneficial interest 550
Accumulated net realized loss
on investments (13)
Net unrealized appreciation
on investments 829
------
TOTAL NET ASSETS -- 100.0% $4,270
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A $12.21
======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($12.21 / 96.50%) $12.65
======
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (1) $12.16
======
- -------------------------------------------
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
INTERNATIONAL EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------
INVESTMENT COMPANY -- 98.2%
SEI International Trust
International Equity
Portfolio 353,175 $3,723
------
TOTAL INVESTMENT COMPANY
(Cost $3,630) 3,723
------
TOTAL INVESTMENTS -- 98.2%
(Cost $3,630) 3,723
------
OTHER ASSETS AND LIABILITIES,
NET -- 1.8% 70
------
NET ASSETS:
FUND SHARES OF CLASS A
(unlimited authorization -- no
par value) based on
312,678 outstanding shares of
beneficial interest 3,349
FUND SHARES OF CLASS B
(unlimited authorization -- no
par value) based on 32,740
outstanding shares of
beneficial interest 349
Accumulated net realized gain
on investments 2
Net unrealized appreciation
on investments 93
------
TOTAL NET ASSETS -- 100.0% $3,793
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A $10.98
======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($10.98 / 96.50%) $11.38
======
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B (1) $10.94
======
- -------------------------------------------
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SEPTEMBER 30, 1997 49
<PAGE>
STATEMENT OF OPERATIONS (000)
<TABLE>
<CAPTION>
TREASURY STRATEGIC LOUISIANA
INSTITUTIONAL SECURITIES TAX EXEMPT GOVERNMENT INCOME TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET SECURITIES BOND INCOME
FUND FUND FUND FUND FUND (2) FUND
---------- ---------- ------------ ------------ ---------- ----------
10/1/96 10/1/96 10/1/96 10/1/96 1/31/97 10/1/96
TO 9/30/97 TO 9/30/97 TO 9/30/97 TO 9/30/97 TO 9/30/97 TO 9/30/97
---------- ---------- ------------ ------------ ---------- ----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C>
Interest income $3,139 $63,906 $2,869 $ 9,676 $644 $1,418
Dividend income -- -- -- -- -- --
------ ------- ------ ------- ---- ------
TOTAL INVESTMENT INCOME 3,139 63,906 2,869 9,676 644 1,418
------ ------- ------ ------- ---- ------
EXPENSES:
Administration fees 58 1,764 115 232 14 43
Less: waiver of administration fees -- (36) (20) (41) (9) (7)
Investment advisory fees 87 3,529 362 852 67 100
Less: waiver of investment
advisory fees (65) (12) (22) (58) (39) (3)
Custodian fees 9 176 12 23 1 4
Transfer agent fees 14 69 12 36 16 31
Distribution fees (1) -- 1,608 192 5 1 6
Less: waiver of distribution fees (1) -- (364) (192) -- -- --
Professional fees 4 121 19 16 6 1
Registration fees 33 112 4 1 21 5
Trustee fees 1 30 2 3 -- --
Printing expense 2 62 5 9 1 1
Amortization of deferred
organization costs -- 35 1 6 -- --
Insurance and other fees 1 31 11 5 3 1
------ ------- ------ ------- ---- ------
TOTAL EXPENSES 144 7,125 501 1,089 82 182
------ ------- ------ ------- ---- -------
LESS:
Reimbursement by Administrator -- -- -- -- -- --
------ ------- ------ ------- ---- ------
NET INVESTMENT INCOME 2,995 56,781 2,368 8,587 562 1,236
------ ------- ------ ------- ---- ------
NET REALIZED GAIN (LOSS) ON SECURITIES SOLD -- 34 -- (19) -- --
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENT SECURITIES -- -- -- 3,734 239 1,038
------ ------- ------ ------- ---- ------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS -- 34 -- 3,715 239 1,038
------ ------- ------ ------- ---- ------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,995 $56,785 $2,368 $12,302 $801 $2,274
====== ======= ====== ======= ==== ======
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) ALL DISTRIBUTION FEES AND WAIVERS ARE INCURRED AT THE RETAIL CLASS LEVEL FOR
TREASURY SECURITIES MONEY MARKET FUND AND THE CLASS B LEVEL FOR NON-DOLLAR
FUNDS.
(2) THE STRATEGIC INCOME BOND FUND COMMENCED OPERATIONS ON JANUARY 31, 1997.
(3) THE SMALL CAP EQUITY AND INTERNATIONAL EQUITY FUNDS COMMENCED OPERATIONS ON
JANUARY 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
50 SEPTEMBER 30, 1997
<PAGE>
<TABLE>
<CAPTION>
VALUE GROWTH SMALL CAP INTERNATIONAL
BALANCED EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND (3) FUND (3)
---------- ---------- ---------- ----------- -----------
10/1/96 10/1/96 10/1/96 1/31/97 1/31/97
TO 9/30/97 TO 9/30/97 TO 9/30/97 TO 9/30/97 TO 9/30/97
---------- ---------- ---------- ---------- ----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Interest income $ 3,435 $ 137 $ 116 $ -- $ --
Dividend income 1,459 2,561 260 -- --
------- ------- ------ ---- ----
TOTAL INVESTMENT INCOME 4,894 2,698 376 -- --
------- ------- ------ ---- ----
EXPENSES:
Administration fees 186 173 39 2 2
Less: waiver of administration fees (33) (5) (7) (2) (2)
Investment advisory fees 918 872 191 6 4
Less: waiver of investment
advisory fees (41) -- (5) (3) (2)
Custodian fees 18 18 4 -- --
Transfer agent fees 41 38 25 14 14
Distribution fees (1) 21 46 6 1 1
Less: waiver of distribution fees (1) -- -- -- -- --
Professional fees 9 13 3 -- --
Registration fees 3 15 3 1 1
Trustee fees 2 4 -- -- --
Printing expense 6 15 3 4 4
Amortization of deferred
organization costs 4 9 1 -- --
Insurance and other fees 3 2 -- -- --
------- ------- ------ ----- ----
TOTAL EXPENSES 1,137 1,200 263 23 22
------- ------- ------ ----- ----
LESS:
Reimbursement by Administrator -- -- -- (19) (18)
------- ------- ------ ----- ----
NET INVESTMENT INCOME 3,757 1,498 113 (4) (4)
------- ------- ------ ----- ----
NET REALIZED GAIN (LOSS) ON SECURITIES SO 12,142 18,764 818 (9) 6
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENT SECURITIE 13,260 23,918 6,453 829 93
------- ------- ------ ----- ----
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 25,402 42,682 7,271 820 98
------- ------- ------ ----- ----
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $29,159 $44,180 $7,384 $ 816 $ 95
======= ======= ====== ===== ====
</TABLE>
SEPTEMBER 30, 1997 51
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
INSTITUTIONAL TREASURY SECURITIES TAX EXEMPT GOVERNMENT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND (6) SECURITIES FUND
---------------------- ----------------------- --------------------- ----------------------
10/1/96 10/1/95 10/1/96 10/1/95 10/1/96 6/7/96 10/1/96 10/1/95
TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income $ 2,995 $ 1,510 $ 56,781 $ 46,0002 $ 2,368 $ 469 $ 8,587 $ 8,530
Net realized gain (loss) on
securities sold -- -- 4 8 -- -- (19) 169
Net unrealized appreciation
(depreciation) of investment
securities -- -- -- -- -- -- 3,734 (3,474)
--------- -------- ---------- ----------- --------- -------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 2,995 1,510 56,785 46,010 2,368 469 12,302 5,225
--------- -------- ---------- ----------- --------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Income distribution Class A(1) (2,995) (1,510) (30,423) (29,276) (2,368) (469) (8,550) (8,516)
Income distribution Class B(2) -- -- (24,421) (16,726) -- -- (37) (18)
Income distribution Class C(3) -- -- (1,937) -- -- -- -- --
Capital gain distribution
Class A(1) -- -- -- -- -- -- -- --
Capital gain distribution
Class B(2) -- -- -- -- -- -- -- --
