<PAGE> 1
THE ONE(R)
INVESTOR
PROGRAM
ANNUAL REPORT
FOR THE YEAR ENDED JUNE 30, 1999
INVESTOR CONSERVATIVE GROWTH FUND
INVESTOR BALANCED FUND
INVESTOR GROWTH & INCOME FUND
INVESTOR GROWTH FUND
ONE GROUP [LOGO]
<PAGE> 2
IMPORTANT CUSTOMER INFORMATION. INVESTMENT PRODUCTS:
- are not deposits or obligations of, or guaranteed by,
BANK ONE CORPORATION or any of its affiliates,
- are not insured by the FDIC, and [CANCELLED FDIC LOGO]
- are subject to investment risks, including possible loss of
the principal amount invested.
<PAGE> 3
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
Portfolio Performance Review............................................... 2
Schedules of Portfolio Investments.......................................... 8
Statements of Assets and Liabilities......................................... 12
Statements of Operations..................................................... 13
Statements of Changes in Net Assets.......................................... 14
Notes to Financial Statements................................................ 16
Financial Highlights......................................................... 24
Report of Independent Accountants............................................ 40
1
<PAGE> 4
One Group Investor Funds
Portfolio Performance Review
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
HOW DID THE FUNDS PERFORM?
For the year ended June 30, 1999, the One Group Investor Funds posted the
following total returns for their respective I share classes:
- - One Group Investor Growth Fund, 16.84%
- - One Group Investor Growth and Income Fund, 14.11%
- - One Group Investor Balanced Fund, 11.16%
- - One Group Investor Conservative Growth Fund, 7.01%
For information on other share classes and performance comparisons to indexes,
please see pages 4-7.
HOW WOULD YOU CHARACTERIZE THE STOCK MARKET DURING THE YEAR?
The stock market environment was characterized by rotation of strength and
weakness. During the past fiscal year, we witnessed extreme cases of valuation
driving stock prices at certain times and fundamentals driving stock prices at
others. This created a lot of volatility and uncertainty in the market.
At the beginning of the fiscal year, with market and economic crises developing
abroad, investors wanted to avoid stocks with foreign market exposure and to
focus on those with reliable fundamentals. As the situations in Asia, Russia and
Brazil intensified, the pool of favored stocks became narrower, and a small
group of growth stocks soared to levels not seen before. The market paid dearly
for fundamentals it could rely on, and valuation became less and less important.
Then, early in 1999, the Federal Reserve showed signs of moving toward a
tightening bias, and almost overnight investors no longer sought out stocks with
good fundamentals. They wanted valuation, and the cheaper the stock, the better.
HOW ABOUT THE BOND MARKET?
The year was incredibly turbulent for the fixed income market. In the fall of
1998, interest rates hit new lows due to the emerging market and hedge fund
crises. Concerns over the stability of the financial markets caused the Federal
Reserve to cut rates three times during the second half of 1998. Investors
worldwide flocked to the safe haven of the U.S. Treasury market, sparking a
strong rally among Treasuries. At the same time, interest rate volatility and
credit quality spreads were rising to levels not seen in nearly a decade.
(Spreads refer to the difference in yield between non-Treasury securities, such
as agency, corporate and mortgage-backed bonds, and comparable-maturity Treasury
bonds. When spreads widen, prices on non-Treasury bonds decline, and vice
versa.) To compound the problem, the low interest rates led to significant
mortgage refinancing activity, putting further negative pressure on
mortgage-backed securities.
As the second half of the fiscal year progressed, interest rates started showing
an upward trend. In addition, liquidity improved and spreads began to tighten.
Mortgage-backed bonds, highly rated corporate bonds and asset-backed securities
outperformed Treasuries in the first quarter of 1999. Economic indicators began
to show that the economy had not been negatively affected by the liquidity
crisis in the fall.
The final quarter of the fiscal year proved to the markets that the volatility
and liquidity problems of 1998 had not been completely erased. As the U.S.
economy continued growing at a rapid pace, the Fed took action with an interest
rate increase at the end of June. In anticipation of this move, interest rate
volatility surged and quality spreads again widened.
WHAT WAS THE ASSET ALLOCATION STRATEGY?
At the beginning of the fiscal year, we underweighted large-cap stocks by 5% and
overweighted international stocks by 2% and investment-grade bonds by 3%. In
August, we neutralized the weight in international stocks and added 2% to
large-cap stocks. We did this when economic problems in Asia began to spread to
Eastern Europe and Latin America.
In November we neutralized the weight in bonds by adding 3% to large-cap stocks.
We did this because the probability of a recession in 1999 was significantly
reduced by the Federal Reserve's interest rate cuts. Also in November, we
introduced high-yield bonds to all of the Investor Funds except the Conservative
Growth Fund.
2
<PAGE> 5
One Group Investor Funds
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
By fiscal year-end, all of the Investor Funds were neutral in their asset
allocations:
- - One Group Investor Growth Fund, 90% equity funds; 10% fixed income funds.
- - One Group Investor Growth and Income Fund, 70% equity funds; 30% fixed income
funds.
- - One Group Investor Balanced Fund, 50% equity funds; 50% fixed income funds.
- - One Group Investor Conservative Growth Fund, 30% equity funds; 70% fixed
income funds.
WHAT WERE YOUR KEY STRATEGIES IN THE EQUITY ARENA?
Other than the strategic allocation moves mentioned above, we continued to
maintain broad equity diversification. The Investor Funds enjoyed varying
exposure, depending on the overall investment objective, to large-, mid- and
small-cap stocks as well as international stocks. Within each style, individual
stock selection remains the core of our management process. This diversified
approach helps limit risk while offering return opportunities from a variety of
market segments.
WHAT WERE YOUR KEY STRATEGIES WITHIN THE FIXED INCOME MARKET?
We also centered on maintaining a low-risk profile by keeping durations at or
near their average levels. (Duration is a measure of a fund's price sensitivity
to interest rate changes. A longer duration indicates greater sensitivity; a
shorter duration indicates less.) Instead of making "bets" on interest rate
movements by significantly altering duration, we prefer to concentrate on the
yield component of total return.
As such, our fund management teams emphasized select investments in the
corporate, asset-backed and mortgage-backed sectors. This strategy typically
allows the funds to capture yield advantages over Treasury securities. At the
same time, they focus on maintaining portfolios with good average credit
quality.
Our focus on yield helped offset some of the price decline experienced in the
second half of the fiscal year, when interest rates went on the upswing.
WHAT IS YOUR OUTLOOK FOR THE FUNDS?
The funds are well positioned to participate in a strong U.S. economy and in a
recovery among international markets. Expected strong U.S. economic growth may
have a slightly negative impact on bonds. In turn, a weak bond market may
negatively affect stocks, but this effect could be offset by strong earnings
growth.
The funds remain neutral with respect to asset allocations. A strong economy
should help the performance of mid-cap and small-cap stocks, where the funds
have good exposure. High-yield bonds also are likely to perform better than
other categories of bonds. We expect the introduction of this asset class to
enhance the fixed income portion of returns.
/s/ Richard R. Jandrain
Richard R. Jandrain III
Chief Investment Officer of Equity Securities
Chairman, Asset Allocation Committee
Please refer to the prospectus and the accompanying financial statements for
more information about the Fund.