--------- -------- ---------- ----------- --------- -------- -------- --------
TOTAL DISTRIBUTIONS (2,995) (1,510) (56,781) 46,002 (2,368) (469) (8,587) (8,534)
--------- -------- ---------- ----------- --------- -------- -------- --------
SHARE TRANSACTIONS:
Class A (1):
Shares issued 340,575 102,959 1,432,933 1,168,501 -- -- 38,560 94,996
Shares issued in lieu of
cash distribution -- -- 334 184 -- -- 4,088 4,408
Shares redeemed (310,063) (106,269) (1,514,130) (1,052,141) -- -- (57,641) (60,190)
--------- -------- ---------- ----------- --------- -------- ---------- --------
TOTAL CLASS A SHARE
TRANSACTIONS 30,512 (3,310) (80,863) 116,544 -- -- (14,993) 39,214
--------- -------- ---------- ----------- --------- -------- -------- --------
Class B (2):
Shares issued -- -- 1,126,969 877,916 154,486 106,346 595 310
Shares issued in lieu of
cash distribution -- -- 12,486 9,617 1,280 222 34 17
Shares redeemed -- -- (945,607) (759,215) (145,236) (40,354) (107) (40)
--------- -------- ---------- ----------- --------- -------- -------- --------
TOTAL CLASS B SHARE
TRANSACTIONS -- -- 193,848 128,318 10,530 66,214 522 287
--------- -------- ---------- ----------- --------- -------- -------- --------
Class C (3):
Shares issued -- -- 312,106 -- -- -- -- --
Shares issued in lieu of
cash distribution -- -- -- -- -- -- -- --
Shares redeemed -- -- (109,894) -- -- -- -- --
--------- -------- ---------- ----------- --------- -------- -------- --------
TOTAL CLASS C SHARE
TRANSACTIONS -- -- 202,212 -- -- -- -- --
--------- -------- ---------- ----------- --------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM SHAREHOLDER TRANSACTIONS 30,512 (3,310) 315,197 244,862 10,530 66,214 (14,471) 39,501
--------- -------- ---------- ----------- --------- -------- ---------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 30,512 (3,310) 315,201 244,870 10,530 66,214 (10,756) 36,192
--------- -------- ---------- ----------- --------- -------- -------- --------
STRATEGIC INCOME LOUISIANA TAX-FREE VALUE
BOND FUND (4) INCOME FUND BALANCED FUND EQUITY FUND
---------------- ----------------------- ------------------------- -----------------------
1/31/97 10/1/96 10/1/95 10/1/96 10/1/95 10/1/96 10/1/95
TO 9/30/97 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/97
---------- ---------- ---------- ----------- ---------- ---------- ----------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income $ 562 $ 1,236 $ 777 $ 3,757 $ 3,754 $ 1,498 $ 1,636
Net realized gain (loss) on
securities sold -- -- (20) 12,142 4,170 18,764 6,632
Net unrealized appreciation
(depreciation) of investment
securities 239 1,038 (37) 13,260 1,350 23,918 1,141
------- -------- ------- ---------- ---------- ---------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 801 2,274 720 29,159 9,274 44,180 9,409
------- -------- ------- ---------- ---------- ---------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Income distribution Class A(1) (554) (1,206) (752) (3,676) (3,722) (1,459) (1,595)
Income distribution Class B(2) (8) (30) (25) (68) (45) (39) (40)
Income distribution Class C(3) -- -- -- -- -- -- --
Capital gain distribution
Class A(1) -- -- -- (4,877) (1,259) (5,916) (987)
Capital gain distribution
Class B(2) -- -- -- (98) (17) (269) (26)
------- -------- ------- ---------- ---------- ---------- ---------
TOTAL DISTRIBUTIONS (562) (1,236) (777) (8,719) (5,043) (7,683) (2,648)
------- -------- -------- ---------- ---------- ---------- ---------
SHARE TRANSACTIONS:
Class A (1):
Shares issued 17,068 21,750 15,116 15,119 55,812 32,366 42,018
Shares issued in lieu of
cash distribution 261 546 295 7,838 4,680 3,882 1,256
Shares redeemed (1,996) (5,774) (6,126) (22,355) (37,358) (30,068) (15,165)
------- -------- -------- ---------- ---------- ---------- ---------
TOTAL CLASS A SHARE
TRANSACTIONS 15,333 16,522 9,285 602 23,134 6,180 28,109
------- -------- ------- ---------- ---------- ---------- ---------
Class B (2):
Shares issued 454 429 183 1,543 926 4,063 2,725
Shares issued in lieu of
cash distribution 6 22 18 146 58 280 60
Shares redeemed -- (67) (37) (231) (182) (456) (299)
------- -------- ------- ---------- ---------- ---------- ---------
TOTAL CLASS B SHARE
TRANSACTIONS 460 384 164 1,458 802 3,887 2,486
------- -------- ------- ---------- ---------- ---------- ---------
Class C (3):
Shares issued -- -- -- -- -- -- --
Shares issued in lieu of
cash distribution -- -- -- -- -- -- --
Shares redeemed -- -- -- -- -- -- --
------- -------- ------- ---------- ---------- ---------- ---------
TOTAL CLASS C SHARE
TRANSACTIONS -- -- -- -- -- -- --
------- -------- ------- ---------- ---------- ---------- ---------
INCREASE (DECREASE) IN NET ASSETS
FROM SHAREHOLDER TRANSACTIONS 15,793 16,906 9,449 2,060 23,936 10,067 30,595
------- -------- ------- ---------- ---------- ---------- ---------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 16,032 17,944 9,392 22,500 28,167 46,564 37,356
------- -------- ------- ---------- ---------- ---------- ---------
GROWTH EQUITY SMALL CAP INTERNATIONAL
FUND (7) EQUITY FUND (5) EQUITY FUND (5)
------------------------ -------------- ---------------
10/1/96 3/1/96 1/31/97 1/31/97
TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/97
------------ ---------- ---------- ----------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income $ 113 $ 71 $ (4) $ (4)
Net realized gain (loss) on
securities sold 818 (73) (9) 6
Net unrealized appreciation
(depreciation) of investment
securities 6,453 1,627 829 93
---------- ---------- ---------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 7,384 1,625 816 95
---------- ---------- ---------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Income distribution Class A(1) (114) (71) -- --
Income distribution Class B(2) -- -- -- --
Income distribution Class C(3) -- -- -- --
Capital gain distribution
Class A(1) -- -- -- --
Capital gain distribution
Class B(2) -- -- -- --
---------- ---------- ---------- --------
TOTAL DISTRIBUTIONS (114) (71) -- --
---------- ---------- ---------- --------
SHARE TRANSACTIONS:
Class A (1):
Shares issued 15,927 29,369 3,707 3,447
Shares issued in lieu of
cash distribution 79 62 -- --
Shares redeemed (9,836) (12,578) (803) (96)
---------- ---------- ---------- --------
TOTAL CLASS A SHARE
TRANSACTIONS 6,170 16,853 2,904 3,349
---------- ---------- ---------- --------
Class B (2):
Shares issued 1,472 145 565 356
Shares issued in lieu of
cash distribution -- -- -- --
Shares redeemed (56) -- (15) (7)
---------- ---------- ---------- --------
TOTAL CLASS B SHARE
TRANSACTIONS 1,416 145 550 349
---------- ---------- ---------- --------
Class C (3):
Shares issued -- -- -- --
Shares issued in lieu of
cash distribution -- -- -- --
Shares redeemed -- -- -- --
---------- ---------- ---------- --------
TOTAL CLASS C SHARE
TRANSACTIONS -- -- -- --
---------- ---------- ---------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM SHAREHOLDER TRANSACTIONS 7,586 16,998 3,454 3,698
---------- ---------- ---------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 14,856 18,552 4,270 3,793
---------- ---------- ---------- --------
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) TRUST CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(2) RETAIL CLASS FOR TREASURY SECURITIES MONEY MARKET FUND AND TAX EXEMPT MONEY
MARKET FUND.
(3) CASH SWEEP CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(4) THE STRATEGIC INCOME BOND FUND COMMENCED OPERATIONS ON JANUARY 31, 1997.
(5) THE SMALL CAP EQUITY AND INTERNATIONAL EQUITY FUNDS COMMENCED OPERATIONS ON
JANUARY 31, 1997.
(6) THE TAX EXEMPT MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 7, 1996.
(7) THE GROWTH EQUITY FUND COMMENCED OPERATIONS ON MARCH 1, 1996.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
52 & 53 SEPTEMBER 30, 1997
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
INSTITUTIONAL TREASURY SECURITIES TAX EXEMPT GOVERNMENT STRATEGIC INCOME
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND (6) SECURITIES FUND BOND FUND (4)
--------------------- --------------------- --------------------- --------------------- ----------------
10/1/96 10/1/95 10/1/96 10/1/95 10/1/96 6/7/96 10/1/96 10/1/95 1/31/97
TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $28,004 $ 31,314 $1,048,887 $ 804,017 $ 66,214 $ -- $160,840 $124,648 $ --
------- -------- ---------- ---------- -------- ------- -------- -------- -------
End of period $58,516 $ 28,004 $1,364,088 $1,048,887 $ 76,744 $66,214 $150,084 $160,840 $16,032
------- -------- ---------- ---------- -------- ------- -------- -------- -------
SHARES ISSUED AND
REDEEMED:
Class A (1):
Issued 340,575 102,959 1,432,933 1,168,501 -- -- 3,925 9,606 1,710
Issued in lieu of cash
distribution -- -- 334 184 -- -- 416 451 26
Redeemed (310,063) (106,269) (1,514,130) (1,052,141) -- -- (5,864) (6,148) (201)
------- -------- ---------- ---------- -------- ------- -------- -------- -------
TOTAL CLASS A SHARE
TRANSACTIONS 30,512 (3,310) (80,863) 116,544 -- -- (1,523) 3,909 1,535
------- -------- ---------- ---------- -------- ------- -------- -------- -------
Class B (2):
Issued -- -- 1,126,969 877,916 154,486 106,346 61 31 46
Issued in lieu of cash
distribution -- -- 12,486 9,617 1,280 222 3 2 1
Redeemed -- -- (945,607) (759,215) (145,236) (40,354) (11) (4) --
------- -------- ---------- ---------- -------- ------- -------- -------- -------
TOTAL CLASS B SHARE
TRANSACTIONS -- -- 193,848 128,318 10,530 66,214 53 29 47
------- -------- ---------- ---------- -------- ------- -------- -------- -------
Class C (3):
Issued -- -- 312,106 -- -- -- -- -- --
Issued in lieu of cash
distribution -- -- -- -- -- -- -- -- --
Redeemed -- -- (109,894) -- -- -- -- -- --
------- -------- ---------- ---------- -------- ------- -------- -------- -------
TOTAL CLASS C SHARE
TRANSACTIONS -- -- 202,212 -- -- -- -- -- --
------- -------- ---------- ---------- -------- ------- -------- -------- -------
NET INCREASE (DECREASE) IN
SHARE TRANSACTIONS 30,512 (3,310) 315,198 244,862 10,530 66,214 (1,470) 3,938 1,582
------- -------- ---------- ---------- -------- ------- -------- -------- -------
LOUISIANA TAX-FREE VALUE GROWTH EQUITY SMALL CAP
INCOME FUND BALANCED FUND EQUITY FUND FUND (7) EQUITY FUND (5)
--------------------- --------------------- --------------------- --------------------- ---------------
10/1/96 10/1/95 10/1/96 10/1/95 10/1/96 10/1/95 10/1/96 3/1/96 1/31/97
TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97 TO 9/30/96 TO 9/30/97
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $21,664 $12,272 $116,380 $ 88,213 $ 97,498 $ 60,142 $ 18,552 $ -- $ --
------- ------- -------- -------- --------- -------- -------- -------- --------
End of period $39,608 $21,664 $138,880 $116,380 $ 144,062 $ 97,498 $ 33,408 $ 18,552 $ 4,270
------- ------- -------- -------- --------- -------- -------- -------- --------
SHARES ISSUED AND
REDEEMED:
Class A (1):
Issued 2,204 1,540 1,283 5,030 2,231 3,370 1,198 2,638 380
Issued in lieu of cash
distribution 55 30 676 420 294 101 6 5 --
Redeemed (593) (627) (1,891) (3,351) (2,070) (1,219) (726) (1,122) (83)
------- ---------- -------- -------- --------- -------- -------- -------- --------
TOTAL CLASS A SHARE
TRANSACTIONS 1,666 943 68 2,099 455 2,252 478 1,521 297
------- ---------- -------- -------- --------- -------- -------- -------- --------
Class B (2):
Issued 43 18 127 83 271 218 106 13 55
Issued in lieu of cash
distribution 2 2 13 5 21 5 -- -- --
Redeemed (7) (4) (19) (16) (32) (24) (4) -- (1)
------- ---------- -------- -------- --------- -------- -------- -------- --------
TOTAL CLASS B SHARE
TRANSACTIONS 38 16 121 72 260 199 102 13 54
------- ---------- -------- -------- --------- -------- -------- -------- --------
Class C (3):
Issued -- -- -- -- -- -- -- -- --
Issued in lieu of cash
distribution -- -- -- -- -- -- -- -- --
Redeemed -- -- -- -- -- -- -- -- --
------- ---------- -------- -------- --------- -------- -------- -------- --------
TOTAL CLASS C SHARE
TRANSACTIONS -- -- -- -- -- -- -- -- --
------- ---------- -------- -------- --------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN
SHARE TRANSACTIONS 1,704 959 189 2,171 715 2,451 580 1,534 351
------- ---------- -------- -------- --------- -------- -------- -------- --------
INTERNATIONAL
EQUITY FUND (5)
----------------
1/31/97
TO 9/30/97
----------
NET ASSETS:
<S> <C>
Beginning of period $ --
------
End of period $3,793
------
SHARES ISSUED AND
REDEEMED:
Class A (1):
Issued 322
Issued in lieu of cash
distribution --
Redeemed (9)
------
TOTAL CLASS A SHARE
TRANSACTIONS 313
------
Class B (2):
Issued 33
Issued in lieu of cash
distribution --
Redeemed (1)
------
TOTAL CLASS B SHARE
TRANSACTIONS 32
------
Class C (3):
Issued --
Issued in lieu of cash
distribution --
Redeemed --
------
TOTAL CLASS C SHARE
TRANSACTIONS --
------
NET INCREASE (DECREASE) IN
SHARE TRANSACTIONS 345
------
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) TRUST CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(2) RETAIL CLASS FOR TREASURY SECURITIES MONEY MARKET FUND AND TAX-EXEMPT MONEY
MARKET FUND.