3
<PAGE> 6
One Group Investor Conservative Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 7.01% 10.11%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
----------------------------------------------------------------
CLASS I LEHMAN BROTHERS LIPPER MIX
------- INTERMEDIATE AGGREGATE ----------
BOND INDEX
----------------------
<S> <C> <C> <C>
12/96 $10000.00 $10000.00 $10000.00
6/97 10600.00 10323.00 10243.00
6/98 11949.00 11219.00 11444.00
6/99 12787.00 11682.00 11982.00
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 6.77% 9.66%
Class A* 1.18% 7.38%
</TABLE>
* Reflects 5.25% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
------------------------------------------------------------------------------
CLASS A CLASS A* LEHMAN BROTHERS LIPPER MIX
------- -------- INTERMEDIATE ----------
AGGREGATE BOND
INDEX
---------------
<S> <C> <C> <C> <C>
12/96 $10000.00 $ 9475.00 $10000.00 $10000.00
6/97 10546.00 9997.00 10323.00 10243.00
6/98 11852.00 11235.00 11219.00 11444.00
6/99 12655.00 11995.00 11682.00 11982.00
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 6.10% 9.00%
Class B** 1.10% 7.96%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
------------------------------------------------------------------------------
CLASS B CLASS B** LEHMAN BROTHERS LIPPER MIX
------- --------- INTERMEDIATE ----------
AGGREGATE BOND
INDEX
---------------
<S> <C> <C> <C> <C>
12/96 $10000.00 $10000.00 $10000.00 $10000.00
6/97 10530.00 10530.00 10323.00 10243.00
6/98 11744.00 11744.00 11219.00 11444.00
6/99 12461.00 12161.00 11682.00 11982.00
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 6.00% 8.72%
Class C** 5.00% 8.72%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
------------------------------------------------------------------------------
CLASS C CLASS C** LEHMAN BROTHERS LIPPER MIX
------- --------- INTERMEDIATE ----------
AGGREGATE BOND
INDEX
---------------
<S> <C> <C> <C> <C>
7/97 $10000.00 $10000.00 $10000.00 $10000.00
6/98 11148.00 11148.00 10868.00 11172.00
6/99 11818.00 11818.00 11317.00 11697.00
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Conservative Growth Fund is measured against the
Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised
of US Government, mortgage, corporate and asset-backed securities with
maturities of one to ten years. Investors are unable to purchase the index
directly, although they can invest in the underlying securities. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management. By contrast, the performance of the fund
reflects the deduction of these value-added services as well as the deduction of
sales charges on Class A Shares and applicable contingent deferred sales charges
on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (20%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(75%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
4
<PAGE> 7
One Group Investor Balanced Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 11.16% 14.44%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
----------------------------------------------------------------
CLASS I LEHMAN BROTHERS LIPPER MIX
------- INTERMEDIATE AGGREGATE ----------
BOND INDEX
----------------------
<S> <C> <C> <C>
12/96 $10000 $10000 $10000
6/97 10848 10323 10390
6/98 12694 11219 11890
6/99 14111 11682 12721
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 10.70% 14.07%
Class A* 4.85% 11.70%
</TABLE>
* Reflects 5.25% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
------------------------------------------------------------------------------
CLASS A CLASS A* LEHMAN BROTHERS LIPPER MIX
------- -------- INTERMEDIATE ----------
AGGREGATE BOND
INDEX
---------------
<S> <C> <C> <C> <C>
12/96 $10000 $ 9475 $10000 $10000
6/97 10841 10275 10323 10390
6/98 12641 11983 11219 11890
6/99 13995 13266 11682 12721
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 10.01% 13.42%
Class B** 5.01% 12.45%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
------------------------------------------------------------------------------
CLASS B CLASS B** LEHMAN BROTHERS LIPPER MIX
------- --------- INTERMEDIATE ----------
AGGREGATE BOND
INDEX
---------------
<S> <C> <C> <C> <C>
12/96 $10000 $10000 $10000 $10000
6/97 10822 10822 10323 10390
6/98 12536 12536 11219 11890
6/99 13792 13492 11682 12721
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 10.04% 12.84%
Class C** 9.04% 12.84%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
------------------------------------------------------------------------------
CLASS C CLASS C** LEHMAN BROTHERS LIPPER MIX
------- --------- INTERMEDIATE ----------
AGGREGATE BOND
INDEX
---------------
<S> <C> <C> <C> <C>
7/97 $10000 $10000 $10000 $10000
6/98 11466 11466 10868 11444
6/99 12728 12728 11317 12243
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Balanced Fund is measured against the Lehman
Brothers Intermediate Aggregate Bond Index, an unmanaged index comprised of US
Government, mortgage, corporate and asset-backed securities with maturities of
one to ten years. Investors are unable to purchase the index directly, although
they can invest in the underlying securities. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management. By contrast, the performance of the fund reflects the
deduction of these value-added services as well as the deduction of sales
charges on Class A Shares and applicable contingent deferred sales charges on
Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (40%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(55%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
5
<PAGE> 8
One Group Investor Growth & Income Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 14.11% 17.89%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
-------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS I
-------------- ---------- -------
<S> <C> <C> <C>
12/96 $10000 $10000 $10000
6/97 11945 10535 11087
6/98 15462 12342 13342
6/99 18763 13486 15225
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 13.62% 17.89%
Class A* 7.68% 15.45%
</TABLE>
* Reflects 5.25% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
--------------------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS A CLASS A*
-------------- ---------- ------- --------
<S> <C> <C> <C> <C>
12/96 $10000 $10000 $10000 $ 9475
6/97 11945 10535 11150 10568
6/98 15462 12342 13399 12701
6/99 18763 13486 15224 14430
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 12.93% 17.02%
Class B** 7.93% 16.09%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
--------------------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS B CLASS B**
-------------- ---------- ------- ---------
<S> <C> <C> <C> <C>
12/96 $10000 $10000 $10000 $10000
6/97 11945 10535 11102 11102
6/98 15462 12342 13225 13225
6/99 18763 13486 14937 14637
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 12.94% 16.00%
Class C** 11.94% 16.00%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
--------------------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS C CLASS C**
-------------- ---------- ------- ---------
<S> <C> <C> <C> <C>
7/97 $10000 $10000 $10000 $10000
6/98 12944 11715 11908 11908
6/99 15708 12801 13450 13450
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth & Income Fund is measured against the S&P
1500 Index, an unmanaged index generally representative of the performance of
large and small companies in the US stock market. Investors are unable to
purchase the index directly, although they can invest in the underlying
securities. The performance of the index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management. By
contrast, the performance of the fund reflects the deduction of these
value-added services as well as the deduction of sales charges on Class A Shares
and applicable contingent deferred sales charges on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (60%), the Lipper International Funds
Universe (5%), and the Lipper Intermediate US Government Bond Funds Universe
(35%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
6
<PAGE> 9
One Group Investor Growth Fund
Portfolio Performance Review, continued
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class I 16.84% 21.43%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
-------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS I
-------------- ---------- -------
<S> <C> <C> <C>
12/96 $10000 $10000 $10000
6/97 11945 10680 11350
6/98 15462 12724 14053
6/99 18763 14138 16419
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class A 16.40% 20.83%
Class A* 10.27% 18.33%
</TABLE>
* Reflects 5.25% Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
-------------------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS A* CLASS A
-------------- ---------- -------- -------
<S> <C> <C> <C> <C>
12/96 $10000 $10000 $ 9475 $10000
6/97 11945 10680 10696 11284
6/98 15462 12724 13203 13929
6/99 18763 14138 15368 16213
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (12/10/96)
<S> <C> <C> <C>
Class B 15.57% 20.57%
Class B** 10.57% 19.69%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
-------------------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS B** CLASS B
-------------- ---------- --------- -------
<S> <C> <C> <C> <C>
12/96 $10000 $10000 $10000 $10000
6/97 11945 10680 11388 11388
6/98 15462 12724 13952 13952
6/99 18763 14138 15824 16124
</TABLE>
AVERAGE ANNUAL
TOTAL RETURN AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Since
Inception
1 Year (7/1/97)
<S> <C> <C> <C>
Class C 15.65% 19.01%
Class C** 14.65% 19.01%
</TABLE>
** Reflects Applicable Contingent Deferred Sales Charge.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTMENT
-------------------------------------------------------------------------------
S&P 1500 INDEX LIPPER MIX CLASS C** CLASS C
-------------- ---------- --------- -------
<S> <C> <C> <C> <C>
7/97 $10000 $10000 $10000 $10000
6/98 12944 11914 12241 12241
6/99 15708 13238 14157 14157
</TABLE>
The performance data quoted represents past performance and is not an indication
of future results. Investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The total return set forth may reflect the waiver of a portion of the
fund's fees for certain periods since the inception date, without the waiver,
total return would have been lower.
The performance of the Investor Growth Fund is measured against the S&P 1500
Index, an unmanaged index generally representative of the performance of large
and small companies in the US stock market. Investors are unable to purchase the
index directly, although they can invest in the underlying securities. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management. By contrast, the performance
of the fund reflects the deduction of these value-added services as well as the
deduction of sales charges on Class A Shares and applicable contingent deferred
sales charges on Class B and Class C Shares.
The Lipper Mix for all the classes consists of the average monthly returns of
the Lipper General Equity Funds Universe (75%), the Lipper International Funds
Universe (10%), and the Lipper Intermediate US Government Bond Funds Universe
(15%). The Lipper Universes consist of the equally weighted average monthly
return of all the funds within the category.
7
<PAGE> 10
- --------------------------------------------------------------------------------
One Group Mutual Funds
Investor Conservative Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (99.4%):
1,099 One Group Bond Fund Class I........... $ 11,360
658 One Group Diversified Equity Fund
Class I............................. 9,994
120 One Group Diversified International
Fund Class I........................ 1,819
483 One Group Equity Income Fund Class
I................................... 11,825
4,307 One Group Government Bond Fund Class
I................................... 41,909
4,453 One Group Income Bond Fund Class I.... 34,199
1,837 One Group Intermediate Bond Fund Class
I................................... 18,886
209 One Group International Equity Index
Fund Class I........................ 3,889
486 One Group Large Cap Growth Fund Class
I................................... 12,718
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
649 One Group Large Cap Value Fund Class
I................................... $ 11,733
180 One Group Mid Cap Growth Fund Class
I................................... 4,549
291 One Group Mid Cap Value Fund Class
I................................... 4,329
5,904 One Group Prime Money Market Fund
Class I............................. 5,904
1,271 One Group Short-Term Bond Fund Class
I................................... 13,219
972 One Group Ultra Short-Term Bond Fund
Class I............................. 9,493
--------
Total Investment Companies 195,826
--------
Total (Cost $191,224) (a) $195,826
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $196,935.
(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 $218. 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...................... $ 7,924
Unrealized depreciation...................... (3,540)
-------
Net unrealized appreciation.................. $ 4,384
=======
</TABLE>
See notes to financial statements.
8
<PAGE> 11
- --------------------------------------------------------------------------------
One Group Mutual Funds
Investor Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (99.9%):
6,183 One Group Bond Fund Class I........... $ 63,928
3,721 One Group Diversified Equity Fund
Class I............................. 56,524
669 One Group Diversified International
Fund Class I........................ 10,121
228 One Group Diversified Mid Cap Fund
Class I............................. 5,030
5,012 One Group Government Bond Fund Class
I................................... 48,766
1,974 One Group High Yield Bond Fund Class
I................................... 19,482
6,350 One Group Income Bond Fund Class I.... 48,771
2,381 One Group Intermediate Bond Fund Class
I................................... 24,480
814 One Group International Equity Index
Fund Class I........................ 15,166
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
1,963 One Group Large Cap Growth Fund Class
I................................... $ 51,344
2,725 One Group Large Cap Value Fund Class
I................................... 49,287
1,234 One Group Mid Cap Growth Fund Class
I................................... 31,250
2,332 One Group Mid Cap Value Fund Class
I................................... 34,698
12,502 One Group Prime Money Market Fund
Class I............................. 12,502
1,865 One Group Short-Term Bond Fund Class
I................................... 19,400
48 One Group Small Cap Value Fund Class
I................................... 688
1,470 One Group Ultra Short-Term Income Fund
Class I............................. 14,367
--------
Total Investment Companies 505,804
--------
Total (Cost $477,570) (a) $505,804
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $506,417.
(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 $1,593. 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...................... $35,423
Unrealized depreciation...................... (8,782)
-------
Net unrealized appreciation.................. $26,641
=======
</TABLE>
See notes to financial statements.
9
<PAGE> 12
- --------------------------------------------------------------------------------
One Group Mutual Funds
Investor Growth & Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (99.8%):
6,436 One Group Bond Fund Class I........... $ 66,548
6,936 One Group Diversified Equity Fund
Class I............................. 105,361
2,233 One Group Diversified International
Fund Class I........................ 33,788
633 One Group Diversified Mid Cap Fund
Class I............................. 13,998
3,397 One Group Government Bond Fund Class
I................................... 33,048
2,672 One Group High Yield Bond Fund Class
I................................... 26,374
3,432 One Group Income Bond Fund Class I.... 26,361
1,918 One Group Intermediate Bond Fund Class
I................................... 19,717
1,221 One Group International Equity Index
Fund Class I........................ 22,754
2,909 One Group Large Cap Growth Fund Class
I................................... 76,082
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
4,461 One Group Large Cap Value Fund Class
I................................... $ 80,699
2,236 One Group Mid Cap Growth Fund Class
I................................... 56,612
5,200 One Group Mid Cap Value Fund Class
I................................... 77,375
14,603 One Group Prime Money Market Fund
Class I............................. 14,603
1,270 One Group Short-Term Bond Fund Class
I................................... 13,203
651 One Group Small Cap Growth Fund Class
I................................... 6,909
483 One Group Small Cap Value Fund Class
I................................... 6,884
709 One Group Ultra Short-Term Income Fund
Class I............................. 6,928
--------
Total Investment Companies 687,244
--------
Total (Cost $642,205) (a) $687,244
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $688,356.
(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 $4,080. 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...................... $ 54,937
Unrealized depreciation...................... (13,978)
--------
Net unrealized appreciation.................. $ 40,959
========
</TABLE>
See notes to financial statements.
10
<PAGE> 13
- --------------------------------------------------------------------------------
One Group Mutual Funds
Investor Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES (99.7%):
1,068 One Group Bond Fund Class I........... $ 11,040
3,794 One Group Diversified Equity Fund
Class I............................. 57,626
465 One Group Diversified International
Fund Class I........................ 7,039
352 One Group Diversified Mid Cap Fund
Class I............................. 7,784
342 One Group Government Bond Fund Class
I................................... 3,326
1,074 One Group High Yield Bond Fund Class
I................................... 10,597
434 One Group Income Bond Fund Class I.... 3,329
324 One Group Intermediate Bond Fund Class
I................................... 3,330
1,423 One Group International Equity Index
Fund Class I........................ 26,519
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- --------- -------------------------------------- --------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
2,405 One Group Large Cap Growth Fund Class
I................................... $ 62,886
3,085 One Group Large Cap Value Fund Class
I................................... 55,808
2,153 One Group Mid Cap Growth Fund Class
I................................... 54,514
3,489 One Group Mid Cap Value Fund Class
I................................... 51,917
5,772 One Group Prime Money Market Fund
Class I............................. 5,772
312 One Group Short-Term Bond Fund Class
I................................... 3,248
1,119 One Group Small Cap Growth Fund Class
I................................... 11,885
529 One Group Small Cap Value Fund Class
I................................... 7,543
--------
Total Investment Companies 384,163
--------
Total (Cost $337,739) (a) $384,163
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $385,249.
(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 $1,236. 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...................... $50,005
Unrealized depreciation...................... (4,817)
-------
Net unrealized appreciation.................. $45,188
=======
</TABLE>
See notes to financial statements.
11
<PAGE> 14
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1999
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
INVESTOR INVESTOR INVESTOR INVESTOR
CONSERVATIVE BALANCED GROWTH & GROWTH
GROWTH FUND FUND INCOME FUND FUND
------------- --------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value (cost $191,224;
$477,570; $642,205; and $337,739, respectively)........... $195,826 $505,804 $687,244 $384,163
Dividends receivable........................................ 669 1,331 1,174 246
Receivable for capital shares issued........................ 1,389 1,336 1,964 1,523
Prepaid expenses and other assets........................... 24 3 3 3
-------- -------- -------- --------
TOTAL ASSETS................................................ 197,908 508,474 690,385 385,935
-------- -------- -------- --------
LIABILITIES:
Dividends payable........................................... 576 1,113 894 46
Payable for capital shares redeemed......................... 75 226 245 140
Accrued expenses and other payables:
Investment advisory fees................................ -- 54 21 15
Administration fees..................................... -- 18 12 5
12b-1 Fees.............................................. 313 460 475 325
Other................................................... 9 186 382 155
-------- -------- -------- --------
TOTAL LIABILITIES........................................... 973 2,057 2,029 686
-------- -------- -------- --------
NET ASSETS:
Capital..................................................... 191,402 478,210 646,370 336,460
Accumulated undistributed net realized gains (losses) from
investment transactions................................... 931 (27) (3,053) 2,365
Net unrealized appreciation (depreciation) from
investments............................................... 4,602 28,234 45,039 46,424
-------- -------- -------- --------
NET ASSETS.................................................. $196,935 $506,417 $688,356 $385,249
======== ======== ======== ========
NET ASSETS:
Class I................................................. $ 37,131 $ 84,447 $209,770 $100,566
Class A................................................. 29,714 177,336 245,151 100,789
Class B................................................. 121,348 229,671 221,088 168,823
Class C................................................. 8,742 14,963 12,347 15,071
-------- -------- -------- --------
Total....................................................... $196,935 $506,417 $688,356 $385,249
======== ======== ======== ========
OUTSTANDING UNITS OF BENEFICIAL INTEREST (SHARES)
Class I................................................. 3,314 6,899 15,788 6,990
Class A................................................. 2,657 14,484 18,295 7,046
Class B................................................. 10,849 18,769 16,552 11,687
Class C................................................. 783 1,228 932 1,054
-------- -------- -------- --------
Total....................................................... 17,603 41,380 51,567 26,777
======== ======== ======== ========
Net Asset Value
Class I Offering and redemption price per share......... $ 11.20 $ 12.24 $ 13.29 $ 14.39
======== ======== ======== ========
Class A Redemption price per share...................... $ 11.18 $ 12.24 $ 13.40 $ 14.30
======== ======== ======== ========
Maximum sales charge............................... 5.25% 5.25% 5.25% 5.25%
======== ======== ======== ========
Maximum offering price per share (100%/(100%-
maximum sales charge) of net asset value adjusted
to nearest cent)................................. $ 11.80 $ 12.92 $ 14.14 $ 15.09
======== ======== ======== ========
Class B Offering price per share (a).................... $ 11.19 $ 12.24 $ 13.36 $ 14.44
======== ======== ======== ========
Class C Offering price per share (a).................... $ 11.17 $ 12.19 $ 13.25 $ 14.30
======== ======== ======== ========
</TABLE>
- ------------
(a) Redemption price per Class B and Class C share varies based on length of
time shares are held.
See notes to financial statements.