(3) CASH SWEEP CLASS FOR TREASURY SECURITIES MONEY MARKET FUND.
(4) THE STRATEGIC INCOME BOND FUND COMMENCED OPERATIONS ON JANUARY 31, 1997.
(5) THE SMALL CAP EQUITY AND INTERNATIONAL EQUITY FUNDS COMMENCED OPERATIONS ON
JANUARY 31, 1997.
(6) THE TAX EXEMPT MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 7, 1996.
(7) THE GROWTH EQUITY FUND COMMENCED OPERATIONS ON MARCH 1, 1996.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
54 & 55 SEPTEMBER 30, 1997
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
NET ASSET REALIZED DISTRIBUTIONS RATIO OF
VALUE NET AND UNREALIZED FROM NET NET ASSET NET ASSETS EXPENSES TO
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT VALUE TOTAL END OF AVERAGE
OF PERIOD INCOME ON INVESTMENTS INCOME END OF PERIOD RETURN+ PERIOD (000) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 1.00 $0.05 -- $(0.05) $1.00 5.29% $ 58,516 0.25%
1996 1.00 0.05 -- (0.05) 1.00 5.33 28,004 0.25
1995(4) 1.00 0.01 -- (0.01) 1.00 5.55* 31,314 0.25*
- ------------------------------------------------------------------------------------------------------------------------------------
TREASURY SECURITIES MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
TRUST CLASS
1997 $ 1.00 $0.05 -- $(0.05) $1.00 5.04% $556,957 0.50%
1996 1.00 0.05 -- (0.05) 1.00 5.06 637,819 0.50
1995 1.00 0.05 -- (0.05) 1.00 5.33 521,270 0.50
1994 1.00 0.03 -- (0.03) 1.00 3.22 403,778 0.50
RETAIL CLASS
1997 $ 1.00 $0.05 -- $(0.05) $1.00 4.83% $604,919 0.70%
1996 1.00 0.05 -- (0.05) 1.00 4.86 411,068 0.70
1995 1.00 0.05 -- (0.05) 1.00 5.16 282,747 0.68
1994(1) 1.00 0.03 -- (0.03) 1.00 3.15* 86,848 0.59*
SWEEP CLASS
1997(10) $ 1.00 $0.03 -- $(0.03) $1.00 4.46%* $202,212 1.00%*
- ------------------------------------------------------------------------------------------------------------------------------------
TAX EXEMPT MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL CLASS
1997 $ 1.00 $0.03 -- $(0.03) $1.00 3.12% $ 76,744 0.65%
1996(5) 1.00 0.01 -- (0.01) 1.00 2.83* 66,214 0.65*
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $ 9.71 $0.55 $ 0.23 $(0.55) $9.94 8.22% $149,022 0.70%
1996 9.87 0.55 (0.16) (0.55) 9.71 4.10 160,317 0.70
1995 9.41 0.54 0.46 (0.54) 9.87 10.84 124,404 0.70
1994 10.00 0.43 (0.59) (0.43) 9.41 (1.66) 97,562 0.70
CLASS B
1997 $ 9.76 $0.47 $ 0.24 $(0.48) $9.99 7.40% $ 1,062 1.45%
1996 9.92 0.46 (0.15) (0.47) 9.76 3.23 523 1.45
1995 9.46 0.46 0.47 (0.47) 9.92 10.10 244 1.45
1994(2) 10.04 0.31 (0.58) (0.31) 9.46 (2.84)* 147 1.45*
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
RATIO OF NET EXPENSES TO INVESTMENT
INVESTMENT AVERAGE NET INCOME TO
INCOME TO ASSETS AVERAGE PORTFOLIO
AVERAGE (EXCLUDING NET ASSETS TURNOVER
NET ASSETS WAIVERS) (EXCLUDING WAIVERS) RATE
- ------------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET FUND
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
1997 5.19% 0.36% 5.08% --
1996 5.19 0.34 5.10 --
1995(4) 5.56* 0.60* 5.21* --
- ------------------------------------------------------------------------------------
TREASURY SECURITIES MONEY MARKET FUND
- ------------------------------------------------------------------------------------
TRUST CLASS
1997 4.92% 0.50% 4.92%
1996 4.92 0.53 4.89 --
1995 5.23 0.57 5.16 --
1994 3.15 0.60 3.05 --
RETAIL CLASS
1997 4.73% 0.75% 4.68%
1996 4.72 0.78 4.64 --
1995 5.12 0.82 4.98 --
1994(1) 3.27* 0.83* 3.03* --
SWEEP CLASS
1997(10) 4.57%* 1.25%* 4.32%* --
- ------------------------------------------------------------------------------------
TAX EXEMPT MONEY MARKET FUND
- ------------------------------------------------------------------------------------
RETAIL CLASS
1997 3.07% 0.95% 2.77% --
1996(5) 2.92* 1.12* 2.45* --
- ------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------------
CLASS A
1997 5.54% 0.76% 5.48% 11.88%
1996 5.53 0.79 5.44 22.80
1995 5.63 0.84 5.49 18.33
1994 4.43 0.90 4.23 37.80
CLASS B
1997 4.81% 1.51% 4.75% 11.88%
1996 4.81 1.54 4.72 22.80
1995 4.86 1.59 4.72 18.33
1994(2) 3.88* 1.69* 3.64* 37.80
- ------------------------------------------------------------------------------------
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
+ TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
(1) COMMENCED OPERATIONS ON OCTOBER 19, 1993.
(2) COMMENCED OPERATIONS ON OCTOBER 22, 1993.
(3) COMMENCED OPERATIONS ON NOVEMBER 22, 1993.
(4) COMMENCED OPERATIONS ON AUGUST 10, 1995.
(5) COMMENCED OPERATIONS ON JUNE 7, 1996.
(6) COMMENCED OPERATIONS ON MARCH 1, 1996.
(7) COMMENCED OPERATIONS ON APRIL 19, 1996.
(8) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(9) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(10) COMMENCED OPERATIONS ON FEBRUARY 26, 1997.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
56 & 57 SEPTEMBER 30, 1997
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
NET ASSET REALIZED DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE TOTAL END OF
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS END OF PERIOD RETURN+ PERIOD (000)
- ---------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 (8) $10.00 $0.39 $ 0.14 $(0.39) -- $10.14 8.26%* $ 15,562
CLASS B
1997(8) $10.00 $0.33 $ 0.16 $(0.35) -- $10.14 7.57%* $ 470
- ---------------------------------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $9.79 $0.43 $ 0.32 $(0.43) -- $10.11 7.77% $ 38,471
1996 9.79 0.42 .-- (0.42) -- 9.79 4.48 20,937
1995 9.38 0.42 0.41 (0.42) -- 9.79 9.01 11,705
1994 10.00 0.36 (0.62) (0.36) -- 9.38 (2.68) 6,971
CLASS B
1997 $9.79 $0.34 $ 0.33 $(0.35) -- $10.11 6.99% $ 1,137
1996 9.79 0.35 .-- (0.35) -- 9.79 3.60 727
1995 9.39 0.35 0.40 (0.35) -- 9.79 8.21 567
1994 (3) 9.87 0.27 (0.48) (0.27) -- 9.39 (2.58)* 601
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $11.31 $0.36 $ 2.44 $(0.36) $(0.50) $13.25 26.10% $134,941
1996 10.87 0.38 0.59 (0.38) (0.15) 11.31 9.11 114,384
1995 9.59 0.37 1.28 (0.37) -- 10.87 17.58 87,076
1994 10.00 0.31 (0.41) (0.31) -- 9.59 (1.02) 71,379
CLASS B
1997 $11.37 $0.26 $ 2.47 $(0.28) $(0.50) $13.32 25.19% $ 3,939
1996 10.93 0.30 0.59 (0.30) (0.15) 11.37 8.30 1,996
1995 9.64 0.30 1.29 (0.30) -- 10.93 16.75 1,137
1994 (2) 10.03 0.18 (0.39) (0.18) -- 9.64 (2.24)* 868
- ---------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
RATIO OF NET EXPENSES TO INVESTMENT
RATIO OF INVESTMENT AVERAGE NET INCOME TO
EXPENSES TO INCOME TO ASSETS AVERAGE PORTFOLIO AVERAGE
AVERAGE AVERAGE (EXCLUDING NET ASSETS TURNOVER COMMISSION
NET ASSETS NET ASSETS WAIVERS) (EXCLUDING WAIVERS) RATE RATE**
- ------------------------------------------------------------------------------------------------------
STRATEGIC INCOME BOND FUND
- ------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C>
1997 (8) 0.90%* 6.22%* 1.43%* 5.69%* 1.34% n/a
CLASS B
1997(8) 1.65%* 5.49%* 2.13%* 5.01%* 1.34% n/a
- ------------------------------------------------------------------------------------------------------
LOUISIANA TAX-FREE INCOME
- ------------------------------------------------------------------------------------------------------
CLASS A
1997 0.61% 4.35% 0.65% 4.31% 0.77% n/a
1996 0.65 4.38 0.75 4.28 8.26 n/a
1995 0.65 4.51 0.95 4.21 2.31 n/a
1994 0.65 4.10 1.72 3.03 30.31 n/a
CLASS B
1997 1.36% 3.61% 1.40% 3.57% 0.77% n/a
1996 1.40 3.62 1.50 3.52 8.26 n/a
1995 1.40 3.77 1.70 3.47 2.31 n/a
1994 (3) 1.40* 3.35* 2.47* 2.28* 30.31 n/a
- ------------------------------------------------------------------------------------------------------
BALANCED FUND
- ------------------------------------------------------------------------------------------------------
CLASS A
1997 0.90% 3.05% 0.96% 2.99% 40.97% .0796
1996 0.89 3.53 1.01 3.41 57.22 .0794
1995 0.85 3.70 1.04 3.51 55.06 n/a
1994 0.85 3.18 1.14 2.89 64.09 n/a
CLASS B
1997 1.65% 2.28% 1.71% 2.22% 40.97% .0796
1996 1.64 2.80 1.76 2.68 57.22 .0794
1995 1.60 2.95 1.79 2.76 55.06 n/a
1994 (2) 1.60* 2.55* 1.94* 2.21* 64.09 n/a
- ----------------------------------------------------------------------------------------------------
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
+ TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
(1) COMMENCED OPERATIONS ON OCTOBER 19, 1993.
(2) COMMENCED OPERATIONS ON OCTOBER 22, 1993.
(3) COMMENCED OPERATIONS ON NOVEMBER 22, 1993.
(4) COMMENCED OPERATIONS ON AUGUST 10, 1995.
(5) COMMENCED OPERATIONS ON JUNE 7, 1996.
(6) COMMENCED OPERATIONS ON MARCH 1, 1996.
(7) COMMENCED OPERATIONS ON APRIL 19, 1996.