12
<PAGE> 15
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
INVESTOR INVESTOR INVESTOR INVESTOR
CONSERVATIVE BALANCED GROWTH & GROWTH
GROWTH FUND FUND INCOME FUND FUND
------------- --------- ------------ ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Distribution income from affiliates......................... $6,154 $12,100 $12,069 $ 7,379
------ ------- ------- -------
EXPENSES:
Investment advisory fees.................................... 68 154 191 139
Administration fees......................................... 136 307 371 278
12b-1 fees (Class A)........................................ 70 295 359 245
12b-1 fees (Class B)........................................ 767 1,342 1,395 1,076
12b-1 fees (Class C)........................................ 55 100 98 116
Legal and audit fees........................................ 5 7 9 8
Trustees' fees and expenses................................. 1 2 2 2
Transfer agent fees......................................... 113 199 314 286
Registration and filing fees................................ 85 79 92 103
Printing costs.............................................. 26 46 57 50
Other....................................................... 2 3 2 3
------ ------- ------- -------
Total expenses before waivers............................... 1,328 2,534 2,890 2,306
Less waivers................................................ (184) (266) (379) (383)
------ ------- ------- -------
Net expenses................................................ 1,144 2,268 2,511 1,923
------ ------- ------- -------
Net investment income....................................... 5,010 9,832 9,558 5,456
------ ------- ------- -------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from investment transactions and
distributions of realized gains by other investment
companies................................................. 1,991 5,382 7,915 12,487
Net change in unrealized appreciation (depreciation) from
investments............................................... 1,707 16,871 38,821 29,588
------ ------- ------- -------
Net realized/unrealized gains (losses) from investments..... 3,698 22,253 46,736 42,075
------ ------- ------- -------
Change in net assets resulting from operations.............. $8,708 $32,085 $56,294 $47,531
====== ======= ======= =======
</TABLE>
See notes to financial statements.
13
<PAGE> 16
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in thousands)
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE INVESTOR
GROWTH FUND BALANCED FUND
------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income................................... $ 5,010 $ 1,840 $ 9,832 $ 3,904
Net realized gains (losses) from investment
transactions.......................................... 1,991 808 5,382 5,351
Net change in unrealized appreciation (depreciation)
from investments...................................... 1,707 2,434 16,871 10,033
-------- ------- -------- --------
Change in net assets resulting from operations.............. 8,708 5,082 32,085 19,288
-------- ------- -------- --------
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income.............................. (1,467) (985) (3,441) (2,708)
From net realized gains from investment transactions.... (372) (205) (2,012) (1,584)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.............................. (847) (215) (3,125) (414)
From net realized gains from investment transactions.... (193) (29) (1,311) (185)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.............................. (2,687) (572) (4,343) (717)
From net realized gain from investment transactions..... (708) (121) (2,775) (441)
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income.............................. (189) (67) (336) (65)
From net realized gain from investment transactions..... (53) (17) (232) (37)
-------- ------- -------- --------
Change in net assets from shareholder distributions......... (6,516) (2,211) (17,575) (6,151)
-------- ------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................. 136,484 71,233 234,425 130,231
Proceeds from shares issued in Pegasus acquisition...... -- -- 137,280 --
Proceeds from shares issued in conversion............... -- 707 -- 6,532
Dividends reinvested.................................... 4,585 1,170 12,777 3,506
Cost of shares redeemed................................. (32,493) (8,767) (95,853) (30,131)
-------- ------- -------- --------
Change in net assets from share transactions................ 108,576 64,343 288,629 110,138
-------- ------- -------- --------
Change in Net Assets........................................ 110,768 67,214 303,139 123,275
NET ASSETS:
Beginning of period..................................... 86,167 18,953 203,278 80,003
-------- ------- -------- --------
End of period........................................... $196,935 $86,167 $506,417 $203,278
======== ======= ======== ========
SHARE TRANSACTIONS:
Issued.................................................. 12,319 6,600 19,664 11,443
Issued in Pegasus acquisition........................... -- -- 11,461 --
Issued in conversion.................................... -- 67 -- 600
Reinvested.............................................. 415 109 1,088 315
Redeemed................................................ (2,930) (811) (8,041) (2,677)
-------- ------- -------- --------
Change in shares............................................ 9,804 5,965 24,172 9,681
======== ======= ======== ========
</TABLE>
See notes to financial statements.
14
<PAGE> 17
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in thousands)
<TABLE>
<CAPTION>
INVESTOR GROWTH INVESTOR
& INCOME FUND GROWTH FUND
------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income................................... $ 9,558 $ 2,446 $ 5,456 $ 759
Net realized gains (losses) from investment
transactions.......................................... 7,915 6,961 12,487 7,240
Net change in unrealized appreciation (depreciation)
from investments...................................... 38,821 14,037 29,588 14,046
-------- -------- -------- --------
Change in net assets resulting from operations.............. 56,294 23,444 47,531 22,045
-------- -------- -------- --------
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income.............................. (5,573) (1,586) (2,945) (544)
From net realized gains from investment transactions.... (3,758) (1,513) (4,219) (1,180)
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income.............................. (1,989) (357) (1,935) (172)
From net realized gains from investment transactions.... (1,911) (348) (3,069) (471)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income.............................. (3,776) (472) (2,417) (38)
From net realized gain from investment transactions..... (4,316) (761) (4,568) (776)
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net investment income.............................. (282) (31) (297) (5)
From net realized gain from investment transactions..... (335) (55) (564) (101)
-------- -------- -------- --------
Change in net assets from shareholder distributions......... (21,940) (5,123) (20,014) (3,287)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................. 240,451 177,644 157,704 165,696
Proceeds from shares issued in Pegasus acquisition...... 266,732 -- 29,200 --
Proceeds from shares issued in conversion............... -- 12,936 -- 10,702
Dividends reinvested.................................... 15,516 3,682 15,858 2,757
Cost of shares redeemed................................. (98,528) (39,570) (65,729) (20,622)
-------- -------- -------- --------
Change in net assets from share transactions................ 424,171 154,692 137,033 158,533
-------- -------- -------- --------
Change in Net Assets........................................ 458,525 173,013 164,550 177,291
NET ASSETS:
Beginning of period..................................... 229,831 56,818 220,699 43,408
-------- -------- -------- --------
End of period........................................... $688,356 $229,831 $385,249 $220,699
======== ======== ======== ========
SHARE TRANSACTIONS:
Issued.................................................. 18,390 14,884 11,864 13,101
Issued in Pegasus acquisition........................... 20,835 -- 2,173 --
Issued in conversion.................................... -- 1,150 -- 922
Reinvested.............................................. 1,247 319 1,220 232
Redeemed................................................ (7,124) (3,325) (4,956) (1,634)
-------- -------- -------- --------
Change in shares............................................ 33,348 13,028 10,301 12,621
======== ======== ======== ========
</TABLE>
See notes to financial statements.
15
<PAGE> 18
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999
1. ORGANIZATION:
The One Group Mutual Funds (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
Conservative Growth Fund, the Investor Balanced Fund, the Investor Growth &
Income Fund, and the Investor Growth Fund (individually a "Fund",
collectively the "Funds") only.
The Trust entered into an Agreement and Plan of Reorganization (the "Marquis
Agreement") with the Marquis Family of Funds ("Marquis"), a Massachusetts
business trust. Pursuant to the Marquis Agreement, all of the assets and
liabilities of each Marquis Fund transferred to a Fund of the One Group on
August 10, 1998 in exchange for shares of the corresponding Fund of the One
Group.
The Trust entered into an Agreement and Plan of Reorganization (the "Pegasus
Agreement") with the Pegasus Funds ("Pegasus"), a Massachusetts business
trust. Pursuant to the Pegasus Agreement, all of the assets and liabilities
of each Pegasus Fund transferred to a Fund of the One Group on March 22, 1999
in exchange for shares of the corresponding Fund of the One Group.
The Funds' investment objectives are as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
---- ---------
<S> <C>
Investor Conservative Growth Fund Seeks income and capital appreciation by investing
primarily in a diversified group of One Group Mutual
Funds which invest primarily in equity and fixed income
securities.
Investor Balanced Fund Seeks high total return consistent with the preservation
of capital by investing primarily in a diversified group
of One Group Mutual Funds which invest primarily in
equity and fixed income securities.
Investor Growth & Income Fund Seeks long-term capital appreciation and growth of income
by investing primarily in a diversified group of One
Group Mutual Funds which invest primarily in equity
securities.
Investor Growth Fund Seeks long-term capital appreciation by investing
primarily in a diversified group of One Group Mutual
Funds which invest primarily in equity 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 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
Continued
16
<PAGE> 19
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1999
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.
EXPENSES
Expenses directly attributable to a Fund are charged directly to that
Fund, while the expenses which are attributable to more than one fund of
the Trust are allocated among the respective Funds. Each class of shares
bears its pro-rata portion of expenses attributable to its series, except
that each class separately bears expenses related specifically to that
class, such as distribution fees.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid monthly for
the Funds. Net realized capital gains, if any, are distributed at least
annually. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
due to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses. Permanent book and tax
basis differences, which affect shareholder distributions, have been
reclassified to additional paid-in capital.
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 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
fifty-nine series and five classes of shares: Class I, Class A, Class B,
Class C and Service Class (Prior to November 1, 1998 Class I was known as
Fiduciary Class). Currently, the Trust consists of forty-nine active funds.
The funds are each authorized to issue Class I, Class A, Class B and Class C
shares. Class A shares are subject to initial sales charges, imposed at the
time of purchase, in accordance with the funds' prospectus. Certain
redemptions of Class B and Class C shares are subject to contingent deferred
sales charges in accordance with the funds' prospectus. Shareholders are
entitled to one vote for each full share held and vote in the aggregate and
not by class or series, except as otherwise expressly required by law or when
the Board of Trustees has determined that the matter to be voted on affects
only the interest of shareholders of a particular class or series. The
following is a summary of transactions in fund shares for the fiscal years
ended June 30, 1999 and 1998:
Continued
17
<PAGE> 20
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
INVESTOR INVESTOR
CONSERVATIVE GROWTH FUND BALANCED FUND
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS I SHARES:
Proceeds from shares issued............................... $ 19,054 $18,972 $ 24,622 $ 29,880
Proceeds from shares issued in Pegasus acquisition........ -- -- 14,183 --
Proceeds from shares issued in conversion................. -- 707 -- 6,532
Dividends reinvested...................................... 370 338 1,516 1,866
Cost of shares redeemed................................... (13,123) (6,167) (51,130) (25,609)
-------- ------- -------- --------
Change in net assets from Class I Share transactions...... $ 6,301 $13,850 $(10,809) $ 12,669
======== ======= ======== ========
CLASS A SHARES:
Proceeds from shares issued............................... $ 22,281 $11,834 $ 60,946 $ 30,496
Proceeds from shares issued in Pegasus acquisition........ -- -- 97,757 --
Dividends reinvested...................................... 936 192 3,991 518
Cost of shares redeemed................................... (6,347) (1,084) (23,019) (1,837)
-------- ------- -------- --------
Change in net assets from Class A Share transactions...... $ 16,870 $10,942 $139,675 $ 29,177
======== ======= ======== ========
CLASS B SHARES:
Proceeds from shares issued............................... $ 88,650 $36,712 $139,496 $ 63,523
Proceeds from shares issued in Pegasus acquisition........ -- -- 25,340 --
Dividends reinvested...................................... 3,063 571 6,726 1,034
Cost of shares redeemed................................... (11,204) (1,395) (19,622) (2,638)
-------- ------- -------- --------
Change in net assets from Class B Share transactions...... $ 80,509 $35,888 $151,940 $ 61,919
======== ======= ======== ========
CLASS C SHARES:
Proceeds from shares issued............................... $ 6,499 $ 3,715 $ 9,361 $ 6,332
Dividends reinvested...................................... 216 69 544 88
Cost of shares redeemed................................... (1,819) (121) (2,082) (47)
-------- ------- -------- --------
Change in net assets from Class C Share transactions...... $ 4,896 $ 3,663 $ 7,823 $ 6,373
======== ======= ======== ========
SHARE TRANSACTIONS:
CLASS I SHARES:
Issued.................................................... 1,717 1,763 2,027 2,648
Issued in Pegasus acquisition............................. -- -- 1,184 --
Issued in conversion...................................... -- 67 -- 600
Reinvested................................................ 34 32 130 169
Redeemed.................................................. (1,182) (572) (4,367) (2,282)
-------- ------- -------- --------
Change in Class I Shares.................................. 569 1,290 (1,026) 1,135
======== ======= ======== ========
CLASS A SHARES:
Issued.................................................... 2,010 1,092 5,133 2,665
Issued in Pegasus acquisition............................. -- -- 8,160 --
Reinvested................................................ 84 18 338 46
Redeemed.................................................. (573) (100) (1,902) (160)
-------- ------- -------- --------
Change in Class A Shares.................................. 1,521 1,010 11,729 2,551
======== ======= ======== ========
CLASS B SHARES:
Issued.................................................... 8,007 3,397 11,711 5,569
Issued in Pegasus acquisition............................. -- -- 2,117 --
Reinvested................................................ 277 53 573 92
Redeemed.................................................. (1,010) (128) (1,595) (231)
-------- ------- -------- --------
Change in Class B Shares.................................. 7,274 3,322 12,806 5,430
======== ======= ======== ========
CLASS C SHARES:
Issued.................................................... 585 348 793 561
Reinvested................................................ 20 6 47 8
Redeemed.................................................. (165) (11) (177) (4)
-------- ------- -------- --------
Change in Class C Shares.................................. 440 343 663 565
======== ======= ======== ========
</TABLE>
Continued
18
<PAGE> 21
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
INVESTOR INVESTOR
GROWTH & INCOME FUND GROWTH FUND
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS I SHARES:
Proceeds from shares issued............................... $ 45,077 $ 61,976 $ 26,700 $ 47,160
Proceeds from shares issued in Pegasus acquisition........ 85,917 -- 794 --
Proceeds from shares issued in conversion................. -- 12,936 -- 10,702
Dividends reinvested...................................... 2,495 1,780 2,977 1,220
Cost of shares redeemed................................... (32,247) (32,898) (23,549) (13,523)
--------- -------- -------- --------
Change in net assets from Class I Share transactions...... $ 101,242 $ 43,794 $ 6,922 $ 45,559
========= ======== ======== ========
CLASS A SHARES:
Proceeds from shares issued............................... $ 70,189 $ 35,814 $ 39,280 $ 50,360
Proceeds from shares issued in Pegasus acquisition........ 163,313 -- 16,083 --
Dividends reinvested...................................... 4,511 653 5,019 621
Cost of shares redeemed................................... (43,971) (3,170) (21,519) (3,719)
--------- -------- -------- --------
Change in net assets from Class A Share transactions...... $ 194,042 $ 33,297 $ 38,863 $ 47,262
========= ======== ======== ========
CLASS B SHARES:
Proceeds from shares issued............................... $ 118,374 $ 73,655 $ 84,953 $ 59,863
Proceeds from shares issued in Pegasus acquisition........ 17,502 -- 12,323 --
Dividends reinvested...................................... 7,937 1,171 7,009 810
Cost of shares redeemed................................... (20,030) (3,333) (18,200) (3,085)
--------- -------- -------- --------
Change in net assets from Class B Share transactions...... $ 123,783 $ 71,493 $ 86,085 $ 57,588
========= ======== ======== ========
CLASS C SHARES:
Proceeds from shares issued............................... $ 6,811 $ 6,199 $ 6,771 $ 8,313
Dividends reinvested...................................... 573 78 853 106
Cost of shares redeemed................................... (2,280) (169) (2,461) (295)
--------- -------- -------- --------
Change in net assets from Class C Share transactions...... $ 5,104 $ 6,108 $ 5,163 $ 8,124
========= ======== ======== ========
SHARE TRANSACTIONS:
CLASS I SHARES:
Issued.................................................... 3,572 5,278 2,024 3,722
Issued in Pegasus acquisition............................. 6,749 -- 59 --
Issued in conversion...................................... -- 1,150 -- 922
Reinvested................................................ 203 155 227 103
Redeemed.................................................. (2,538) (2,777) (1,771) (1,080)
--------- -------- -------- --------
Change in Class I Shares.................................. 7,986 3,806 539 3,667
========= ======== ======== ========
CLASS A SHARES:
Issued.................................................... 4,934 2,960 2,958 3,973
Issued in Pegasus acquisition............................. 12,718 -- 1,203 --
Reinvested................................................ 359 56 389 52
Redeemed.................................................. (2,859) (260) (1,634) (291)
--------- -------- -------- --------
Change in Class A Shares.................................. 15,152 2,756 2,916 3,734
========= ======== ======== ========
CLASS B SHARES:
Issued.................................................... 9,331 6,126 6,368 4,734
Issued in Pegasus acquisition............................. 1,368 -- 911 --
Reinvested................................................ 639 101 538 68
Redeemed.................................................. (1,547) (274) (1,367) (240)
--------- -------- -------- --------
Change in Class B Shares.................................. 9,791 5,953 6,450 4,562
========= ======== ======== ========
CLASS C SHARES:
Issued.................................................... 553 520 514 672
Reinvested................................................ 46 7 66 9
Redeemed.................................................. (180) (14) (184) (23)
--------- -------- -------- --------
Change in Class C Shares.................................. 419 513 396 658
========= ======== ======== ========
</TABLE>
Continued
19
<PAGE> 22
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1999
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and Banc One Investment Advisors Corporation (the "Advisor") are
parties to an investment advisory agreement under which the Advisor is
entitled to receive an annual fee, computed daily and paid monthly, equal to
0.05% of the average net assets of the Investor Conservative Growth Fund, the
Investor Balanced Fund, the Investor Growth & Income Fund, and the Investor
Growth 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 0.10% on
the first $500 million of each fund's average daily net assets, 0.075% of
each fund's average daily net assets between $500 million and $1 billion, and
0.05% of each Fund's average daily net assets when fund assets exceed $1
billion. The Advisor also serves as sub-Administrator to each fund of the
Trust, pursuant to an agreement between the Administrator and the Advisor.
Pursuant to this agreement, the Advisor performs many of the Administrator's
duties, for which the Advisor receives a fee paid by the Administrator.