(8) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(9) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(10) COMMENCED OPERATIONS ON FEBRUARY 26, 1997.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
58 & 59 SEPTEMBER 30, 1997
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
NET ASSET REALIZED DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE TOTAL END OF
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS END OF PERIOD RETURN+ PERIOD (000)
- ---------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $12.93 $ 0.19 $5.32 $(0.19) $(0.81) $17.44 45.27% $134,117
1996 11.81 0.25 1.30 (0.25) (0.18) 12.93 13.38 93,508
1995 9.65 0.24 2.16 (0.24) -- 11.81 25.13 58,854
1994 10.00 0.18 (0.35) (0.18) -- 9.65 (1.64) 41,922
CLASS B
1997 $12.97 $ 0.09 $5.34 $(0.09) $(0.81) $17.50 44.31% $ 9,944
1996 11.86 0.17 1.29 (0.17) (0.18) 12.97 12.49 3,990
1995 9.70 0.15 2.17 (0.16) -- 11.86 24.17 1,288
1994 (2) 9.95 0.08 (0.25) (0.08) -- 9.70 (1.82)* 389
- ---------------------------------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 $12.10 $ 0.06 $3.71 $(0.06) -- $15.81 31.25% $ 31,608
1996 (6) 11.00 0.05 1.10 (0.05) -- 12.10 10.46 18,400
CLASS B
1997 $12.07 $(0.03) $3.64 -- -- $15.74 30.41% $ 1,800
1996 (7) 11.14 0.01 0.93 $(0.01) -- 12.07 8.48 152
- ---------------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 (9) $10.00 $(0.01) $2.22 -- -- $12.21 33.61%* $ 3,616
CLASS B
1997 (9) $10.00 $(0.02) $2.18 -- -- $12.16 32.85%* $ 654
- ---------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1997 (9) $10.00 $(0.01) $0.99 -- -- $10.98 14.90%* $ 3,435
CLASS B
1997 (9) $10.00 $(0.03) $0.97 -- -- $10.94 14.30%* $ 358
- ---------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
RATIO OF NET EXPENSES TO INVESTMENT
RATIO OF INVESTMENT AVERAGE NET INCOME TO
EXPENSES TO INCOME TO ASSETS AVERAGE PORTFOLIO AVERAGE
AVERAGE AVERAGE (EXCLUDING NET ASSETS TURNOVER COMMISSION
NET ASSETS NET ASSETS WAIVERS) (EXCLUDING WAIVERS) RATE RATE**
- ------------------------------------------------------------------------------------------------------
VALUE EQUITY FUND
- ------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C>
1997 1.00% 1.33% 1.00% 1.33% 97.91% $.0798
1996 0.97 2.12 1.02 2.07 95.93 .0795
1995 0.90 2.40 1.07 2.23 97.88 n/a
1994 0.90 1.95 1.17 1.68 161.42 n/a
CLASS B
1997 1.75% 0.55% 1.75% 0.55% 97.91% $.0798
1996 1.73 1.37 1.77 1.33 95.93 .0795
1995 1.65 1.62 1.82 1.45 97.88 n/a
1994 (2) 1.65* 1.30* 1.93* 1.02* 161.42 n/a
- ------------------------------------------------------------------------------------------------------
GROWTH EQUITY FUND
- ------------------------------------------------------------------------------------------------------
CLASS A
1997 1.00% 0.46% 1.04% 0.42% 65.12% $.0799
1996 (6) 1.00* 0.73* 1.12* 0.61* 91.09 .0797
CLASS B
1997 1.75% (0.30)% 1.79% (0.34)% 65.12% $.0799
1996 (7) 1.75* (0.02)* 1.87* (0.14)* 91.09 .0797
- ------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY FUND
- ------------------------------------------------------------------------------------------------------
CLASS A
1997 (9) 0.20%* (0.20)%* 1.79%* (1.79)%* 29.56% n/a
CLASS B
1997 (9) 0.95%* (0.95)%* 2.61%* (2.61)%* 29.56% n/a
- ------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------------------------------------
CLASS A
1997 (9) 0.27%* (0.27)%* 2.21%* (2.21)%* 4.69% n/a
CLASS B
1997 (9) 1.02%* (1.02)%* 2.86%* (2.86)%* 4.69% n/a
- ------------------------------------------------------------------------------------------------------
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
+ TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
(1) COMMENCED OPERATIONS ON OCTOBER 19, 1993.
(2) COMMENCED OPERATIONS ON OCTOBER 22, 1993.
(3) COMMENCED OPERATIONS ON NOVEMBER 22, 1993.
(4) COMMENCED OPERATIONS ON AUGUST 10, 1995.
(5) COMMENCED OPERATIONS ON JUNE 7, 1996.
(6) COMMENCED OPERATIONS ON MARCH 1, 1996.
(7) COMMENCED OPERATIONS ON APRIL 19, 1996.
(8) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(9) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(10) COMMENCED OPERATIONS ON FEBRUARY 26, 1997.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
60 & 61 SEPTEMBER 30, 1997
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Marquis Funds (the "Trust") was organized as a Massachusetts business trust
under a Declaration of Trust dated June 29, 1993. The Trust is registered under
the Investment Company Act of 1940, as amended, as an open-end management
company with eleven series funds: Institutional Money Market Fund, Treasury
Securities Money Market Fund, Tax Exempt Money Market Fund (the "Money Market
Funds"), Government Securities Fund, Strategic Income Bond Fund, Louisiana
Tax-Free Income Fund, Balanced Fund (formerly the "Growth and Income Fund"),
Value Equity Fund, Growth Equity Fund, Small Cap Equity Fund, and International
Equity Fund (the "Non-Dollar Funds"). Each Fund's prospectus provides a
description of the Fund's investment objectives, policies and strategies. The
assets of each Fund are segregated, and a shareholder's interest is limited to
the Fund in which shares are held. The Trust is registered to offer the
following classes of shares: Trust, Retail, and the Cash Sweep Class in the
Treasury Securities Money Market Fund, Retail and the Cash Sweep in the
Tax-Exempt Money Market and Class A and Class B in the Non-Dollar Funds.
The Small Cap Equity Fund and the International Equity Fund are currently
"feeder" funds in separate Corporate Master-Feeder(TM) structures. That is, the
Small Cap Equity Fund and International Equity Fund each currently invest in
another open-end management investment company with the same investment
objectives and hold as their only investment securities, shares of a single
"master" fund, in this case, the SEI Institutional Managed Trust Small Cap
Growth Portfolio and the SEI International Trust International Equity
Portfolio, respectively. However, in certain instances the Funds are permitted
to invest in securities other than a single open-end management investment
company.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by
the Funds.
SECURITIES VALUATION -- Investments in equity securities that are traded on a
national securities exchange (or reported on the NASDAQ national market system)
are stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt obligations
exceeding sixty days to maturity for which market quotations are readily
available are valued at the most recently quoted bid price. Debt obligations
with sixty days or less remaining until maturity may be valued at their amor-
62 SEPTEMBER 30, 1997
<PAGE>
tized cost. Under this valuation method, purchase discounts and premiums are
accreted and amortized ratably to maturity and are included in interest income.
Restricted and illiquid securities for which quotations are not readily
available are valued at fair value using methods determined in good faith as
approved by the Board of Trustees.
The investments of the Small Cap Equity and International Equity Funds (the
"Feeder" funds) in the SEI Institutional Managed Trust Small Cap Growth
Portfolio and the SEI International Trust International Equity Portfolio (the
"Master Funds"), respectively, are valued at the net asset value per share of
each Master Fund determined as of the close of the New York Stock Exchange.
FEDERAL INCOME TAXES -- It is each Fund's intention to continue
to qualify as a regulated investment company for federal income tax purposes by
complying with the appropriate provisions of the Internal Revenue Code of 1986,
as amended, and to distribute all of its taxable income and net capital gains.
Accordingly, no provision for federal income taxes has been made in the
accompanying financial statements.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend income
is recognized on the ex-dividend date, and interest income is recognized on the
accrual basis. Costs used in determining realized gains and losses on the sales
of investment securities are those of the specific securities sold adjusted for
the accretion and amortization of purchase discounts and premiums during the
respective holding period. Purchase discounts and premiums on securities held
by the Non-Dollar Funds are accreted and amortized to maturity using the
scientific interest method, which approximates the effective interest method.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value
of the collateral, including accrued interest thereon, is sufficient in the
event of default of the counterparty. The Funds also invest in tri-party
repurchase agreements. Securities held as collateral for tri-party repurchase
agreements are maintained in a segregated account by the broker's custodian
bank until maturity of the repurchase agreement. If the counterparty defaults
and the value of the collateral declines, or if the counter-party enters an
insolvency proceeding, realization of the collateral by the Funds may be
delayed or limited.
NET ASSET VALUE PER SHARE -- The net asset value per share of each Fund is
calculated each business day. In general, it is computed by dividing the
assets of each Fund, less its liabilities, by the number of outstanding shares
of the Fund.
SEPTEMBER 30, 1997 63
<PAGE>
NOTES TO FINANCIAL STATEMENTS
EXPENSES -- Expenses that are directly related to one of the Funds are charged
directly to that Fund. Other operating expenses are prorated to the Funds on
the basis of relative net assets. Class specific expenses are borne by that
class. Income, expenses, and realized and unrealized gains/losses are
allocated to the respective classes on the basis of relative daily net assets.
DISTRIBUTIONS -- Distributions from net investment income are declared and paid
quarterly for the Balanced Fund, Value Equity Fund, Growth Equity Fund and
Small Cap Equity Fund. Distributions from net investment income are declared
daily and paid monthly for the Institutional Money Market Fund, Treasury
Securities Money Market Fund, and Tax Exempt Money Market Fund.
Distributions from net investment income are declared and paid monthly for the
Government Securities Fund, Strategic Income Bond Fund and Louisiana Tax-Free
Income Fund. Any net realized capital gains are declared and distributed to
shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with U.S. Federal income tax regulations, which may
differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are charged or
credited to paid in capital in the period that the differences arises.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The preparation
of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
3. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS
First National Bank of Commerce in New Orleans (the "Adviser") serves as
investment adviser to each Fund pursuant to an investment advisory agreement
(the "Advisory Agreement") with the Trust. For its services, the Adviser is
entitled to a fee, that is calculated daily and paid monthly, at an annual rate
based on the average daily net assets of each Fund as follows: Institutional
Money Market Fund -- .15%, Treasury Securities Money Market Fund -- .30%, Tax
Exempt Money Market Fund -- .45%, Government Securities Fund -- .55%, Strategic
Income Bond Fund -- .74%, Louisiana Tax-Free Income Fund -- .35%, Balanced
Fund -- .74%, Value Equity Fund -- .74%, Growth Equity Fund -- .74%, Small Cap
Equity Fund -- .40%, and International Equity Fund -- .40%. The Adviser has
voluntarily agreed to waive a portion of its fee so that expenses of each Fund
will not exceed certain annual expense limitations. The Adviser reserves the
64 SEPTEMBER 30, 1997
<PAGE>
right to terminate its waiver at any time in its sole discretion.
Weiss, Peck & Greer, L.L.C. serves as the investment sub-adviser for the Tax
Exempt Money Market Fund pursuant to a sub-advisory agreement with the Adviser.
The sub-advisory fees are paid by the Adviser.
The Trust and SEI Fund Resources (the "Administrator") have entered into an
Administration Agreement. SEI Investments Management Corporation, a wholly-
owned subsidiary of SEI Investments, is the owner of all beneficial interest
in the Administrator. Under terms of the Administration Agreement, the
Administrator is entitled to a fee calculated daily and paid monthly at an
annual rate of .10% of the average daily net assets of the Institutional Money
Market Fund and .15% of the average daily net assets of the Treasury Securities
Money Market Fund, Tax Exempt Money Market Fund, Government Securities Fund,
Strategic Income Bond Fund, Louisiana Tax-Free Income Fund, Balanced Fund,
Value Equity Fund, Growth Equity Fund, Small Cap Equity Fund, and International
Equity Fund. The Administrator has voluntarily agreed to waive a portion of its
fee so that expenses of each Fund will not exceed certain annual expense
limitations. The Administrator reserves the right to terminate its waiver at
any time in its sole discretion.
The Trust and SEI Investments Distribution Co. (the "Distributor") have
entered into a Distribution Agreement. As provided in certain Distribution
Plans adopted under the Distribution Agreement, the Trust will pay a fee at an
annual rate of .25% of the average daily net assets of the Retail Class of the
Treasury Securities Money Market Fund and Tax Exempt Money Market Fund, and
.75% of the Class B shares of the Non-Dollar Funds and the Cash Sweep Class of
the Treasury Securities Money Market Fund to the Distributor as compensation
for its services. The Distributor has agreed to waive a portion of its fee
from the Treasury Securities Money Market Fund and the Tax Exempt Money Market
Fund in order to maintain a competitive expense ratio. The Distributor reserves
the right to terminate its waiver at any time in its sole discretion.
In addition to the fees paid at the feeder level for the Small Cap Equity and
International Equity Funds, each Feeder Fund's shareholders will bear
indirectly their prorata portion of the advisory, administrative, distribution
and other expenses of the respective Master Funds in which they invest.
The Class A shares of the Non-Dollar Funds are subject to a maximum sales load
of 3.50%.
There is a contingent deferred sales charge on the Class B shares of the
Non-Dollar Funds which varies depending on the number of years from time of
payment for the purchase of shares until the time of redemption of such shares
(the "holding period"). Solely for the purpose of determining the number of
years from the time of any payment for the purchase of shares, all payments
during the month are aggregated and deemed to have been made on the first day
of the month.
SEPTEMBER 30, 1997 65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEAR SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
------------ --------------------------
First 3.50%
Second 2.75%
Third 2.00%
Fourth 1.25%
Fifth 0.50%
Sixth None
4. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES
Organizational costs have been capitalized by the Funds and are being amortized
over sixty months commencing with operations. In the event any of the initial
shares of the Funds are redeemed by any holder thereof during the period that
the Funds are amortizing their organizational costs, the redemption proceeds
payable to the holder thereof will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption. These costs
include legal fees of approximately $54,278 for organizational work performed
by a law firm of which an officer and a trustee of the Trust are partners.
Certain officers and trustees of the Trust who are officers of the
Administrator and the Distributor received no compensation from the Trust.
5. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than short-term investments, for the period ended September 30, 1997 were
as follows:
STRATEGIC LOUISIANA
GOVERNMENT INCOME TAX-FREE
SECURITIES BOND INCOME BALANCED
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- ---------- ---------- ----------
PURCHASES:
U.S.
Government $17,068 $5,054 $ -- $ 7,924
Other -- 7,597 15,100 41,013
SALES:
U.S.
Government $24,853 $ 142 $ -- $ 7,614
Other 6,570 -- 205 50,821
INTER-
VALUE GROWTH SMALL CAP NATIONAL
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- ---------- ---------- --------
PURCHASES:
U.S.
Government $ -- $ -- $ -- $ --
Other 118,175 21,006 4,021 3,706
SALES:
U.S.
Government $ -- $ -- $ -- $ --
Other 111,360 15,240 651 82
On September 30, 1997, the total cost of securities and the net realized gains
or losses on securities sold for federal income tax purposes were not
materially different from amounts reported for financial reporting purposes.