The Trust and The One Group Services Company (the "Distributor") are parties
to a distribution agreement under which shares of the funds are sold on a
continuous basis. Class A, Class B and Class C shares are subject to a
distribution and shareholder services 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% 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. Class I shares of each fund are offered without
distribution fees. For the year ended June 30, 1999, the Distributor received
$7,305,781 from commissions earned on sales of Class A shares and redemptions
of Class B and Class C shares, of which, the Distributor re-allowed
$7,226,414 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. For the year ended June 30, 1999, 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>
Investor Conservative Growth Fund........................ $28 $136 $20
Investor Balanced Fund................................... -- 182 84
Investor Growth and Income Fund.......................... -- 276 103
Investor Growth Fund..................................... 47 266 70
</TABLE>
Continued
20
<PAGE> 23
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1999
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities) during the year ended June 30, 1999 were as
follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -------
<S> <C> <C>
Investor Conservative Growth Fund........................... $114,825 $12,735
Investor Balanced Fund...................................... 189,602 41,211
Investor Growth and Income Fund............................. 216,441 68,263
Investor Growth Fund........................................ 142,620 40,182
</TABLE>
6. CONVERSION OF COMMON TRUST FUNDS:
On December 19, 1997 the net assets of certain common trust funds managed by
the Advisor were exchanged for shares of the corresponding One Group Funds.
The transaction was accounted for by a method followed for tax purposes in a
tax-free business combination. The following is a summary of shares issued,
net assets converted, net asset value per share issued and unrealized
appreciation of assets acquired as of the conversion date (amounts in
thousands except per share amounts):
<TABLE>
<CAPTION>
NET ASSET
SHARES NET ASSETS VALUE PER
ISSUED CONVERTED SHARE ISSUED
------ ---------- ------------
<S> <C> <C> <C>
Investor Conservative Growth Fund........................... 67 $ 707 $10.56
Investor Balanced Fund...................................... 600 6,532 10.89
Investor Growth & Income Fund............................... 1,150 12,936 11.25
Investor Growth Fund........................................ 922 10,702 11.61
</TABLE>
7. PEGASUS REORGANIZATION:
The Trust entered an agreement and plan of reorganization and liquidation
("the Reorganization") with the Pegasus Funds pursuant to which all of the
assets and liabilities of each Pegasus Fund transferred to a fund of the One
Group in exchange for shares of the corresponding fund of the One Group. The
Reorganization, which qualified as a tax-free exchange for Federal income tax
purposes, was completed on March 22, 1999 following approval by shareholders
of the Pegasus Funds at a special Shareholder Meeting. The following is a
summary of shares outstanding, net assets, net asset value per share issued
and unrealized appreciation immediately before and after the Reorganization
(amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------------- --------------
PEGASUS MANAGED INVESTOR INVESTOR
ASSETS CONSERVATIVE BALANCED BALANCED
FUND FUND FUND
-------------------- -------- --------------
<S> <C> <C> <C>
Shares............................................... 10,038 25,605 37,066
Net assets........................................... $137,280 $306,589 $443,869
Net asset value:
Class I............................................ 13.73 11.98 11.98
Class A............................................ 13.67 11.98 11.98
Class B............................................ 13.68 11.97 11.97
Class C............................................ -- 11.92 11.92
Unrealized appreciation.............................. (3,150) 19,523 16,373
</TABLE>
Continued
21
<PAGE> 24
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1999
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
---------------------------------- ---------------
PEGASUS MANAGED INVESTOR INVESTOR
ASSETS BALANCED GROWTH & INCOME GROWTH & INCOME
FUND FUND FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares......................................... 25,159 27,223 48,058
Net assets..................................... $266,732 $347,797 $614,529
Net asset value:
Class I...................................... 10.50 12.73 12.73
Class A...................................... 10.53 12.84 12.84
Class B...................................... 11.96 12.79 12.79
Class C...................................... -- 12.69 12.69
Unrealized appreciation........................ (11,652) 25,486 13,834
</TABLE>
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
---------------------------------- ---------------
PEGASUS MANAGED INVESTOR INVESTOR
ASSETS GROWTH GROWTH GROWTH
FUND FUND FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares......................................... 2,740 22,356 24,529
Net assets..................................... $29,200 $300,776 $329,976
Net asset value:
Class I...................................... 10.79 13.45 13.45
Class A...................................... 10.73 13.37 13.37
Class B...................................... 10.55 13.52 13.52
Class C...................................... -- 13.38 13.38
Unrealized appreciation........................ (1,306) 22,458 21,152
</TABLE>
8. SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED):
A Special Meeting of Shareholders of the One Group Mutual Funds was held on
May 17, 1999. At the meeting, shareholders voted on the approval of the
following proposals:
1. To elect the Board of Trustees of the One Group Mutual Funds.
<TABLE>
<CAPTION>
BROKER
FUND NAME FOR AGAINST ABSTAIN NON-VOTE
--------- ---------- ------- ------- --------
<S> <C> <C> <C> <C>
Investor Conservative Growth Fund......................... 6,651,931 0 136,101 0
Investor Balanced Fund.................................... 13,382,308 0 154,653 0
Investor Growth & Income Fund............................. 14,679,461 0 103,662 0
Investor Growth Fund...................................... 10,231,815 0 222,179 0
</TABLE>
2. To ratify the selection of independent accountants.
<TABLE>
<CAPTION>
BROKER
FUND NAME FOR AGAINST ABSTAIN NON-VOTE
--------- ---------- ------- ------- --------
<S> <C> <C> <C> <C>
Investor Conservative Growth Fund......................... 6,970,099 29,411 220,895 0
Investor Balanced Fund.................................... 17,147,379 57,856 211,835 0
Investor Growth & Income Fund............................. 13,273,349 51,280 150,304 0
Investor Growth Fund...................................... 11,728,021 47,881 185,413 0
</TABLE>
Continued
22
<PAGE> 25
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED JUNE 30, 1999
3. To approve a change to a fundamental investment restriction by eliminating
language which prohibits One Group Mutual Funds from participating on a
joint or a joint and several basis in any trading account in securities.
<TABLE>
<CAPTION>
BROKER
FUND NAME FOR AGAINST ABSTAIN NON-VOTE
--------- ---------- ------- ------- ---------
<S> <C> <C> <C> <C>
Investor Conservative Growth Fund*....................... 5,418,017 68,041 228,540 1,505,808
Investor Balanced Fund................................... 10,675,463 99,563 205,272 6,436,774
Investor Growth & Income Fund............................ 10,297,944 84,998 245,372 2,846,620
Investor Growth Fund*.................................... 9,260,283 68,402 201,211 2,431,421
</TABLE>
* Voting was adjourned to June 1, 1999 and hence was not conducted on May 17,
1999.
9. 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, 1999
(amounts in thousands):
<TABLE>
<CAPTION>
FUND AMOUNT
- ---- -------
<S> <C>
Investor Conservative Growth Fund........................... $ 1,326
Investor Balanced Fund...................................... 6,330
Investor Growth & Income Fund............................... 10,320
Investor Growth Fund........................................ 12,419
</TABLE>
Eligible Distributions:
The Trust designates the following percentage of distributions eligible for
the dividends received deductions for corporations.
<TABLE>
<CAPTION>
FUND AMOUNT
- ---- ------
<S> <C>
Investor Conservative Growth Fund........................... 2.09%
Investor Balanced Fund...................................... 2.97%
Investor Growth & Income Fund............................... 8.87%
Investor Growth Fund........................................ 20.74%
</TABLE>
23
<PAGE> 26
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE
GROWTH FUND
----------------------------------
CLASS I
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.06 $ 10.33 $ 10.00
------- ------- -------
Investment Activities:
Net investment income..................................... 0.47 0.46 0.26
Net realized and unrealized gains (losses) from
investments............................................ 0.28 0.82 0.33
------- ------- -------
Total from Investment Activities....................... 0.75 1.28 0.59
------- ------- -------
Distributions:
Net investment income..................................... (0.48) (0.45) (0.26)
Net realized gains........................................ (0.13) (0.10) --
------- ------- -------
Total Distributions.................................... (0.61) (0.55) (0.26)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.20 $ 11.06 $ 10.33
======= ======= =======
Total Return................................................ 7.01% 12.70% 6.00%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $37,131 $30,352 $15,038
Ratio of expenses to average net assets................... 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 4.31% 4.43% 4.92%(c)
Ratio of expenses to average net assets*.................. 0.32% 0.56% 1.46%(c)
Ratio of net investment income to average net assets*..... 4.19% 4.07% 3.66%(c)
Portfolio turnover (d).................................... 9.73% 3.22% 28.46%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
24
<PAGE> 27
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE
GROWTH FUND
----------------------------------
CLASS A
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.04 $ 10.32 $10.00
------- ------- ------
Investment Activities:
Net investment income..................................... 0.44 0.43 0.22
Net realized and unrealized gains (losses) from
investments............................................ 0.29 0.82 0.32
------- ------- ------
Total from Investment Activities....................... 0.73 1.25 0.54
------- ------- ------
Distributions:
Net investment income..................................... (0.46) (0.43) (0.22)
Net realized gains........................................ (0.13) (0.10) --
------- ------- ------
Total Distributions.................................... (0.59) (0.53) (0.22)
------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.18 $ 11.04 $10.32
======= ======= ======
Total Return (Excludes Sales Charge)........................ 6.77% 12.38% 5.46%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $29,714 $12,538 $1,299
Ratio of expenses to average net assets................... 0.45% 0.45% 0.47%(c)
Ratio of net investment income to average net assets...... 4.07% 4.12% 4.76%(c)
Ratio of expenses to average net assets*.................. 0.67% 0.82% 3.05%(c)
Ratio of net investment income to average net assets*..... 3.85% 3.75% 2.18%(c)
Portfolio turnover (d).................................... 9.73% 3.22% 28.46%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
25
<PAGE> 28
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE
GROWTH FUND
----------------------------------
CLASS B
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.05 $ 10.33 $10.00
-------- ------- ------
Investment Activities:
Net investment income..................................... 0.36 0.37 0.19
Net realized and unrealized gains (losses) from
investments............................................ 0.29 0.81 0.33
-------- ------- ------
Total from Investment Activities....................... 0.65 1.18 0.52
-------- ------- ------
Distributions:
Net investment income..................................... (0.38) (0.36) (0.19)
Net realized gains........................................ (0.13) (0.10) --
-------- ------- ------
Total Distributions.................................... (0.51) (0.46) (0.19)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.19 $ 11.05 $10.33
======== ======= ======
Total Return (Excludes Sales Charge)........................ 6.10% 11.53% 5.30%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $121,348 $39,489 $2,616
Ratio of expenses to average net assets................... 1.20% 1.20% 1.21%(c)
Ratio of net investment income to average net assets...... 3.33% 3.37% 4.06%(c)
Ratio of expenses to average net assets*.................. 1.32% 1.47% 3.52%(c)
Ratio of net investment income to average net assets*..... 3.21% 3.10% 1.75%(c)
Portfolio turnover (d).................................... 9.73% 3.22% 28.46%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
26
<PAGE> 29
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR CONSERVATIVE
GROWTH FUND
-----------------------
CLASS C
-----------------------
YEAR JULY 1,
ENDED 1997 THROUGH
JUNE 30, JUNE 30,
1999 1998(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $11.03 $10.33
------ ------
Investment Activities:
Net investment income..................................... 0.36 0.35
Net realized and unrealized gains (losses) from
investments............................................ 0.29 0.81
------ ------
Total from Investment Activities....................... 0.65 1.16
------ ------
Distributions:
Net investment income..................................... (0.38) (0.36)
Net realized gains........................................ (0.13) (0.10)
------ ------
Total Distributions.................................... (0.51) (0.46)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $11.17 $11.03
====== ======
Total Return (Excludes Sales Charge)........................ 6.00% 11.48%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $8,742 $3,788
Ratio of expenses to average net assets................... 1.20% 1.20%
Ratio of net investment income to average net assets...... 3.32% 3.39%
Ratio of expenses to average net assets*.................. 1.33% 1.47%
Ratio of net investment income to average net assets*..... 3.19% 3.12%
Portfolio turnover (b).................................... 9.73% 3.22%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
27
<PAGE> 30
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR BALANCED FUND
----------------------------------
CLASS I
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.81 $ 10.63 $ 10.00
------- ------- -------
Investment Activities:
Net investment income..................................... 0.47 0.37 0.21
Net realized and unrealized gains (losses) from
investments............................................ 0.79 1.39 0.63
------- ------- -------
Total from Investment Activities....................... 1.26 1.76 0.84
------- ------- -------
Distributions:
Net investment income..................................... (0.51) (0.36) (0.21)
Net realized gains........................................ (0.32) (0.22) --
------- ------- -------
Total Distributions.................................... (0.83) (0.58) (0.21)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 12.24 $ 11.81 $ 10.63
======= ======= =======
Total Return................................................ 11.16% 17.02% 8.48%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $84,447 $93,557 $72,155
Ratio of expenses to average net assets................... 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 3.85% 3.31% 3.84%(c)
Ratio of expenses to average net assets*.................. 0.26% 0.32% 0.56%(c)
Ratio of net investment income to average net assets*..... 3.79% 3.19% 3.48%(c)
Portfolio turnover (d).................................... 13.51% 9.71% 12.20%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
28
<PAGE> 31
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR BALANCED FUND
----------------------------------
CLASS A
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.83 $ 10.66 $10.00
-------- ------- ------
Investment Activities:
Net investment income..................................... 0.42 0.34 0.17
Net realized and unrealized gains (losses) from
investments............................................ 0.79 1.39 0.66
-------- ------- ------
Total from Investment Activities....................... 1.21 1.73 0.83
-------- ------- ------
Distributions:
Net investment income..................................... (0.48) (0.34) (0.17)
Net realized gains........................................ (0.32) (0.22) --
-------- ------- ------
Total Distributions.................................... (0.80) (0.56) (0.17)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 12.24 $ 11.83 $10.66
======== ======= ======
Total Return (Excludes Sales Charge)........................ 10.70% 16.62% 8.41%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $177,336 $32,605 $2,176
Ratio of expenses to average net assets................... 0.45% 0.45% 0.47%(c)
Ratio of net investment income to average net assets...... 3.27% 3.01% 3.78%(c)
Ratio of expenses to average net assets*.................. 0.61% 0.66% 1.12%(c)
Ratio of net investment income to average net assets*..... 3.11% 2.80% 3.13%(c)
Portfolio turnover (d).................................... 13.51% 9.71% 12.20%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
29
<PAGE> 32
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR BALANCED FUND
----------------------------------
CLASS B
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.82 $ 10.65 $10.00
-------- ------- ------
Investment Activities:
Net investment income..................................... 0.33 0.26 0.16
Net realized and unrealized gains (losses) from
investments............................................ 0.81 1.39 0.65
-------- ------- ------
Total from Investment Activities....................... 1.14 1.65 0.81
-------- ------- ------
Distributions:
Net investment income..................................... (0.40) (0.26) (0.16)
Net realized gains........................................ (0.32) (0.22) --
-------- ------- ------
Total Distributions.................................... (0.72) (0.48) (0.16)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 12.24 $ 11.82 $10.65
======== ======= ======
Total Return (Excludes Sales Charge)........................ 10.01% 15.85% 8.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $229,671 $70,463 $5,672
Ratio of expenses to average net assets................... 1.20% 1.20% 1.22%(c)
Ratio of net investment income to average net assets...... 2.78% 2.26% 2.93%(c)
Ratio of expenses to average net assets*.................. 1.26% 1.31% 1.73%(c)
Ratio of net investment income to average net assets*..... 2.72% 2.15% 2.42%(c)
Portfolio turnover (d).................................... 13.51% 9.71% 12.20%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
30
<PAGE> 33
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR BALANCED FUND
-----------------------
CLASS C
-----------------------
YEAR JULY 1,
ENDED 1997 THROUGH
JUNE 30, JUNE 30,
1999 1998(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 11.77 $10.63
------- ------
Investment Activities:
Net investment income..................................... 0.32 0.26
Net realized and unrealized gains (losses) from
investments............................................ 0.81 1.37
------- ------
Total from Investment Activities....................... 1.13 1.63
------- ------
Distributions:
Net investment income..................................... (0.39) (0.27)
Net realized gains........................................ (0.32) (0.22)
------- ------
Total Distributions.................................... (0.71) (0.49)
------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 12.19 $11.77
======= ======
Total Return (Excludes Sales Charge)........................ 10.04% 15.66%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $14,963 $6,653
Ratio of expenses to average net assets................... 1.20% 1.20%
Ratio of net investment income to average net assets...... 2.85% 2.24%
Ratio of expenses to average net assets*.................. 1.26% 1.30%
Ratio of net investment income to average net assets*..... 2.79% 2.14%
Portfolio turnover (b).................................... 13.51% 9.71%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
31
<PAGE> 34
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH &
INCOME FUND
----------------------------------
CLASS I
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.57 $ 10.93 $ 10.00
-------- ------- -------
Investment Activities:
Net investment income..................................... 0.35 0.25 0.15
Net realized and unrealized gains (losses) from
investments............................................ 1.32 1.92 0.93
-------- ------- -------
Total from Investment Activities....................... 1.67 2.17 1.08
-------- ------- -------
Distributions:
Net investment income..................................... (0.48) (0.25) (0.15)