The aggregate gross unrealized appreciation and depreciation on securities at
September 30, 1997, for each Non-Dollar Fund are as follows:
66 SEPTEMBER 30, 1997
<PAGE>
STRATEGIC LOUISIANA
GOVERNMENT INCOME TAX-FREE
SECURITIES BOND INCOME BALANCED
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- ---------- ---------- ----------
AGGREGATE GROSS
UNREALIZED
APPRECIATION $ 1,308 $239 $1,046 $21,987
Aggregate Gross
Unrealized
Depreciation (1,179) -- (16) (878)
------- ---- ------ -------
Net Unrealized
Appreciation/
(Depreciation) $ 129 $239 $1,030 $21,109
======= ==== ====== =======
INTER-
VALUE GROWTH SMALL CAP NATIONAL
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- ---------- ---------- --------
AGGREGATE GROSS
UNREALIZED
APPRECIATION $34,218 $8,194 $829 $116
Aggregate Gross
Unrealized
Depreciation (580) (114) -- (23)
------- ------ ---- ----
Net Unrealized
Appreciation/
(Depreciation) $33,638 $8,080 $829 $ 93
======= ====== ==== ====
6. CONCENTRATION OF CREDIT RISK
The Institutional Money Market Fund and the Treasury Securities Money Market
Fund invest primarily in a portfolio of money market instruments maturing in
one year or less whose ratings are within the highest ratings category assigned
by a nationally recognized statistical rating agency or, if not rated, are
believed to be of comparable quality.
The Tax Exempt Money Market Fund invests in debt instruments of municipal
issuers. The issuers' ability to meet their obligations may be affected by
economic developments in a specific state or region. The Tax Exempt Money
Market Fund invests in securities that include revenue bonds, tax and revenue
anticipation notes, and general obligation bonds. At September 30, 1997, the
percentages of portfolio investments by each revenue source were as follows:
TAX EXEMPT
MONEY MARKET FUND
-----------------
Revenue Bonds 73%
Anticipation Notes 18%
General Obligations 6%
Tax-Exempt
Commercial Paper 3%
-----------------
Total 100%
=================
The Government Securities, Strategic Income Bond and Balanced Funds invest in
debt instruments.
The Louisiana Tax-Free Income Fund is more susceptible to factors adversely
affecting issuers of Louisiana municipal securities than a comparable municipal
bond fund that does not concentrate its investments in Louisiana municipal
securities.
The following table presents a summary of holdings in the Government
Securities, Strategic Income Bond and Louisiana Tax-Free Income Funds as of
September 30, 1997.
SEPTEMBER 30, 1997 67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
STRATEGIC LOUISIANA
GOVERNMENT INCOME TAX-FREE
SECURITIES BOND INCOME
RATING FUND FUND FUND
- ------------ -------------- ---------- ----------
AAA 86.3% 31.0% 79.1%
AA 0.5% 6.8% --
A 1.4% 44.5% 3.6%
BBB -- 11.2% --
Not Rated 11.8% 6.5% 17.3%
---------- ---------- ----------
100% 100% 100%
========== ========== ==========
These percentages are stated as a percentage of total investments. U.S.
Government Securities represent obligations issued or guaranteed by the U.S.
Government and its agencies or instrumentalities. Repurchase agreements are
collateralized by U.S. Government Securities and are included in Not Rated
above.
7. CAPITAL LOSS CARRYFORWARDS
The Funds had capital loss carryforwards and post-October deferred losses at
September 30, 1997, to the extent provided in the regulations for federal
income tax as follows:
POST
CAPITAL LOSS OCTOBER 31,
CARRYFORWARDS EXPIRING 1996
------------------------------ DEFERRED
FUNDS 2003 2004 2005 LOSSES
- ----- ------------------------------ ------------
Government
Securities
Fund $679,660 $124,634 $ -- $19,540
Louisiana
Tax-Free
Income
Fund 32,125 2,083 19,720 --
Small Cap
Equity Fund -- -- -- 9,414
For tax purposes, capital losses can be carried forward for a maximum of eight
years to offset any future net realized capital gains. Post-October deferred
losses have been deferred to fiscal year 1998 for tax purposes.
8. SUBSEQUENT EVENT
On October 20, 1997, First Commerce Corporation and Banc One Corporation
jointly announced that they had signed a definitive agreement for the merger
of First Commerce Corporation with Banc One Corporation. As of September 30,
1997, the Adviser is a wholly-owned subsidiary of First Commerce Corporation.
Subject to certain conditions being met, it is currently anticipated that the
trans-action will close at the end of February 1998. Thereafter, the Adviser
would be an indirect subsidiary of Banc One.
68 SEPTEMBER 30, 1997
<PAGE>
NOTICE TO SHAREHOLDERS (UNAUDITED)
FOR TAXPAYERS FILING ON A CALENDAR-YEAR BASIS. THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
Dear Marquis Funds' Shareholders:
For the fiscal year ended September 30, 1997, each Fund is designating
qualifying dividends and exempt income with regard to distributions paid during
the year as follows:
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
LONG TERM ORDINARY
CAPITAL GAINS INCOME TOTAL
DISTRIBUTION DISTRIBUTIONS QUALIFYING DISTRIBUTIONS TAX-EXEMPT
FUNDS (TAX BASIS)* (TAX BASIS)* DIVIDENDS(1) (TAX BASIS)** INTEREST**
- -------- -------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Institutional Money
Market Fund 0% 100% 0% 100% 0%
Treasury Securities
Money Market Fund 0% 100% 0% 100% 0%
Tax Exempt Money
Market Fund 0% 100% 0% 100% 100%
Government
Securities Fund 0% 100% 0% 100% 0%
Strategic Income
Bond Fund 0% 100% 0% 100% 0%
Louisiana Tax-Free
Income Fund 0% 100% 0% 100% 99%
Balanced Fund 45% 55% 27% 100% 0%
Value Equity Fund 64% 36% 88% 100% 0%
Growth Equity Fund 0% 100% 100% 100% 0%
Small Cap
Equity Fund 0% 0% 0% 0% 0%
Inernational
Equity Fund 0% 0% 0% 0% 0%
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the Fund's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income
distributions of the Fund.
Please consult your tax adviser for proper treatment of this information.
</TABLE>
SEPTEMBER 30, 1997 69
<PAGE>
NOTES
70 SEPTEMBER 30, 1997
<PAGE>
NOTES
SEPTEMBER 30, 1997 71
<PAGE>
NOTES
72 SEPTEMBER 30, 1997
<PAGE>
[MARQUIS LOGO OMITTED]
High Quality. High Standards. Highly Personal.
Investment Adviser
First National Bank of Commerce in New Orleans
201 St. Charles Avenue
New Orleans, LA 70170
Administrator
SEI Fund Resources
Oaks, PA 19456
Transfer Agent
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
Legal Counsel
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Independent Public Accountants
Arthur Andersen LLP
1601 Market Street
Philadelphia, PA 19103
THE MARQUIS FUNDS:
NOT FDIC INSUREDBULLETNO BANK GUARANTEEBULLETMAY LOSE VALUE
The First NBC Trust Group is a department of First National Bank of Commerce
("First NBC"), a wholly owned subsidiary of First Commerce Corporation ("FCC").
First NBC serves as investment adviser and custodian for the Marquis Funds;
remuneration may be earned for such services. The Marquis Funds are distributed
by SEI Investments Distribution Co., which is not affiliated with FCC, First
NBC, Marquis Investments, LLC, or any affiliates thereof.
This material must be preceded or accompanied by a current prospectus.
(C) 1997 MRQ-F-007-04