Net realized gains........................................ (0.47) (0.28) --
-------- ------- -------
Total Distributions.................................... (0.95) (0.53) (0.15)
-------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 13.29 $ 12.57 $ 10.93
======== ======= =======
Total Return................................................ 14.11% 20.34% 10.87%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $209,770 $98,060 $43,660
Ratio of expenses to average net assets................... 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 3.70% 2.17% 2.78%(c)
Ratio of expenses to average net assets*.................. 0.27% 0.34% 0.66%(c)
Ratio of net investment income to average net assets*..... 3.63% 2.03% 2.32%(c)
Portfolio turnover (d).................................... 17.87% 11.38% 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
32
<PAGE> 35
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH &
INCOME FUND
----------------------------------
CLASS A
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.69 $ 11.02 $10.00
-------- ------- ------
Investment Activities:
Net investment income..................................... 0.36 0.22 0.12
Net realized and unrealized gains (losses) from
investments............................................ 1.27 1.95 1.02
-------- ------- ------
Total from Investment Activities....................... 1.63 2.17 1.14
-------- ------- ------
Distributions:
Net investment income..................................... (0.45) (0.22) (0.12)
Net realized gains........................................ (0.47) (0.28) --
-------- ------- ------
Total Distributions.................................... (0.92) (0.50) (0.12)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 13.40 $ 12.69 $11.02
======== ======= ======
Total Return (Excludes Sales Charge)........................ 13.62% 20.18% 11.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $245,151 $39,874 $4,262
Ratio of expenses to average net assets................... 0.45% 0.45% 0.46%(c)
Ratio of net investment income to average net assets...... 1.54% 1.91% 2.67%(c)
Ratio of expenses to average net assets*.................. 0.62% 0.67% 1.26%(c)
Ratio of net investment income to average net assets*..... 1.37% 1.69% 1.87%(c)
Portfolio turnover (d).................................... 17.87% 11.38% 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
33
<PAGE> 36
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH &
INCOME FUND
----------------------------------
CLASS B
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.64 $ 11.00 $10.00
-------- ------- ------
Investment Activities:
Net investment income..................................... 0.26 0.14 0.09
Net realized and unrealized gains (losses) from
investments............................................ 1.29 1.92 1.00
-------- ------- ------
Total from Investment Activities....................... 1.55 2.06 1.09
-------- ------- ------
Distributions:
Net investment income..................................... (0.36) (0.14) (0.09)
Net realized gains........................................ (0.47) (0.28) --
-------- ------- ------
Total Distributions.................................... (0.83) (0.42) (0.09)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 13.36 $ 12.64 $11.00
======== ======= ======
Total Return (Excludes Sales Charge)........................ 12.93% 19.13% 11.02%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $221,088 $85,468 $8,896
Ratio of expenses to average net assets................... 1.20% 1.20% 1.21%(c)
Ratio of net investment income to average net assets...... 2.12% 1.15% 1.94%(c)
Ratio of expenses to average net assets*.................. 1.27% 1.32% 1.89%(c)
Ratio of net investment income to average net assets*..... 2.05% 1.03% 1.26%(c)
Portfolio turnover (d).................................... 17.87% 11.38% 18.07%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
34
<PAGE> 37
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH &
INCOME FUND
-----------------------
CLASS C
-----------------------
YEAR JULY 1,
ENDED 1997 THROUGH
JUNE 30, JUNE 30,
1999 1998(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.54 $10.93
------- ------
Investment Activities:
Net investment income..................................... 0.26 0.14
Net realized and unrealized gains (losses) from
investments............................................ 1.28 1.90
------- ------
Total from Investment Activities....................... 1.54 2.04
------- ------
Distributions:
Net investment income..................................... (0.36) (0.15)
Net realized gains........................................ (0.47) (0.28)
------- ------
Total Distributions.................................... (0.83) (0.43)
------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 13.25 $12.54
======= ======
Total Return (Excludes Sales Charge)........................ 12.94% 19.08%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $12,347 $6,429
Ratio of expenses to average net assets................... 1.20% 1.20%
Ratio of net investment income to average net assets...... 2.20% 1.14%
Ratio of expenses to average net assets*.................. 1.27% 1.31%
Ratio of net investment income to average net assets*..... 2.13% 1.03%
Portfolio turnover (b).................................... 17.87% 11.38%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
35
<PAGE> 38
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH FUND
----------------------------------
CLASS I
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.39 $ 11.25 $ 10.00
-------- ------- -------
Investment Activities:
Net investment income..................................... 0.32 0.12 0.09
Net realized and unrealized gains (losses) from
investments............................................ 1.77 2.49 1.25
-------- ------- -------
Total from Investment Activities....................... 2.09 2.61 1.34
-------- ------- -------
Distributions:
Net investment income..................................... (0.43) (0.12) (0.09)
Net realized gains........................................ (0.66) (0.35) --
-------- ------- -------
Total Distributions.................................... (1.09) (0.47) (0.09)
-------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.39 $ 13.39 $ 11.25
======== ======= =======
Total Return................................................ 16.84% 23.81% 13.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $100,566 $86,355 $31,318
Ratio of expenses to average net assets................... 0.20% 0.20% 0.20%(c)
Ratio of net investment income to average net assets...... 2.57% 1.04% 1.70%(c)
Ratio of expenses to average net assets*.................. 0.31% 0.36% 0.77%(c)
Ratio of net investment income to average net assets*..... 2.46% 0.88% 1.13%(c)
Portfolio turnover (d).................................... 14.62% 4.05% 18.49%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
36
<PAGE> 39
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH FUND
----------------------------------
CLASS A
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.33 $ 11.21 $10.00
-------- ------- ------
Investment Activities:
Net investment income..................................... 0.29 0.10 0.07
Net realized and unrealized gains (losses) from
investments............................................ 1.74 2.47 1.21
-------- ------- ------
Total from Investment Activities....................... 2.03 2.57 1.28
-------- ------- ------
Distributions:
Net investment income..................................... (0.40) (0.10) (0.07)
Net realized gains........................................ (0.66) (0.35) --
-------- ------- ------
Total Distributions.................................... (1.06) (0.45) (0.07)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.30 $ 13.33 $11.21
======== ======= ======
Total Return (Excludes Sales Charge)........................ 16.40% 23.44% 12.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $100,789 $55,057 $4,439
Ratio of expenses to average net assets................... 0.45% 0.45% 0.46%(c)
Ratio of net investment income to average net assets...... 2.08% 0.78% 1.82%(c)
Ratio of expenses to average net assets*.................. 0.66% 0.70% 1.62%(c)
Ratio of net investment income to average net assets*..... 1.87% 0.53% 0.66%(c)
Portfolio turnover (d).................................... 14.62% 4.05% 18.49%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
37
<PAGE> 40
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH FUND
----------------------------------
CLASS B
----------------------------------
YEAR YEAR DECEMBER 10,
ENDED ENDED 1996 THROUGH
JUNE 30, JUNE 30, JUNE 30,
1999 1998 1997(a)
-------- -------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.47 $ 11.34 $10.00
-------- ------- ------
Investment Activities:
Net investment income..................................... 0.20 0.02 0.04
Net realized and unrealized gains (losses) from
investments............................................ 1.76 2.48 1.34
-------- ------- ------
Total from Investment Activities....................... 1.96 2.50 1.38
-------- ------- ------
Distributions:
Net investment income..................................... (0.33) (0.02) (0.04)
Net realized gains........................................ (0.66) (0.35) --
-------- ------- ------
Total Distributions.................................... (0.99) (0.37) (0.04)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.44 $ 13.47 $11.34
======== ======= ======
Total Return (Excludes Sales Charge)........................ 15.57% 22.52% 13.88%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $168,823 $70,515 $7,651
Ratio of expenses to average net assets................... 1.20% 1.20% 1.20%(c)
Ratio of net investment income to average net assets...... 1.44% 0.04% 0.97%(c)
Ratio of expenses to average net assets*.................. 1.31% 1.35% 2.18%(c)
Ratio of net investment income to average net assets*..... 1.33% (0.11)% (0.01)%(c)
Portfolio turnover (d).................................... 14.62% 4.05% 18.49%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
38
<PAGE> 41
- --------------------------------------------------------------------------------
One Group Mutual Funds
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR GROWTH FUND
-----------------------
CLASS C
-----------------------
YEAR JULY 1,
ENDED 1997 THROUGH
JUNE 30, JUNE 30,
1999 1998(a)
-------- ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.34 $11.25
------- ------
Investment Activities:
Net investment income..................................... 0.18 0.02
Net realized and unrealized gains (losses) from
investments............................................ 1.77 2.45
------- ------
Total from Investment Activities....................... 1.95 2.47
------- ------
Distributions:
Net investment income..................................... (0.33) (0.03)
Net realized gains........................................ (0.66) (0.35)
------- ------
Total Distributions.................................... (0.99) (0.38)
------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.30 $13.34
======= ======
Total Return (Excludes Sales Charge)........................ 15.65% 22.42%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)......................... $15,071 $8,772
Ratio of expenses to average net assets................... 1.20% 1.20%
Ratio of net investment income to average net assets...... 1.50% 0.04%
Ratio of expenses to average net assets*.................. 1.31% 1.35%
Ratio of net investment income to average net assets*..... 1.39% (0.11)%
Portfolio turnover (b).................................... 14.62% 4.05%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares issued.
See notes to financial statements.
39
<PAGE> 42
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
ONE GROUP MUTUAL FUNDS JUNE 30, 1999
To the Shareholders and Board of Trustees of
One Group Mutual Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Investor Conservative Growth
Fund, the Investor Balanced Fund, the Investor Growth & Income Fund, and the
Investor Growth Fund (four series of One Group Mutual Funds, hereafter referred
to as the "Funds") at June 30, 1999, the results of each of their operations for
the period then ended and the changes in each of their net assets and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Columbus, Ohio
August 20, 1999
40
<PAGE> 43
(This page has been left blank intentionally.)
<PAGE> 44
Important Customer Information.
Please Read:
Shares of One Group:
- - are not deposits or obligations of, or guaranteed by, BANK 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 BANK ONE CORPORATION, serves as an investment advisor to
One Group, for which it receives advisory fees. One Group is distributed by The
One Group Services Company, 3435 Stelzer Road, Columbus, Ohio 43219, which is
not affiliated with BANK 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 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
[BANK ONE LOGO]
TOG-F-036-AN (8/99)
